Safeguarding material supply and building up business structures able to cope with crises and rapid changes are increasingly important.
”Companies that have completed their risk analysis are better equipped to manage crisis situations”, says Martin Kurdve, researcher at RISE.
Industrial production today relies on the global flow of materials and commodities where logistics is key. When everything runs smoothly, it is a cost-effective approach that is difficult to compete against– but when something in the chain fails, the effects spread rapidly, which, in the worst case, can lead to production stoppages and customers who are left without goods. Rapid changes in the market can also result in immense difficulties for an industry.
An example of this was evident during the Covid-19 pandemic when the demand for certain types of hospital materials and personal protective equipment became so great that hospital and healthcare staff, i.e. those who needed the equipment the most, did not have an adequate supply. The pandemic has had consequences for many industrial companies, which now have major problems in obtaining materials for their production. The vulnerability also became clear in the context of the war in Ukraine, which had a major impact on energy supplies with elevated prices for gas and oil, but also on the supply of certain metallic elements and minerals important to the green transition.
Industry can support society
An issue that has always been important, but which has become increasingly more pertinent in recent years, is how Swedish industry should be better equipped to deal with similar or worse crises, such as wars and natural disasters, and what role it can play for the rest of society.
The Covid-19 pandemic showed that many industrial companies have both the opportunity and the willingness to help when essential public services are unable to function, Martin Kurdve, implies.
“There is very strong willingness in the industry to support society – to be part of a well-functioning Swedish society. Take the example of personal protective equipment, where many larger companies that furloughed workers and received financial support from the state, quickly and voluntarily provided staff to make protective visors, aprons and other things that were needed.” he says.
“Many industrial companies in Sweden are engaged in contract manufacturing, and their strength lies in being able to adapt and convert their production. We have quite a few small and medium-sized companies that are agile and adaptable.”
Shortage of emergency reserves hot issue
During the initial period of the pandemic, a dominant issue related to Sweden’s shortage of emergency reserves. This was in contrast to Finland, which was able to use protective equipment from its emergency reserves, thereby avoiding the material shortages experienced by Sweden.
“Finland had a considerably lower infection rate compared to us,” says Kurdve. “If we had had the same level of emergency reserves, we would have coped for a few weeks, but then we would still have had to find a new supply chain as the consumption of these different materials increased between two- and fifty-fold.”
Even though he believes that one does not exclude the other, Kurdve says that adaptable and rapid transition in industry is often preferable to maintaining large emergency reserves:
“Especially when it comes to these disposable materials, face masks or protective aprons, it’s better to have good processes in place to start production instead”, he says.
“It’s important to have adequate communication with subcontractors and the subcontractor’s subcontractors, so as to create an information chain. It’s also important to decide what information can be shared and that no business-critical information can fall into the wrong hands”, says Martin Kurdve.
It is important to have adequate communication with subcontractors and the subcontractor’s subcontractors
A concept for a flexible emergency supply
A key capability is to achieve a robust emergency supply where the old models, such as companies of military importance and emergency reserves, need to be modernised and supplemented with new, smart and cost-effective solutions. Against this background, MSB last year launched a strategy for how emergency supply needs to be developed in close collaboration between companies and public services.
Experiences from the pandemic led to, among other things, four large industrial companies; ABB Sweden, Saab, Volvo Group and Mölnlycke initiating a new idea, a concept for a flexible emergency supply. RISE collaborates with MSB (the Swedish Civil Contingencies Agency), these four industrial companies and the Swedish Armed Forces in the development of an analysis and overall mapping for flexible preparedness.
“It's a way to prepare Sweden for the next crisis”, says Benny Lyvén, research and business developer at RISE, who is also part of the working group on flexible production.”
“Partly, it’s about how Swedish industry can help society gain access to critical products, but also how the system should work with the various actors. Something that was clear during the COVID-19 pandemic was that industry works one way, healthcare in a second and the authorities in a third. We are now looking into how we can get the whole thing to work better in a crisis”, Benny Lyvén continues.
The area of sustainable production includes safeguarding material supply and possessing a production system that is resilient and stable and that can handle variation
Availability of labour is critical
Besides materials and commodities, access to labour is also important in the event of war.
“In that case, we would need to train the workforce quickly, and this is something for which we have seen significant opportunities for improvement. For example, learning through visual, digital work specifications would be a possibility. Projects pursued by RISE have shown that this makes it possible for people who can neither speak the Swedish language nor read and write to handle a high-quality job in an industrial environment”, says Martin Kurdve.
RISE has been working for a long time with issues concerning how companies and authorities can become more resilient when faced with crises. with the training programme Production Boost being one example.
“There we coach companies to become more robust and agile and to strengthen their ability to adapt,” explains Kurdve.
RISE also has expertise in how companies can safeguard their production and cope with rapid and unexpected changes.
“The area of sustainable production includes safeguarding material supply and possessing a production system that is resilient and stable and that can handle variation,” says Kurdve.
The first step for those seeking to increase their knowledge about how a company can better equip itself is to join one of the production clusters run by RISE in collaboration with universities and companies.
“It’s a meeting place for manufacturing companies in Sweden. We hold seminars, arrange research projects and spread knowledge about these issues.”