After the massive disruptions that took up the first half of this year, and continue to varying degrees in many areas of the world, manufacturers are looking to the future. From supply chains to workforce agility, manufacturers have come to realize that preparedness is key to adapting to the fluctuations in demand seen in today's current climate.
For many manufacturers, the market is in some level of turmoil. For some, that’s meant a drop in demand; for others, it means the opposite. Regardless of the situation, this turbulence has made it difficult to plan.
While it’s difficult to predict the future, survey data in a recent state of manufacturing report highlights the uncertainty that the manufacturing industry is facing. With 65% of manufacturers saying market uncertainty is the challenge they’re most worried about; maintaining revenues and profitability is top of mind.
Manufacturers must create a succinct list of priorities that will ensure financial resilience. For some, this means reducing operational costs for others improving margins by eliminating waste.
Focus On Aspects That Can Be Controlled
In times of uncertainty, it is crucial to focus efforts on production aspects that can be controlled rather than aspects, like the economy, that manufacturers have no control over. Forward-looking organizations are working to identify opportunities to improve operational resilience and put processes in place that enable adaptability.
The use of advanced analytics can provide an impactful way to help control operational costs. Better data helps manage processes by allowing manufacturers to react quickly and fix what needs to be fixed, and to pivot when a pivot is called for. Interruptions and breakdowns are minimized, further improving margins.
Innovations in supply chains and reshoring will also be aided by advanced analytics because they increase efficiency and minimize waste, and enable significant cost savings.
Diversify Concentrated Supply Chains
Re-examining supply chains and their weak points is another way to reduce the risk of disruptions as much as possible. At the root of our supply chain problem is concentration, and manufacturers are reassessing how much concentration risk they are now willing to expose themselves to. Most manufacturers have long been reliant on a limited group of suppliers, who may even be located in the same country or even region.
One disruption—political or environmental, among others—can easily bloom into a major domino effect of disturbances. This is instigating a period of supply chain reinvention which will include near- and re-shoring, improved visibility for every step, local logistics hubs, and collaboration amongst suppliers and manufacturers. Already, manufacturers are embarking on domestic investments to reshore some of their production, and COVID-19 will likely accelerate this trend.
Balance Risk Mitigation With Capacity Management
Manufacturers are looking to achieve a balance of risk mitigation and capacity management. Diversification of suppliers is one option, although there are often costs that come with that. One tactic to manage costs that will come with diversifying supply chains is through digital transformation projects that improve efficiencies and will keep costs, like labor, manageable.
Further, manufacturers can minimize risks by focusing on specific solutions and production processes, and by broadening offerings. Optimization processes and near-shoring enable a level of customization not previously possible, without out-of-control costs. That will allow more flexibility, innovation, and broadening of product offerings.
Reshoring will be made possible with automation. The usual arguments of higher costs are irrelevant when automation minimizes the costs of producing domestically. Labor costs, for instance, aren’t as large a cost segment. Therefore the extra costs aren’t passed along to the customer.
Think Differently About Upskilling And Labor Sourcing
The talent segment of the supply chain has been a continual challenge for some manufacturers. But now that many manufacturers have adapted and continue to refine remote working, they’re able to think differently about sourcing labor. Previously, if the best talent for a role was based in certain areas—may be because a local university has a great program and a lot of graduates—that restricted where manufacturers could be and how much talent they could source unless they were willing to support relocations or were in an attractive area where people were willing to move. But now advances in remote work technologies mean the best talent could be almost anywhere, opening up many more options for manufacturers who need to hire highly skilled workers.
Digital transformations also enable manufacturers to explore innovations in technology. Artificial intelligence, for example, is able to perform tasks at scale and at a speed that would be impossible for people to do. More and more, AI will help manufacturers innovate and take their production to new levels, without wasting resources.
This is how we’ll bring manufacturing back to 20% of GDP it was 20 years ago. But it will be a new type of manufacturing using robotics and electronics. This will also help attract the workforce talent manufacturers are clambering for.
Time for Leadership
There will always be challenges in manufacturing, but the future demands creativity and resourceful leadership. We could easily fall back into old habits and leave ourselves vulnerable to further disruptions. Or we could think of better long-term solutions that support adaptability and resilience.
The future demands creativity and resourceful leadership. This period of disruption presents significant opportunities for innovative thinkers who are ready to take leadership with the future of manufacturing and do things differently.
Manufacturers need a strategy for digital transformation and a culture of innovation. We have to make sure that we reform our supply chains, from raw material to finished products, in order to be as self-sufficient as possible and prepared for whatever the future brings, good or not so good. If we can improve efficiency, then we can reshore and make more of our products at home. Automation will be the driver of this transformation, and of an industry that will be exponentially more efficient, and exciting.
