For most manufacturing companies, the global pandemic has served as a sobering wake-up call: Manufacturers need to be as prepared as possible for whatever global economic forces throw their way. After a brutal two years, the worst of the supply chain disruptions and workforce continuity issues appear to have subsided.
At the same time, many manufacturers are still not feeling optimistic. In fact, nearly 25% of manufacturers do not feel positive about their company’s financial outlook, according to a 2022 industry survey by the National Association of Manufacturers—a two-year low in manufacturers’ confidence about the future. To maintain stability and a growth trajectory in a post-pandemic world, manufacturers need to be following where the industry is heading, and then making strategic investments to adapt and adjust.
Let’s explore four must-know trends every manufacturing company should be watching in 2023 to future-proof their organization:
1. Attracting and retaining talent will require a proactive, multipronged strategy.
The global pandemic has decimated the ranks of manufacturing companies. The industry has experienced a nearly 60% increase in resignations compared to pre-pandemic numbers, according to a 2022 report by the Washington Post. To attract and retain talent in this climate, manufacturers will need to be creating workplaces where modern manufacturing employees want to work. In addition to offering competitive salary and benefits, companies should be looking at ways to increase flexibility with employee scheduling, add more diversity to the workforce (especially via addition of more women and minorities), and create pathways for professional development and career advancement. These benefits are on par with what other sectors are offering—and they’re a must for every manufacturing company that is looking to attract and retain younger generations. Finally, with intense focus in recent years on preventing employee illnesses, manufacturing companies will need to put more emphasis on overall employee well-being, including both overall health and work-life balance.
2. Digital innovation will reinvent the customer experience.
From 5G to big data to AI and machine learning, the technology that manufacturers need to modernize, streamline, and deliver a modern customer experience is there for the taking. Until now, however, just a minority of manufacturers have digitally transformed their operations. Just 10% of manufacturers have completed digital transformation projects and realized the benefits, according to 2022 Aptean industry research. But that trend is changing fast for the manufacturing industry.
From the digitalization of selling direct to end customers, PaaS (product as a service), investments in IIoT, and predictive resolution, manufacturers continue to move their digital operations forward to reinvent the customer experience. Selling direct to end customers means manufacturers aren’t relying solely on third party distributors to interact with their clients, but are building their own relationships by expanding their repertoire to B2B2C. With PaaS, manufacturers are able to offer more flexibility to customers by leasing products and services to customers, often via subscriptions. A bonus to PaaS? Because manufacturers can choose exactly the combination of products and services they need, they become more inclined to invest in more value-add products and services, which has the effect of accelerating the company’s digital transformation goals.
Another key area of digital innovation for the manufacturing industry is IIoT (industrial internet of things), where a variety of devices that monitor various facets of a company’s operations are connected via the internet to produce continuous data streams. Manufacturers increasingly will turn to data from IIoT devices to make informed decisions (i.e. predictive resolution) about how to drive improvements to the customer experience.
3. Supply chains will become more resilient.
Manufacturers have experienced extreme disruptions to their supply chains in recent years—a phenomenon that has forced manufacturers to rethink the supply chains themselves. First, manufacturers are finding suppliers that are geographically closer, to reduce the distance that component products need to be transported and to lessen dependence on foreign companies. This trend, known as reshoring or nearshoring, will continue to accelerate. Second, manufacturers are creating supply chain redundancies by building relationships with multiple suppliers and identifying multiple sourcing options. Third, manufacturers are reducing dependence on the third-party companies that control aspects of supply chains via a phenomenon known as insourcing, where manufacturing companies acquire and/or create their own logistics companies and suppliers to eliminate these middlemen-level barriers altogether. Some manufacturers are even going a step further, turning to additive manufacturing to digitally create their own 3D objects or models. All of these trends will accelerate in 2023 as manufacturers continue to contend with inflation, shipping delays, and factory shutdowns and slowdowns.
4. Cloud technology solutions will streamline operations.
Many manufacturers are saddled with technology debt from years of trying to update, expand, and integrate their legacy systems. Often, the all-important ERP (enterprise resource planning) system is emblematic of this technology debt: Companies cannot live without their ERP, even as its many updates and enhancements have resulted in a customized but highly inflexible system. Increasingly, manufacturers will reach their breaking point with legacy technology. Simply put, customers and employees will demand increasing improvements to the user experience that legacy technology won’t be able to deliver. At this juncture, cloud-based technology solutions will become the must-have, gold-standard alternative. Unlike legacy systems, cloud technology runs on out-of-the-box simplicity and standardized best practices; customization is discouraged to avoid systems quickly falling out of date. And best of all, once cloud technology solutions are implemented, manufacturers can begin generating the data they need to drive meaningful, informed improvements to their operations.
For most manufacturers, the disruptiveness and uncertainty of the past few years is here to stay. But that doesn’t mean manufacturers cannot adapt to this new normal. As manufacturing companies consider how to make strategic investments in 2023 to pivot and adapt, they should recognize that they’ll need to develop a proactive, multipronged talent recruitment and retention strategy, to reinvent the customer experience via digital innovation, to make their supply chains more resilient through new ways of doing business, and to streamline their operations using cloud technology.
Simplus specializes in helping manufacturing companies thrive in a world dominated by constant disruption and uncertainty. To learn more about how Simplus helps manufacturing companies make strategic investments in their future, please reach out to us today. We look forward to helping you create a strong, resilient organization that can weather all of your challenges ahead.