London – Enterprise software company SAGE has recently published a report, titled Survival, Resilience and Growth, which highlights how investment in the digitisation of the manufacturing sector can improve prospects for recovery from the impact of the Covid-19 pandemic.
In a follow-up Q&A, ERJ asks Rob Sinfield, VP Product, Sage Business Cloud X3, about the implications for the rubber-product manufacturing sector:
ERJ: Assuming rubber product makers are typical of the manufacturing companies covered by the Survival, Resilience and Growth report, what steps are/should they be taking to increase business and recover from the impact of Covid?
RS: The report highlights that despite the many hesitancies, 54% of manufacturing companies are actively taking measures to increase export revenue. This has also pushed the sector to be ranked the third highest for future confidence in growth. However, this level of confidence needs to be reinforced.
With 80% of SMEs underlining digital adoption as a critical function for enterprise-led recovery and job creation, those within manufacturing - rubber product makers included – will need to ensure that the integration of technology for day to day practices is a key priority for recovery.
ERJ: As a traditional materials-based industry, many rubber manufacturers are behind the curve in terms of the adoption of IT-based technologies and services. What is your advice to such SMEs in terms of prioritising investment in IT?
RS: In our ‘Survival, Resilience and Growth’ report, it is highlighted that key barriers have been ongoing restrictions from lockdown (28%), lack of finance (22%) and lack of technology (15%). However, it is reported that higher-tech service sectors like financial services and technology, are the best positioned for growth and resilience, and the most confident amongst sectors.
For those that may be behind the curve of adoption, incentives will be key as money for investment may be hard to come by. But the reality is that businesses no longer have time to stay on the fence. Support from the Government, such as grants, will allow businesses, to boost technology up the priority ladder more easily.
ERJ: Rubber compounds typically have around 20 chemical ingredients, for example cross-linking systems and anti-degradants to protect the end-product. Which IT-based technologies can best help rubber/tire companies to safeguard supply of essential materials and chemicals from global supply-chains?
RS: One of the biggest challenges faced today by SMEs is supply chain disruption (32%). To combat this, increasing the use of technology for better control of supply chains and communication with customers, can help overcome problems, such as blockers and delays.
IT-based technology that provides tracking and real-time updates about progress can help pin down where materials are and when they’ll arrive.
ERJ: When it comes to the supply of end-products to customers, which IT-based technologies and services can best help rubber product makers deliver enhanced quality-assurance and traceability to customers?
RS: In terms of supplying end-products to customers, business cloud software can provide greater visibility and control efficiency in all areas of your business – sharing inventory tracking can help build trust and loyalty for an SME.
Implementing the right ERP tech can be part of a successful supply chain management strategy, enabling businesses to see and control the flow of goods and services across the company, geographies, and the entire business.
For rubber product makers, big and small, taking the time to construct an effective supply chain management strategy and investing in the right solution will deliver big rewards in both the short and long term.
ERJ: Servitisation was beginning to make inroads in the rubber & tire industry. How has Covid impacted that positive trend and what is the outlook over the (hopefully) post-pandemic next 2-3 years?
RS: With Covid-19, we’ve seen many businesses pivot their product offering, such as by changing to the supply of alcoholic hand sanitizer to meet the meteoric rise in demand. In the rubber and tire industry, it’s likely that, in order to keep products appealing and drive sales, the servitised industry offering will lean towards service-as-a-product over traditional models.
Within the next 2-3 years, this could look like companies moving away from the transactional break-fix model and into a system of preventative repair and technologically-informed management of fleets of vehicles – it reduces overheads from product wastage and also provides a more appealing service to customers who will likely have to deal with less downtime from damaged products.
ERJ: Any other advice or guidance for tire or rubber-product makers working to recover from the impact of the global pandemic on their businesses?
RS: Recovery is slow and fragile, but SMEs can help cultivate the right conditions for growth. Encouraging new and improved solutions should be a company-wide process – short courses and training for people wanting to affect change must be made widely available and built into further education courses and could be funded out of the apprenticeship levy.
This could also be coupled with a recruitment drive hiring the next generation of entrepreneurs: SMEs created 73% of all jobs following the financial crisis in 2010, and the number of SMEs grew by 23%, so it's important to drive hiring during times of adversity in order to bounce back.
ERJ: Thank you