As the world transitions to a post-COVID-19 world, industries like manufacturing are aiming to recalibrate their processes in the search for growth amidst continued global uncertainty.
With supply chain issues gradually improving and ongoing digital and business transformation across the globe, opportunities will arise in 2023 that could help manufacturers improve, grow and expand. In particular, the world is watching closely as China emerges from lockdown.
Here are three manufacturing trends in 2023 that business leaders should be aware of, and how to address these.
Talent and skills management remains a primary concern
With the eventual loss of invaluable knowledge and skills as workers retire, companies must invest in mentoring or learning and development programmes to enable greater knowledge and skills transfer within the organisation, so the necessary information is retained.
Employee retention is a challenge, with the effects of the Great Resignation continuing to linger.
Workers today want better working conditions, which has led many employers to implement new programmes and policies to allow for higher wages, flexible hours, greater advancement opportunities and improved workplace wellness.
Given the talent crunch, it’s no surprise that in 2022, several companies outsourced manufacturing in a bid to cut costs and improve operational efficiency. This includes US-based exercise equipment specialist Peloton, which outsourced all of its manufacturing.
In a survey by Fictiv conducted in early 2022, 48% of respondents indicated they had increased manufacturing outsourcing, and almost three-quarters of respondents perceived outsourcing as positive, “citing efficiency, quality, pricing and speed as key advantages”. This trend is likely to continue as companies seek to reduce operating costs and increase focus on core competencies.
Further digital transformation and technological investment is expected
In today’s digital-first, fast-moving world, digital transformation is a necessity. In recent years, manufacturing firms have increased digital investment and accelerated the adoption of emerging technologies. Companies with higher digital maturity have shown greater resilience, as did those that accelerated digitalisation during the pandemic.
Manufacturers have increasingly invested in advanced technologies to help mitigate risk, and increase efficiency and productivity – this is not expected to change. Technologies supporting digital manufacturing are evolving rapidly, and implementing these strategically will be a differentiating factor for companies in 2023.
In particular, the focus is turning to Big Data as ever-improving technology enables manufacturers to collect more data from multiple sources, and extract meaningful information that can be used to enhance the business.
This will enable data-driven decision-making so manufacturing firms can improve sourcing, production and fulfilment to help reduce costs and better support growth, especially with sustainability in mind.
Supply chain issues persist, and further uncertainty is likely
Pressure across global supply chains might be easing. The Logistics Managers Index, which tracks transportation, warehousing capacity and inventories, improved in the tail end of 2022 – a sign that production and capacity could be on the upswing.
However, supply chain disruption is likely in the coming months. In a Deloitte survey, 72% of executives said they believed “the persistent shortage of critical materials and the ongoing supply chain disruptions present the biggest uncertainty for the industry”.
While China’s reopening holds great potential for businesses, at least in the initial stages, this could lead to more uncertainty and chaos in the supply chain, with a surge in COVID-19 case numbers slowing business and causing delays.
Businesses that are proactive in addressing disruptions will perform better than those that are reactive, and many companies have digitalised and enhanced processes and systems over the past three years in a bid to make their supply chains more resilient, flexible and agile.
Strategic proactive contingency planning and diversification will also serve to help reduce delays, maximise the profit margin, and maintain and improve customer relationships.
Growing global manufacturing in an uncertain year
2023 will be a year of change and growth but it will also present both new and old challenges. While global supply chain issues may ease, manufacturing leaders will need to continue enhancing their workforce through improved talent management, investing in digital tools and transformation, and building resilience into their operations – especially the supply chain – to help the business grow and flourish.
Learn more about INCIT and how we help manufacturers across the globe move forward on their digital transformation journey, to build future-ready organisations that can thrive in uncertain times.