Despite major labor and supply chain disruptions during the pandemic, the industrial sector is rapidly regaining its footing. Producers must manage greater risks while achieving long-term goals to keep up with the pace. Deloitte has identified five manufacturing trends that could assist organizations in transforming risks into opportunities and capitalizing on future growth. Here is a quick overview of the top five manufacturing industry trends to keep an eye on:
1. Workforce Shortage
Preparing for the future of work may be crucial in solving the current talent shortage
A record number of vacant positions is expected to stifle productivity and growth in 2022, while a skilled labor shortage of 2.1 million jobs is expected by 2030. To recruit and retain top employees, manufacturers should combine strategies such as retraining and rebranding their workplace. Making manufacturing jobs more appealing as a starting point could be critical for meeting 2022 recruitment targets and overcoming the industry’s public perception gap. It is conceivable to combat the ongoing flood of early retirement and voluntary departures by collaborating with more partners in a larger talent ecosystem.
Manufacturing leaders may also need to manage retention, culture, and innovation. This might include manufacturers experimenting with the US government’s Training Within Industry (TWI) program, which you can learn more about here. Flexibility in the workplace is becoming increasingly common in workplaces, and manufacturers would be wise to follow suit to better retain and attract top-notch employees. Those who can negotiate today’s workforce shortages and quick change can come out on top.
2 . Supply Chain Sustainability
Manufacturers are reworking supply chains for advantage beyond the next disruption
The supply chain difficulties are significant and are still developing. There is no denying that manufacturers encounter near-constant disruptions around the world, which raise prices and put adaptability to the test. High demand, rising raw materials, freight costs, and tardy deliveries in the United States continue to expose systemwide challenges, according to purchasing manager reports. Transportation concerns, such as driver shortages in trucking and cargo port congestion in the U.S, are expected to persist in 2022. If demand exceeds supply, customer prices are more likely to rise.
The root reasons for lengthy US supply chain instability may include an overreliance on low inventories, supplier rationalization, and the hollowing out of domestic capability. In 2022, supply chain tactics are projected to be multifaceted. As a result of digital supply networks and data analytics, it may be feasible to respond to disruptions in a more flexible and multi-layered manner.
3. Smart Factory Initiatives
Adoption of digital technologies at a faster pace could result in increased operational efficiencies
Manufacturers seeking to expand their market share and maintain long-term profitability should adopt digital capabilities throughout their operations, from corporate functions to the shop floor. For many companies, smart factories are viewed as a critical component of competitiveness. More businesses are making progress and profiting from more connected, dependable, efficient, and predictive plant operations. Emerging and increasing use cases can continue to scale up from discrete in-house technology initiatives to entire production lines or factories, provided the vision and execution are balanced correctly.
In comparison to manufacturers in other nations, the US has more room for innovation when it comes to complex manufacturing. Advanced global “lighthouse” facilities exemplify the art of the feasible when it comes to scaling up smart manufacturing. Robots, robots, and artificial intelligence can be used to further revolutionize operations. Cloud computing, for example, enables computational power, visibility, scalability, and speed. Industrial 5G implementation may also accelerate in 2022, owing to technological advancements and new use cases. Click here to watch a view recording of an event we did on how these Industry 4.0 digital technologies are transforming manufacturing. Discover more on how we assist manufacturers with integrating emergency technologies such as AI, VR/AR, cloud-based ERP/MES, AMR/AGVs, and more!
Rising threats are pushing the industry to greater levels of readiness
In the last year, high-profile attacks across sectors and governments have elevated cybersecurity as a risk management requirement for most executives and boards. Surging threats during the epidemic increased economic risk for manufacturers in the sight of ransomware. More controls are required as the attack surface expands because of the interconnection of operational technology (OT), information technology (IT), and external networks. The complex network challenges of today were not designed for legacy systems and technology of the past. Remote work risks have made manufacturers even more vulnerable to attacks.
Manufacturers should consider their cyber defenses and the survivability of their company in the event of a cyberattack. Cybercriminals can cause more harm than only intellectual property theft and financial losses by using malware that integrates AI and cryptocurrencies. Both safety and productivity are at risk due to their ability to disrupt whole supply networks. Under the present administration’s “whole-of-nation” plan to preserve essential infrastructure, a patchwork of legislation for various industries might be unified. The threat of more regulation is expected to push more industries to evaluate their crisis readiness.
5. Investment in Environmental, Social, and Corporate Governance (ESG)
Manufacturers will devote greater resources and effort to improving sustainability
The rapid emergence of environmental, social, and governance (ESG) factors is redefining and modernizing manufacturing sustainability like never before.
Capital costs can be linked to ESG ratings, prioritizing corporate financial health and competitiveness. Expectations for reporting on diversity, equality, and inclusion in manufacturing will surely rise in the coming years. Board diversity is progressing, but slowly. To recruit new personnel and meet employee expectations, most organizations are boosting the visibility of their ESG operations.
Environmental accountability is becoming increasingly important, depending on a manufacturer’s end markets. More businesses are committing or revising sustainability responsibilities and programs and quantifying efforts and results related to energy use to set and meet net-zero or carbon-neutral targets. Manufacturers may need to keep a careful watch on the ESG landscape starting in 2022, as it continues to develop swiftly. Many companies are actively complying with a complex network of reporting regulations, ratings, and disclosure procedures. However, regulators worldwide are leaning toward demanding more nonfinancial measures to be disclosed. Strategic initiatives can help manufacturers stay ahead of the curve and gain a competitive advantage.
The Bottom Line
For producers to stay competitive, they may have to develop methods to transform risks into rewards.
Adapting future work, supply-chain resilience, and digital maturity strategies may assist manufacturing in keeping up with rising economic demand. A bright outlook for the year may motivate some enterprises to think large, which might alter the fierce competition. Recent events should serve as a reminder to manufacturers to execute with agility, especially small-scale efforts that deliver value rapidly.
Manufacturers must embrace additional risks to preserve profitability and growth while accomplishing long-term goals. Today’s challenges may be tomorrow’s gains in many cases. Economic uncertainty has honed manufacturers’ instincts to anticipate the unexpected, but it has also intensified their will to sustain momentum and competitiveness.
Director of Marketing
I’m drawn to better and smarter ways of working and communicating. Many times that involves technology. Sometimes it doesn’t. Either way, work can and should be improved – continuously. I’m drawn to the mission of Flexware Innovation for these reasons. We’re committed to unleashing the potential of technology, freeing up leaders to focus on what’s next.