Wake up call for Manufacturing in a post Covid-19 world

Wake up call for Manufacturing in a post Covid-19 world

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By Akshay Shah, Executive Director, Silafrica

The manufacturing world has woken up to a new norm, just as all other sectors have, since the COVID-19 outbreak a few weeks ago. In a pre-COVID-19 era, most experts in the manufacturing sector would argue that successful factories are based on achieving massive economies of scale and standardizing processes to the point of full automation in physical activities, digital data and workflows.

In a matter of 12 weeks, this undeniable model for successful manufacturing has failed in a world where global supply chains have been disrupted. In building extreme efficiency in our supply chains, as a manufacturing sector we have become less agile, less circular and more exposed to the forces of nature.

As the world is accelerating to adopt digital business models and virtual work collaboration, so must the manufacturing sector also pivot to this new norm, and be open to a new way forward. My thoughts on this new way forward are based on the following key areas of transition:

    1. From Centralized to Decentralized
    2. From Standardized to Agile and Resilient
    3. From Linear to Circular Economy

 

Using the example of the plastics manufacturing sector, where I have almost 30 years of experience setting up and managing multiple remote factories in different countries, here is how the sector could have a new road map to a successful manufacturing model:

    1. From Centralized to Decentralized

The case for centralized manufacturing was made because of economies of scale. Accumulating massive manufacturing capacity in one location meant lower capital spend per unit of output, and lower space and manpower overheads to run this centralized beast.

A decentralized manufacturing model must find alternative economical advantages with smaller scale and adapt to managing dozens or hundreds of smaller factories around the world. This is where remote supply chain management, monitoring and controls using MES, Industrial IoT and automation becomes the new success skillset for manufacturers. Equipment suppliers need to design machines that achieve higher output with lower energy consumption, higher automation and more adaptable to circular materials. Plastic raw materials suppliers need to shift to smaller localized plants that convert the waste plastic back into new circular plastic for that localized region where the plastic waste comes from. Product designs also need to adapt to using circular materials, and support more reuse before recycling, such as refillable packaging instead of single-use packaging as an example.

At Silafrica, we have been on the path towards circular packaging for several years, and since the start of 2019 we have been retrofitting our existing machines Industrial IoT with ThingTrax. And our 10-year-old internal operations excellence model called TSW (The Silafrica Way) is key to creating the capability platform to transfer and benchmark best practices across all our different manufacturing locations, which helps us achieve world class standards while being decentralized.

    1. From Standardized to Agile and Resilient

One of the sure-fire ways to reduce costs in mass manufacturing is standardization of products & processes combined with long production runs, especially because changeovers from producing one product to another involves extra costs, specialized talent and down time. This started off as a default reality in the early 1920’s which perpetuated a fixed mindset about how mass production must run. A hundred years later, there has been enough technological change to move towards a different mindset but change in a capital-intensive sector is slow & expensive.

Agile and resilient manufacturing means first of all escaping this fixed mindset and then opening up our mind to possibilities where production changeover can happen without significant downtime and cost, where product design is not just modular as a finished product but also modular in the manufacturing process itself, where lean principles of demand driven or “Heijunka” production planning replaces produce to stock models, and the technology keeps up with this agility. In doing so, a factory becomes even more smart as it becomes responsive to unpredictable or fast changing demand, and therefore becomes more resilient.

At Silafrica, we have been practicing lean and agile manufacturing standards starting with our first training over 25 years ago from the Kaizen Institute and later from Organization Development International. However I must be honest and declare that we still have miles to go because executing and sticking to such lean and agile frameworks requires a huge amount of commitment & discipline from the board room to the shop floor, and committing to invest in modular product design with circular materials needs teamwork across the entire value chain from materials to end consumers. Another example of agility is our new automated IML yogurt cup injection compression molding lines can achieve label changeover from one brand or flavor to another on the fly.

    1. From Linear to Circular Economy

If you know me, then you probably know that I am really passionate about embracing and championing the shift from a linear to a circular economy not only in the plastic manufacturing sector, but across all value chains that extract materials from the earth for converting into products for use to drive our economies. And again, this is a shadow from the past where a ‘take – make – use – waste’ process has defined a default mindset which never was and no longer is sustainable for long-term growth of the economy, the planet and its living ecosystem (which includes us humans by the way).

One might wonder how does moving to a circular economy contribute to economic growth, and also why am I talking about circular economy in the context of adapting to a COVID-19 reality.

The first point about economic growth is that consumption drives the economy, but this consumption does not have to be one way and single dimensional. Moving to a circular economy creates a huge opportunity for new business models and jobs to return, reuse, repair and recycle a product, and keep the material flowing within this circle instead of ending up in the environment. And plastic raw material companies do not need to go out of business as a result – they just need to pivot as the oil-based energy companies are doing, to a different business model to champion circular materials from renewable sources & materials recovery rather than extraction.

The second point about adapting to a COVID-19 reality is that a circular economy supports decentralized and agile manufacturing. By its very nature circular economy is ideally suited to keeping the mass flows of materials in whatever form within use and within a localized economy. Also, products designed for the circular economy are modular to facilitate reuse and repair, this also makes the production more agile and responsive to a demand driven supply chain.

At Silafrica, we are committed to manufacturing only 100% recyclable packaging by 2025, and on that journey we have initiated several smart packaging innovations that use recycled materials for industrial or outer packaging including an exciting project for Twiga Foods that helps them to digitize their supply chain from farm to retail. More projects are underway for non-food packaging as well as renewable materials for both food and non-food packaging. It’s a team effort which needs the entire value chain to work together, and we welcome any FMCG brand that wants to go circular to connect with us.

This new normal in a COVID-19 era is going to last a while long after the vaccine is widely available, because the threat of a pandemic is no longer just about a TED Talk from Bill Gates in 2015 but rather it’s a reality that world’s population is facing as a common enemy, and that is creating a shift in our collective global mindset that we are at the mercy of nature, and therefore must operate in a more agile, resilient, decentralized and circular way in all aspects of our business.

About Akshay Shah

Akshay is a lifelong learner, a committed family man, and a geek with a passion for scaling entrepreneurial ideas that create real impact on the quality of life for people from all walks of life.

Early years were defined by tech as he started coding 38 years ago, and spending afternoons with his father at a plastics packaging manufacturing company, before moving to America to complete a degree in Management Information Systems.

The next 20 years were spent scaling and optimizing manufacturing businesses in East and West Africa, and one manufacturing business in the UAE largely through innovation and strategic management. In the past 5 years, Akshay has pivoted towards a more impact focused approach towards business, not only in manufacturing but also going back to his childhood passion for technology.

Today Akshay’s role in Silafrica is focused on M&A, Technology Innovation and Circular Economy. And outside Silafrica, he has been instrumental in scaling Entrepreneurs Organization in East Africa; Chairing the Young President’s Organisation’s Board in Kenya with a focus on strategy, succession & governance; contributing to the scale up ecosystem in East Africa for tech enabled startups by serving on the Endeavor Kenya Board; and mentoring impact driven tech startups with a potential to disrupt the status quo in traditional industries.