Siemens Resilient and adaptive: industrial production in the "new normal" User Manual

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What does production look like in
the “new normal”? Different from
today – because the crisis ensures
that the previous maximization of
efficiency must be supplemented
with resilient and adaptive produc­tion systems. A significant contribu­tion is made by the digital transfor­mation.

Resilient and
adaptive: industrial
production in the
“new normal”

Everywhere, opportunities are currently being sought to create the “new normal.”
But what happens when a vaccine is found or a treatment becomes available?
Will we then return to the previous business as usual? No – says German futur­ologist Matthias Horx vehemently. The “new normal,” according to Horx, does
not consist of glass dividers and protective masks, but of a reconfiguration of
social systems at all levels of human coexistence – including the economy.
As a result, some familiar knowledge needs to be adapted.

siemens.com/digital-connectivity

The “new normal” does not only consist of protective masks, but also of a reconfiguration of the social systems.

Efficiency at all costs?

The classic competitive paradigm applied to companies
during business as usual: in order to be successful in the
market, a company must either realize a structural cost
advantage (be able to offer its products less expensively
than comparable competitive products) or it must deliver a
better product for the same price. In both cases, it is para­mount for companies to keep an eye on their efficiency
because even the better performing product must always
be in relation to the price. Every user would certainly
want a day-long battery life for smart phones – but if this
unique selling point costs USD ,, the group of buyers
will be extremely small. Efficiency gains arise, among
other things, from the so-called experience curve effect.
This model states that unit cost decreases significantly
with increasing production volume. According to the
model, doubling the accumulated output leads to a cost
reduction of  to % per unit.

The production systems, configured from technologies
and organizational patterns, follow this strategic criterion
of maximum efficiency. For this reason, the assembly line
production was introduced over  years ago; from the
s, the production was increasingly outsourced to low­wage countries as an extended workbench; followed by
the implementation of just-in-time as a logistics concept
and the deployment of ever more efficient (i.e., ultimately
more cost-effective) technologies. Growth is also a decisive

factor, as only in this way can cost reductions from the
experience curve effect be realized faster than by compe­titors – and only through the implementation speed can
competitive advantages be developed.

Maximum efficiency makes companies vulnerable

However, the coronavirus crisis has shown how vulnerable
and fragile systems maximized for efficiency can be, says
Matthias Horx. Just-in-time only works as long as transport
routes and national borders are open. The reduction in
the in-house vertical range of manufacture and the elimi­nation of a “second source” in favor of lower costs require
a supplier not affected by virus-induced plant closures,
etc. To be able to react better to crises, a healthier balance
between efficiency (i.e., cost minimization) and effective­ness (what actually comes out in the end) is thus needed.
For some goods, the classic competitive paradigm was
completely irrelevant during the first phase of the pan­demic – it was simply about being able to deliver at all.
But the coronavirus is only a proxy for crises of all kinds –
global challenges such as sea pollution, depletion of natu­ral resources, and climate change also fundamentally
question the previous notion of “more and more, always
cheaper.”