Businesses equipped with digital innovations fared best and will be faster to return to pre-pandemic production levels
The COVID-19 pandemic took a heavy toll on many manufacturing companies. And if recovery patterns follow those established after the 2008 financial crisis, it may take up to three years for most manufacturers to match pre-pandemic productivity levels. However, those businesses that modernized their systems with digital, cloud-based technology prior to 2020 fared much better during the pandemic in the United States. As a result, they will most likely enjoy speedier recoveries as well.
The reasons for this difference are obvious when you consider the benefits of transitioning to digital-based business services and operations. Manufacturers that made these investments pre-pandemic were well positioned to make the transition to the remote working world when it became necessary. While it may not have been possible to have an entire plant floor working remotely, managing some of the operations and many of the financial elements of a manufacturing business can be accomplished from anywhere in the world with the right technology in place.
While the following technology shifts were already occurring prior to 2020, the impact of the pandemic will accelerate their adoption. Three key technologies include:
Automated Accounts Payable (AP) Processes in the Cloud
Many who think of an Accounts Payable team think about a back office filled with professionals who are great at numbers and make sure the “books are balanced.” Yet, these professionals can do their jobs anywhere. Consider that it costs an average of $11.76 to process a single invoice, and 70–80% of invoices in the United States are still paper based, according to the Institute of Finance and Management (IOFM). Those that switch from paper to digital invoices save $5.46 per invoice. And during the pandemic, the ability to remotely keep vendors paid and employees on the payroll made running the business — and keeping the lights on — possible.
Saving money is a clear benefit, but e-invoices are not required to be a part of a standard form to function effectively. As a result, your “AP in the Cloud strategy” offers no operational hurdles other than setting and following an internal process that in little time becomes second nature to your team. This can also allow your firm to hire Accounts Payable professionals from anywhere — a benefit that may become increasingly important as the pandemic wanes.
Digital Forms
You might be surprised at how many manufacturers still rely on paper forms. They can cause operational headaches and inefficiencies, yet they are still commonly used in many organizations. In a post-pandemic world with many customer interactions occurring virtually, using these paper forms can cause process bottleneck and even lost revenue.
For example, many customers have become accustomed to signing contracts electronically or receiving and reviewing purchase orders online. Working with vendors can be easier as well. Simply put, anything that requires a signature or approval can be turned into a digital form that helps your firm to operate more efficiently.
Cloud-Based Document Management
Manufacturers with cloud-based document management didn’t suffer the same problems when shifting employees to remote working environments, because they did not need to change the ways they accessed and used data in business processes. There was less friction and fewer challenges.
Having your records in the cloud can allow you to provide information to customers, vendors, and partners efficiently and immediately. Employees can quickly look up orders the same way they would on an internal network, without relying on remote access to that network. Cloud-based document management is not a backup — it is a primary benefit that pays for itself in as little as a few months to a year on average for manufacturers. Many operations that were equipped with this capability before the pandemic barely missed a beat throughout the crisis.
Digitizing your files in a dynamic cloud environment is essential. Think of every client you ship products to and every supplier who sends you component parts or raw materials. In an evolving world, maintaining secure remote access to your firm’s documents, forms, and financials will limit wasted time, while positioning you as an industry leader in customer service.
Cloud-based document management supported with digital forms and process automation is not a trend or a fad for manufacturers. The pandemic was a reminder that these essential technology tools are essential to good business practices and outstanding customer care.
HK Bain is the Chief Executive Officer and President at Digitech Systems. Learn more at www.digitechsystems.com.
