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How the economics of innovation impacts manufacturing

May 4, 2022 | Admin, Latest News, Manufacturing

Where is the place for data in manufacturing operations? How does automation play a role in channeling that data in a usable way? What should manufacturing do to account for its ongoing labor crisis? And how can manufacturers stabilize and innovate at the same time to make room for growth? With last month’s NAM Leading Edge Growth Forum, answers to all these questions (and more) were given in abundance with experts from all over sharing their firsthand experiences implementing new technologies and uncovering the best path to success. 

The keynote session, Economics of Innovation, was delivered by Chad Moutray, Chief Economist at NAM, and Shawn DuBravac, Phd, Futurist, and President at Aviro Institute. Moutray and DuBravac looked at how the manufacturing industry has had decades of stubborn productivity growth since the Great Depression. But, especially, after years of organizations learning to be resilient in the face of supply chain issues and still maintain healthy R&D, they see a fast-approaching productivity boom on the horizon. With this incoming rebirth of manufacturing output, it’s critical that manufacturing organizations across the board rethink the way they do things in both good and challenging times. 

Based on this keynote session tailor-made for competitive manufacturers in today’s challenging market, viewers walked away with three guiding principles to help manufacturers channel their existing and future resources and become truly innovative organizations: rethinking labor, adopting automation, and preparing data for the long-run. 

NOTE: If you missed the original event, sign up for the follow-up webinar, Thursday, May 19, where manufacturing leaders will join us virtually once again to discuss these pivotal topics!

 

Rethink how labor resources are used and empower employees

It’s not news to anyone close to the manufacturing industry that labor has been a problem for years. And the pandemic has only exacerbated an already dwindling talent pool as workers have left to care for children at home and immigration has decreased dramatically. For every 100 job openings, there are only 56 people available to fill the positions, according to NAM and Aviro Institute. Because of this approximately 45 percent of manufacturers have had to turn away work because they simply didn’t have enough workers to do the job. 

To combat all this, manufacturers must rethink their approach to labor and invest in existing employees so they are more empowered to take on greater responsibilities. Training and upskilling staff, alongside ongoing investment in technologies that lighten the need for manual human labor, will remedy the situation for many organizations. Manufacturing decision-makers also need to be prepared for more negotiating conversations surrounding salary, flexibility, and employee benefits—workers understand they are highly sought after in today’s market, and they will expect a compensation package that matches that status. 

Additionally, manufacturers can consider an overall reimagining of what they do or how it’s done: do all these job openings have to be done in-person or on the factory floor? How could hybrid or remote positions open up the talent pool more widely? Or is there even a new source of revenue you can explore to become more future-proof—software or services you can invest more heavily in rather than mass production alone? Experimenting with the answers to these questions are all ways manufacturers have been finding a way out of the labor crisis, and, in many cases, actually becoming more innovative than they ever were before. 

 

Adopt automation technologies for a bigger competition pool  

For both workers and customers, the competition pool has gotten much larger for manufacturers. Not only are you fighting for employees with other major industries but your customer base isn’t necessarily as clear-cut as it used to be. With the advent of IoT, robotics, and automation technologies in business, the lines between manufacturing and services and software are blurring, and traditional manufacturing organizations have to pivot quickly to stay relevant amongst such dynamic and wider competition. 

The widely praised customer experiences of Amazon, Starbucks, and the like are not just cross-industry examples to look up to in manufacturing—software and services organizations are increasingly your direct competition. Companies that heavily adopt automation technologies throughout their processes are gaining more customers as they gain greater control over the entire product/services lifecycle. If manufacturers do nothing, this trend will leave them obsolete in the face of other companies that have automated so well they can meet all customer needs from start to finish. 

But that’s not the only fate. Innovative manufacturers, like GM, have gotten ahead with automation technologies, reinvented their mission, and reaped the benefits of a wider customer base and better profit margins. Among its many brand enhancements in recent years, GM has broadened its scope to include electric delivery vehicles and software. Not only is GM entering the sustainability market with this pivot, but it’s also extending further into software development—ultimately giving it a greater slice of the customer pie. 

Manufacturers of all sizes and specialties can pivot just like this. Whether it’s by leveraging sensors in equipment and using 5G to speed up wireless tech agility or by adopting a best-in-class automatic quote-to-cash tool for streamlining sales and unlocking new revenue opportunities, there are countless ways to automate in the industry and use that automation to pivot your brand into something bigger and better equipped for today’s competitive landscape. 

 

Prepare to use your data for long-term strategy

Big data has made a splash in all industries, but many manufacturers are just starting to figure out how to harness the power of this new quantity and quality of data in their organizations. On many factory floors, this job typically falls on the shoulders of a COO or plant manager—someone who is busy doing their day job and keeping operations running but also trying to strategically plan for the future with the influx of customer data. We’re seeing manufacturers start to bring their data back in-house and redeploy it into their home system rather than trusting it to other partners or outside environments. This is a great sign that manufacturing as a whole is pivoting to using data more strategically and with a long-term vision in mind. 

Some of the top data use priorities in the manufacturing field include variations on a single theme: becoming customer-centric. Whether it’s using data to drive more relevant loyalty and rebate programs or putting their data to use in the customer lifecycle by streamlining touchpoints and customizing interactions, manufacturing has many possibilities for making its data work for them. 

However your organization decides to leverage data for the future, keep in mind that the true value of manufacturing customer data is in the long run: while certainly there are actionable steps to take with the data you have now, building up decades of data to guide your long-term strategy is what will distinguish the top manufacturers of the future from the rest. 

 

If you’re interested in freeing up limited resources or investing in more automation and dynamic data management opportunities for your manufacturing organization, reach out to Simplus. We are an experienced advisory, managed services, and implementation consulting partner that can help you find your way to innovative processes. 

 

 

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