The manufacturing sector covers such a broad spectrum of products and processes that any discussion about industry trends must take place at a very high level. One of the megatrends that has been driving manufacturing for over a decade is digitization. Technology writer Dennis Scimeca (@DennisScimeca) explains, “Just like manufacturers that failed to switch from manual to automated processes during the Industrial Revolution found themselves obsolete, so it goes with the digital era. Manufacturers that are not digitally transforming, learning how to network their shop floors and gather data for long term strategic assessments and planning are going to find themselves falling well behind manufacturers that do so.”[1] This digitization trend is often called “Industry 4.0,” a term coined in Germany in 2011.
BCG analysts explain, “Today, another workforce transformation is on the horizon as manufacturing experiences a fourth wave of technological advancement: the rise of new digital industrial technologies that are collectively known as Industry 4.0.”[2] And McKinsey & Company analysts, Cornelius Baur and Dominik Wee, define Industry 4.0 as “the next phase in the digitization of the manufacturing sector, driven by four disruptions: the astonishing rise in data volumes, computational power, and connectivity, especially new low-power wide-area networks; the emergence of analytics and business-intelligence capabilities; new forms of human-machine interaction, such as touch interfaces and augmented-reality systems; and improvements in transferring digital instructions to the physical world, such as advanced robotics and 3-D printing.”[3] Below are some of the trends experts believe will drive manufacturing during this coming year.
Manufacturing Trends
Labor Woes. Like many other sectors, manufacturing is suffering its share of labor woes — especially when it comes to the so-called Great Resignation. Journalist Heather Long (@byHeatherLong) reports, “Manufacturing has weathered the biggest surge in workers quitting — a nearly 60 percent jump compared with pre-pandemic. No other industry has seen an increase like that.”[4] She adds, “Job openings are near record highs, and there aren’t enough workers to fill them. This is the best job seekers’ market ever recorded. And the manufacturing sector overall looks strong. Workers understand this. There have been about 140 walkouts at manufacturing businesses since the pandemic began, according to Payday Report, which tracks worker uprisings. Manufacturing workers want higher pay. But they also want respect, a safe workplace and more flexible schedules, and they’re willing to walk out if they don’t get it.”
Artificial Intelligence (AI) and Machine Learning (ML) Implementation. Anne-Marie Scott, Director of Manufacturing & Industrial Sales at Google Cloud, asserts, “In the new year, it’s paramount that businesses utilize tools to better manage supply chain processes. AI and ML systems, for example, enable scenario planning, demand forecasting, inventory positioning and overall greater awareness. By gleaning insights from data, suppliers and manufacturers can gain a more comprehensive understanding of their inventories and resolve issues before they arise.”[5] Max Versace (@maxversace), Co-Founder and CEO of Neurala, adds, “We will continue to see the acceleration of AI adoption in manufacturing — from predictive maintenance to product quality assurance to demand forecasting to inventory control — all while facing the challenge of workforce scarcity, with or without a pandemic. Peak change will happen when AI access finally becomes a low-or-no-code endeavor for manufacturers.”[6]
Increased Automation. According to Paul Baldassari (@P__Baldassari), an Executive Vice President for Strategic Programs and Asset Management at Flex, increased automation will go hand-in-hand with greater digitization. He told Scimeca, “In 2022, I predict the industry will see an influx of investment in automation and digitization. While these tools aren’t silver bullets, automation can help ease labor concerns, adapt to unbalanced demand cycles and empower workers to up-level on more critical tasks. Likewise, digitization will help organizations increase visibility into processes, scheduling and the supply chain to predict problems before they occur and help make better decisions in real time. The technology has proven its value, and 2022 will be the year of mass adoption across the industry.”
Rise of the Smart Factory. Jason Bergstrom, a principal with Deloitte Consulting LLP, predicts, “Manufacturing will move from occasional smart factory use cases to full-scale smart factory adoption.”[7] He explains, “Before now, a true smart factory with integrated solutions has been elusive due to gaps in offerings without providers to meet all of the technology needs to make smart factory a reality. But technology has now become more cost-effective with hundreds of start-ups entering the game. Technology and solutions such as video analytics, artificial intelligence, cybersecurity, autonomous mobile robots and command centers that used to require custom and often home-grown solutions are now offered by multiple providers. … Now that we have integrated smart factory solutions, I predict we’ll see a big evolution from organizations having a couple of smart factory components to whole production environments becoming smart.”
Digital Twin Adoption. Scimeca writes, “With real-time digital threads, supply chains, factory floor setups, and product maintenance data, organizations can create a digital twin of an entire business. This allows full-tilt simulation of everything, tracing the interconnectedness of every step in the chain and allowing manufacturers to experiment with changes and predict whether or not it’s worth adjusting a process.”
Nimble Supply Chains. Supply chain snafus have been so prevalent this past year that they have constantly made headlines. In reaction to these snarls, Tzahi Rodrig, Co-Founder and Chief Operating Officer at Bright Machines, insists manufacturers will create more agile supply chains. He writes, “In order for global manufacturers to better serve their customers around the world, they most likely will need to have multiple factories, which in turn will have regionalized supply chains tailored to serve them. Having factory capacity distributed across the globe also helps ensure manufacturers have protection in case of a global shock to the system. The idea here is to have plenty of built-in redundancy and no single point of failure. Beyond resiliency, these nimble supply chains allow manufacturers to better serve their customers. This is particularly important given recent research that found that more than 50% of consumers said they prefer customized purchases, with the majority indicating they’d be willing to pay more for a product that is tailored to their preferences.”[8]
Concluding Thoughts
We are all familiar with the old adage, “Necessity is the mother of invention.” The past couple of years have certainly witnessed a manufacturing sector in need of solutions. Rodrig writes, “There will always be disruptions and challenges, but these lead to innovation — and that’s where things get exciting. The best way for the industry to capitalize on the next generation of innovation is by embracing factory digitization.” Bergstrom agrees manufacturers may embrace smart factory technologies; however, he believes they may be motivated more by anxiety than advancement. He explains, “The Fear of Missing Out will be a big driver of smart factory adoption in 2022. Organizations are increasingly understanding that avoiding digital transformation is not an option and that they may no longer be competitive if they don’t jump in now. They will be more open to big changes that can deliver big outcomes.”
Scimeca suggests that manufacturers who feel overwhelmed should take a deep breath. He concludes, “Trying to absorb at once all the possibilities offered by digital transformation may feel overwhelming, especially to manufacturers that have yet to make their first leap. Just remember that this is not an all-or-nothing journey. Taking one step to address a single pain point with a technology-based solution can create the enthusiasm your organization needs as the benefits become clear. The accompanying buy-in opens the doors to all the transformative possibilities.”
Footnotes
[1] Dennis Scimeca, “How Manufacturers Will Digitally Transform in 2022,” IndustryWeek, 5 January 2022.
[2] Markus Lorenz, Michael Rüßmann, Rainer Strack, Knud Lasse Lueth, and Moritz Bolle, “Man and Machine in Industry 4.0,” bcg.perspectives, 28 September 2015.
[3] Cornelius Baur and Dominik Wee, “Manufacturing’s Next Act,” McKinsey & Company, 1 June 2015.
[4] Heather Long, “Why manufacturing has seen the biggest spike in workers quitting,” The Washington Post, 9 January 2022.
[5] Anne-Marie Scott, “What lies ahead for the manufacturing & supply chain sectors,” Manufacturing Global, 6 January 2022.
[6] Max Versace, “Manufacturing Predictions for 2022,” IT in the Supply Chain, 18 November 2021.
[7] Jason Bergstrom, “Five Predictions for 2022, ‘The Year of the Smart Factory’,” IndustryWeek, 20 December 2021.
[8] Tzahi Rodrig, “Where Manufacturing’s Been—and Where It’s Going,” IndustryWeek, 23 November 2021.
