The industrial CEO`s plan for the digital recovery

Across industrial sectors from automotive and machinery to aerospace and electronics companies have had to adapt every facet of their operations in response to the COVID-19 crisis, and many of these changes look set to endure long after the pandemic ends. For example, e-commerce and remote selling have become the preferred modes of doing business, with just 30 percent of B2B customers expressing an interest in engaging with sales representatives in person after the pandemic. Similarly, remote self-installations of certain technologies have more than doubled in recent months, and aftermarket services could remain largely contactless.

Supply chains and manufacturing have become top boardroom priorities. While attention has focused on the shock of the pandemic, our analysis shows that every decade companies lose, on average, 40 percent of a year’s earnings before interest and taxes (EBIT) due to a variety of shocks, such as cyber attacks, natural disasters, or geopolitical events. Digital technologies, new business models, and automation are already allowing industrials to de-risk their global networks and enhance their level of control.

These conditions have pressured companies to transform, and it’s clear that these transformations will be digital.

How companies should respond

Five approaches will fuel growth during the recovery, and each has a digital component.

Accelerate new business building Incumbents can refresh their business models by launching start-ups to take advantage of market opportunities. Digital technologies will both underpin and accelerate their development.

Position the organization for rapid revenue recovery Companies that adopt analytics-driven go to market strategies will be poised to come back faster post-COVID-19.

Increase resilience of the supply chain and procurement Greater transparency, reshoring, Industry 4.0, and automation are the keys to enhanced control and efficiency.

Capitalize on aftermarket disruption Organizations that can quickly incorporate digital technologies into their sales and operations can better respond to changing customer preferences while increasing operational efficiency.

Maximize the impact of cloud migration The cloud has the potential to help industrial companies reinvent the ways they develop, deliver, sell, and service their products.

McKinsey