We have been hearing about the promised value of Industry 4.0 for several years. 85% of businesses agree on this potential. However, manufacturing productivity has been flat for the last decade and many industry digital initiatives are stalled. Many manufacturers have not started initiatives and many others are in assessment mode with a few pilot projects.
Some of the challenges for manufacturers are new:
#1. Uncertain demand rebound for some goods
Although manufacturing is not on the top five on the list of impacted industry jobs during this pandemic, it is still showing a big impact at number six on the list. However, it is not a question of whether it will bounce back or not, it is more a question of when and how fast. We hope manufacturing will be one of the sectors to bounce back quickly from the impact of the pandemic.
#2. Higher productivity is needed to reshore
One of the encouraging trends is reshoring. There are several reasons for the shift from offshoring to reshoring. Economies in many go-to offshoring countries have grown stronger, resulting in increased wages for their residents. In the locations where labor is still inexpensive, the infrastructures often cannot handle complex manufacturing operations. Industry is also looking to reshore suppliers in critical medical and food supply chains where reliance on imports surfaced big issues during this pandemic.
To sustain the reshoring trend, manufacturers must continue achieving increases in productivity using new technologies like smart manufacturing and robotics to automate many of the processes that used to require intense human labor. All in all, this resurgence in reshoring will lead to an increase in made in the U.S.A products in the future.
But prior challenges for manufacturers are still there:
#3. Global competitive pressures
The U.S. is no longer on the top of the list of manufacturing most competitive countries when you consider innovation capability, health, skills and business environment. What will it take for U.S. companies to reclaim and hold the top spot? Manufacturers will have to shift their focus to advanced technologies and smarter talent for greater competitiveness.
Shifts in sourcing and shipping logistics are constantly evolving throughout the manufacturing industry, especially as a result of the COVID-19 pandemic. The ongoing trade war between China and the U.S. rages on, causing the short-term outlook for domestic companies to be uncertain. Manufacturing supply chains will need to be more resilient in adapting to potential future disruptions.
Manufacturers should focus on delivering the best digital customer service experience possible and increase their efforts toward digital projects that build agility and scalability to help to manage risk in supply chains during disrupted and uncertain times.
#4. Exponential pace of technology innovation
From sensors, to automation, artificial intelligence, robotics and cloud computing, the challenge for many manufacturing companies is keeping up with the rapid pace of technology innovation. Not only to use it in their products but also to leverage it in their processes and customer services.
Newer industrial automation equipment incorporates sensors, controllers, computers, and network connectors. The use of robotics including robots working alongside humans is expected to triple or quadruple the next five years. Yet, integration of equipment to manufacturing systems is still too expensive for many small and medium manufacturers.
Many manufacturers understand the important role technology plays, yet many also feel they are not providing their team the best tools for bottom-line success. Thus, there is often a disconnect between understanding the need for new technology and actual implementation and adoption.
#5. Increasing complexity in products and supply chain
Over the last years most manufacturers have seen their products become more complex. Not only are products increasing in complexity, but many organizations are not equipped with the right tools to manage the intricacies of complex product development and manufacturing.
Product designs are getting more intricate with new materials, more parts and an increasing number of electronic components, microprocessors and embedded software. Not only are the number of components increasing, parts are sourced from multiple vendors and are now much smaller and more technologically advanced, adding another layer of complexity to the product and its manufacturing.
Organizations need information systems to help with these complexities in the product lifecycle starting with design, through supply chain and manufacturing operations. Modern supply chains are dynamic with a lot of change taking place, a lot of stakeholders involved, and increasing requirements for data exchange for higher collaboration, transparency and risk management.
#6. Talent pool shrinking for manufacturers
During the past several years, the skills gap has been top of mind for U.S. manufacturers. We can forecast that the demand for talent in manufacturing will come back in the next few years, due to retiring baby boomers and reshoring trends. Many manufacturing jobs were going unfilled over the past few years and that trend will probably pick up again once manufacturing starts hiring again.
Even in an age of automation and robotics, skilled workers are still needed for their problem-solving capabilities, to fill managerial positions and to perform analysis. Baby Boomers are aging and retiring and there are simply not enough skilled workers to fill the positions they’re leaving. To fill the widening skills gap, manufacturers will need to train existing workers to perform skilled tasks and get creative in their efforts to attract workers.
#7. Bombarded by vendor’s varied propositions
In an ever-accelerating digital era, businesses feel pressured to meet rapidly changing customer demands, reinvent or evolve themselves, and beat competitors to the punch by being the first to provide faster and better solutions. To thrive in this new data-rich era, manufacturers want to adopt new technology at the plant floor and mine their data into smart software systems to continuously monitor, analyze and optimize the use resources in their complex operations.
However, there are many technology options to evaluate and many vendors putting forward great sounding value propositions for big data, artificial intelligence, IoT platforms, workflow tools, PLM, ERP, MES, QMS, EAM, and supply chain management systems. In the quest to reap the benefits of these technologies, organizations may focus too heavily on the hype surrounding specific technologies, as opposed to whether the innovation can help solve their problem or business strategy.
It is essential that organizations put a good plan together that focuses on achieving business goals, adapting to marketplace changes, and taking significant steps towards achieving their long-term Smart Manufacturing vision.
Conquering the barriers holding back adoption of Smart Manufacturing technology could create a competitive advantage, while simultaneously helping to battle competition from overseas and the manufacturing skills gap. In future articles we will discuss strategies for conquering these challenges.
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