2022 has seen many seismic changes that have impacted just about every industry. We’ve seen shifts within the energy market and labour availability as well as major supply chain disruptions. Likewise, much of the economic volatility that plagued 2022 is expected to roll into the new year, and yet consumer expectations for higher quality continues to rise – forcing manufacturers to do more with less in 2023.
And so, with rising costs and shrinking capital, the growing competitiveness of the UK market has driven the industry to think very differently, to challenge the norms around manufacturing and how we orchestrate the ecosystem, from factories to the supply chain, and its relationship to engineering. As a result, manufacturers are facing heighten stakes to their strategic investments to drive sustained growth.
But what does this mean for the year ahead? Here are the main trends that we predict to see within the manufacturing industry in 2023.
More discerning customers
The ongoing conflict in Ukraine has created many supply chain disruptions for Western companies. Meanwhile, the Chinese manufacturing economy is suffering from a downturn in demand. As global demand plumets, consumers are being driven to think much more carefully about what we spend money on, where we source our purchases and how these connect with our belief systems. As a result, consumers are becoming increasingly discerning, demanding higher levels of quality and transparency – something that’s going to continue well into 2023.
To meet these rising consumer demands, efficiency becomes the name of the game which manufacturers need to get ahead of. The individualisation of products, for example, made bespoke for consumers, will continue on a luxury level in 2023, but there will be more pressure put on low-margin, high-volume consumer packaged goods (CPG), which require investment in achieving greater efficiency through automation. Organisations will need to keep challenging themselves to take the base cost out of engineering, manufacturing, and operations from the idea stage right through to market as quickly and as cheaply and pragmatically possible.
This will create a culture of organisations doing more with less in the year ahead, as they become more efficient with resources, and learn to sell more using more cost-effective methods. To do that, however, they’ll have to drive competitiveness through a focus on portfolio growth, or by finding new markets.
All eyes on sustainability
Sustainability will be a huge focus for the industry in 2023, with many organisations looking to win over more discerning consumers by showcasing how their operations are more efficient and environmentally friendly. While many businesses have already shared their commitments to net-zero, consumers are now demanding the proof. Increased scrutiny will be given to carbon reduction targets as firms not only assess how to reduce resources within factory walls but also beyond. As a result, manufacturers will be keen to demonstrate through proof how the factories they utilise are more efficient, for example, with fewer diesel-powered forklift trucks and an increased use of autonomous, electric-powered vehicles that have much lower emissions.
Automation in general will be a reoccurring theme here, with AI and ML being employed within company databases to help them become more intelligent. One way is through being proactive as opposed to reactive when it comes to the capital acquisition, energy & emissions trading versus the repair or rebuild of legacy machines in the manufacturing process. To keep legacy in optimal condition, employing networks of IoT devices and smart sensors, companies will be able to use automation to alert engineers to faults automatically, allowing them to fix small issues before they develop into bigger, expensive problems.
Greater focus on labour diversity, retention and workforce upskilling
As businesses are squeezed from every angle, pressured to be more efficient and sustainable in a more costly environment and all while still turning a profit, labour retention and upskilling is going to be a driving issue in 2023. Increasingly, companies are going to have to ensure their workforces are diverse and skilled enough to meet the demands of being smarter and more efficient in an ever-competitive market.
In 2023, organisations will, therefore, need to be smarter about not only how they leverage their workforce more effectively in order to derive new revenue opportunities, but how they best make use of their knowledge base. There’ll be a realisation for many in how they must invest in people to instil the next generation of workers with the skills to unlock new, creative problem-solving capabilities and get the results they want. For this to happen, there needs to be a change in leadership mindset, for example, organisations giving their employees more freedom to explore new technologies or solutions that might help accelerate the business in the long run. Engineering and manufacturing organisations must look to a diverse base of highly digitally motivated employees who can drive true innovations in profitable products and services.
And so, in the year ahead, we expect to see a real drive towards a more fluent and native digital culture in many companies’ workforce, enabling quick and more complex decisions based on reliable data sources.
More investment in new digital infrastructure
Navigating this unstable market requires complex decisions to be made quickly, relying on accurate and reliable data which requires greater digital transformation. However, as businesses continue undergoing this process and pushing a higher use of connected devices, many firms are approaching their network limits. Better infrastructure is therefore needed by a growing number of businesses to ensure they can function at a truly smart level, using digital technologies to improve or create new business processes, culture, and customer experiences to meet changing requirements. The key enablers of enterprise platforms, cloud, cybersecurity, 5G/EDGE/IoT connectivity, insight, leanness and repeatability through AI/ML and RPA are readily available but not yet seamlessly connected.
We’ll see this theme intensify in 2023, as businesses look towards new infrastructure that has wider network bandwidth and better all-round capabilities, enabling their manufacturing systems to talk easily between IoT devices to improve efficiency and save on costs.
However, ripping out legacy infrastructure and installing new systems while continuing to run the business will prove challenging for many companies. We must solve the paradox of disrupting and providing business continuity at the same time. Company leaders must build positive disruption into their delivery plans to gain competitive advantages. And so, over the next year, we’re likely to see them contemplating short and long-term digital transformation plans with a need to embed this drive into the culture of their business.