The past few years have been a whirlwind of unprecedented events for manufacturers. We sat patiently, or as patiently as we could, through 2020 hoping things would get better, only for 2021 to bring new complications. It was like a Shakespearean farce meets Hollywood action movie, but the resolution left something to be desired, like consistency. With a quarter of 2022 behind us, are we still in that same place?
The short answer is no. In many cases, business in manufacturing is booming, and the upwards trajectory is expected to continue. The long answer, however, is complicated at best. While business is doing well, it isn’t necessarily translating into overall increased profits. Why is that? The supply chain is still a major antagonist in our plot, as is the ongoing labor shortage, and perhaps in Act 3 there will be some sort of natural disaster in order to really give the movie goers what they want.
But this isn’t the movies; it’s your company and your team. So, what trends can be expected in the upcoming months? I’m so glad you asked.
Supply Chain Problems
Perhaps you’re lucky, and you haven’t had this problem even in your day-to-day life, but over the past year, I have had to betray my brand loyalty again and again just to be able to get everything on my grocery list. In the industry world, supply chains continue to be one of the biggest challenges. Due to various Covid-related disruptions, bottlenecks abound in the global supply chain. Unfortunately, it seems this issue is here to stay for a while as record-long lead times for raw materials, shortages of goods, and increased prices continue to be the new normal.
Thanks to ERP and IoT technology, there are ways to improve operational efficiency in terms of purchasing and inventory; however, the truth remains that this will affect the overall cost to your customers. Other manufacturers are stockpiling, like an episode of Hoarders, in order to ensure that materials will be on-hand when needed. Regardless of how you proceed in the supply chain, expect to be spending more time sourcing materials and waiting for them, as well as spending more for them.
Though the pandemic is not solely responsible for labor shortages, it certainly did not help the matter. This is true throughout the market, from cooks to teachers, but most specifically manufacturing across the globe has reached a crisis point, reporting all-time high labor shortages. Companies desperately search for both skilled and unskilled workers, and they worry that the labor shortage will cause a reduction in output.
This has caused manufacturers to go down two paths. One is the path of AI and automating all that they can in order to overcome the lack of human workers. The other is in filling vacant positions with workers from other industries, like those who left the hospitality industry due to a lack of stability induced by the pandemic. However, this leads to its own set of problems because these employees need to be trained thoroughly but quickly. The key to staying ahead is to find the most efficient ways to train your new staff.
Trade Policy Issues
To say that the waters of international trade are turbulent these days would be an understatement. Tariffs, trade disputes, and trade agreements will likely remain unstable for the foreseeable future, therefore, it’s important that you keep an eye on that in regards to how it impacts your business.
The pandemic may have slowed down aspects of the work force on the human end, but it pushed digital transformation into the forefront of the manufacturing industry.
Digital transformation leverages technology to make manufacturers more competitive, effective, and streamlined. Embracing new digital technology ensures a company doesn’t lag behind because it transforms how a manufacturing company operates. Not only does digital transformation bring automation and inter-connectivity, but it also supports the advances and advantages of artificial intelligence and the internet of things (IoT), especially for industry.
If your organization has not yet embraced a digital transformation, the time to do so would be now, before the decision is made for you and your choices are rushed and sloppy. Digital transformation is the future, and there’s no better time to bring your company into the future of industry.
Over the past few years, and most likely thanks to the pandemic and other supply chain issues, companies have been moving all or aspects of their business back closer to home.
These moves may take time and create their own bottlenecking of sorts, especially if government incentives continue to draw operations back home.
While re-shoring may mean wonderful things for companies and governments alike, the environment is another focal point for the manufacturing industry.
In the US alone, manufacturing accounts for almost a quarter of direct carbon emissions. This year and the years to come, it should be expected that things like grant money and rebates will be offered to manufacturers who commit to reducing their footprint on the environment. This green economy may be brought about via electrification and better energy and resource management (which various AI tools can assist with).
This is all to say that even though industry is on an upward swing, there will still be some bumps in the road. There are tools to help, though, and now is the time to begin implementing these smart tools to help you make wise decisions for now and the future.