Shrouded epidemic in China manufacturing

The new crown is becoming a global epidemic of stress tests, along with the rising number of people around the world crown new virus diagnosed, global economic growth is facing uncertainty is also increasing. China is the earliest outbreaks, after a more than one month sort of “shock” the strict prevention and control techniques , a nationwide outbreak has been basically brought under control, we will now begin the focus shifted to the recovery of production and life. A month ago, we impact of the epidemic on the Chinese manufacturing sector did predict and analyze this in the current situation, we feel the need to do an update on the impact of China suffered in this incident, lessons learned, as well as epidemic We may share our thoughts affect global manufacturing caused by right.
● impact on the economy: the economy will have fallen sharply in the short term, then rebounded after the end of the epidemic, a large probability will not cause huge lasting impact on the economy. The effect of the epidemic prevention and control of local government is the key. ● impact on the supply chain: It may have a profound impact on business productivity and supply chain network layout, especially multinational global distribution will further enhance their disaster response mechanisms and supply chain information management. ● impact on manufacturing: manufacturing companies, short term decline in revenue and profit, as well as small and medium enterprises will be poor cash flow under more pressure. In the long run, the epidemic has exposed some of the problems and risks that existed before the manufacturing sector, the manufacturing Forced to reform. Further enhancements include automation, information technology level, improve the logistics system. 1 economic level economy will have fallen sharply in the short term, then rebounded after the end of the epidemic, a large probability will not cause huge lasting impact on the economy. The effect of the epidemic prevention and control of local government is the key. China is the first country to be affected by new outbreaks of the crown, is so far the most affected areas. Since the outbreak comes a point in time during the “Spring Festival”, coupled with the early stages, it features for this new type of coronavirus, to understand the impact of mortality and are still very limited. Therefore, the state adopted a very strict control measures. From the current situation, the epidemic is being brought under control very well, but the high economic costs, barely a quarter of domestic growth, which is evident from the National Bureau of Statistics in February: February 2020 , manufacturing PMI was 35.7%,Last month, down 14.3 percent; at the same time, the composite PMI output index was 28.9%, down 24.1 percentage points from last month, China’s production and business activities slowed down significantly. Moreover, as the epidemic continues to spread across the globe, external demand will decline, it will further drag on economic recovery. From the 2003 SARS outbreak and this whole process of China’s new crown epidemic, the development of the disease could be as follows roughly the time the law: from the government to take strict control measures to avoid crowds and a wide range of flow time counting about T + 2 Zhou CONTROL ENGINEERING China Copyright , high growth started to slow down the momentum of confirmed cases, T + a month or so CONTROL ENGINEERING China Copyright , the basic new cases dropped to very low levels. At this time, the production began to gradually recover Control Engineering Copyright , then the epidemic has been effectively controlled one month after the obvious about time, production is expected to recover to 80 to 90% of normal levels. The effect of the epidemic prevention and control of local government is the key. Under the premise of effective prevention and control of epidemic in the whole round of two to three months to the end, to restore normal social order. 2 levels of the supply chain may have a profound impact on business productivity and supply chain network layout, especially multinational global distribution will further enhance their disaster response mechanisms and supply chain information management. Regardless of today, the new crown epidemic has become a “global event”; even in the early stages of the outbreak, it is not only China alone challenge, but triggered a “butterfly effect” global supply chain. Electronic industry and the automotive industry as an example, Apple in the global total of more than 700 production suppliers, of which nearly half are in China, the company announced on February 18 due to the impact of the epidemic and its products, production will fall by 10%. And the automotive industry, the impact even more, according to UBS data show that in 2019 the proportion of China’s auto parts share of global production in the automotive industry is about 27%, at least 1200 auto parts manufacturing in Wuhan enterprise. As early as the beginning of February, China supply chain disruptions caused by Japan and South Korea and other countries have been part of car prices and cut production. Some US and European car prices even at the costAir China cost components to an emergency. Although the center of the epidemic as Hubei, the overall size of the manufacturing sector accounted for only 4% of the country, but it is one of China’s four major automobile production base in the entire automotive industry, Hubei is not isolated existence, its supply chain system has extended to national and even global. Due to a serious epidemic, production recovery time takes longer, here’s auto-related companies have been faced with the problem more than a 2 to 3 per month to the loss of supply also includes the supply chain upstream and downstream enterprises, overseas orders delivery, etc. really affect the situation as a whole. It also led to further examine the supply chain management and distribution issues. Industrial relocation or transfer? This is the face of many companies in this particular case would do considerations. 2011 Japan earthquake shattered parts of the supply chain enterprises migrating capacity appeared. But the decision capacity of transnational migration is not an immediate do need to consider many factors, including the countries of immigration to achieve production capacity, local market capacity, need to invest time and construction funds, local policy, infrastructure and logistics, labor costs, skill levels and many other factors. In contrast, China’s supply chain in the automotive, electronics and other industries here makes perfect industrial chain already has a very high efficiency and flexibility, coupled with China’s own huge market, relatively stable policy and good infrastructure and labor skills engineers and resources, making these industries in China still has a high supply chain advantage. At present, some industry Qianzhuan to Southeast Asia, the more is the transfer of certain production processes, or is outside China supply chain network extension. Compared to industry transfer of businesses to respond more easily in a relatively short period of time could be considered is the establishment of disaster contingency plans. Quickly through various channels at a critical time the possibility of supply strand breaks caused by disasters solution, which may include different areas of capacity and inventory deployment, look for similar products as a substitute for resource record, as well as multi-vendor development and many more. Although all these companies will undoubtedly produce more of the additional cost, but to better protect the security of the supply chain. At this point, the layout of the global multinational production capacity is relatively more capable of room for maneuver. In the long run, the establishment of the information chain will further enhance the resilience of the supply chain: ● grasp and share critical information materials, logistics, inventory, production, capital and other supply chain through information systems and management processes. ● marketWe need more dynamic tracking and forecast evaluation, adjusted according to demand tact. ● The sell-side and supply chain coordination, in the system to adjust the production plant. This will be mentioned below our manufacturing aspects of information technology to improve the same purpose. 3 manufacturing level, the epidemic has exposed some of the problems and risks that existed before the manufacturing sector, the manufacturing Forced to reform. Further enhancements include automation, information technology level, improve the logistics system. Epidemic for manufacturing enterprises, the impact of a decline in short-term revenue and profit. For example, in China stringent control measures, a large number of manufacturing companies shut down, expected to lose 1 to 3 can produce. And the production of recovery is not easy, and even return to work could face recruitment difficulties, inadequate supply of raw materials, transportation difficulties, funding and other issues, operating costs remain high. Small and medium enterprises as well as cash flow is not sufficient in this enterprise will be under greater pressure. For good original operation, high capacity utilization companies, the concern is to restore production capacity to catch up, but for some companies the edge in terms of the market, the epidemic will accelerate the phase-out process, market concentration further improved. In a recent interview with domestic enterprises, the number of enterprises mentioned epidemic may push automation, intelligent speed to reduce dependence on people. One obvious example is the early start of the epidemic, even in the center of the epidemic – of some of the semiconductor plant in Wuhan and panel makers are still able to maintain relatively normal production, which it has benefited from the industry itself very high level of automation; and similar 3C manufactured in such a labor-intensive industry is almost completely shut down, restricting the movement of persons to return to work now greatly enhance the impact of rate. When the surrounding Southeast Asia began to undertake a large number of relatively low value-added manufacturing sectors, China’s manufacturing enterprises will inevitably need to upgrade to higher value-added sectors, which is bound for the degree of efficiency and lean manufacturing, higher demands, by increasing the level of automation to reduce labor usage and the chance of error, with the assistance of machines to replace manual or almost the entire manufacturing industry must pay more attention to the issue. On this basis, the production of intelligence information has been mentioned again, more large-scale, involving complicated industrial chain and large-scale business management of enterprise needs more attention to the construction in this area, to be able to rational planning according to market changes different combinations of plants and product production and supply planning and timely transmission of information to the upstream and downstream enterprises and logistics systems. exceptTo invest and improve the enterprise itself, which also needs the support of the logistics system and related infrastructure. Interestingly, the Chinese government in early March at a meeting held on decision-making put forward the concept of “new infrastructure” of. The new infrastructure refers to the force in infrastructure technology side, mainly includes 5G infrastructure, UHV, intercity high-speed rail and intercity rail transportation, new energy vehicles charging pile, large data centers, artificial intelligence, industrial Internet and other seven large areas related to communications, electricity, transportation, digital and other key industries and people’s livelihood, in essence, can be understood as digital information infrastructure …… including 5G, artificial intelligence, the Internet industry, things new infrastructure as the representative of all It is able to support the development of traditional industries to the network, digital, intelligent direction information infrastructure. Although about , the total new capital infrastructure, compared with only 24% compared to conventional infrastructure investment is CONTROL ENGINEERING China Copyright , but it will contribute directly related development of the industry, good information and intelligence. China in the course of this epidemic prevention and control, the more the late disclosure of information transparency and timeliness of the better emotion of fear gradually weakened, the higher the efficiency of the overall prevention and control. This organization and management of the enterprise is very similar. The larger size of the organization, the higher the degree of information technology, the speed and responsiveness of organizations will be stronger and faster decision-making, production and supply system can also play a more significant role. To the global epidemic of government, industry, companies have brought unexpected difficulties and challenges. But as we said at the beginning of the article CONTROL ENGINEERING China Copyright , it is a short-term impact of the epidemic, all of this will pass. When the epidemic to calmly and efficiently respond after the end of the epidemic, examining problems and risks, we will see new opportunities and hope.


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