Top 2024 Manufacturing Trends to Watch
The following article was first posted in the Manufacturing Insights section of RSM’s website. It is reposted here with permission.
Change is constant in the manufacturing industry, and the supply disruptions and global shifts of the past few years have highlighted how critical it is for industrial companies to focus on resiliency.
Heading into 2024, manufacturers need to adapt proactively their operations to thrive in today’s competitive landscape.
Digital transformation and the changes associated with the Fourth Industrial Revolution, or Industry 4.0—driven by more dynamic and interconnected operations—will be at the heart of all these efforts.
Here are the top six trends RSM has identified for the manufacturing industry:
1. Data and Smart Manufacturing
Machines, assembly lines, smart sensors, robots and other devices generate enormous amounts of industrial data that, historically, manufacturers have not taken advantage of.
As more companies implement advanced technologies and more “factories of the future” take shape, a robust data strategy becomes paramount.
Shifting to a data-driven decision model will provide businesses with predictive insights that can optimize processes, strengthen risk assessment procedures and ultimately help them maintain a competitive edge.
To have a successful data-driven manufacturing operation, companies also need the information technology infrastructure to support advanced Industry 4.0 technologies; this area is where many middle market manufacturers are further behind their larger counterparts.
Organizations need a flexible, scalable, and interconnected IT architecture to support the shift to more data-driven operations and meet future challenges.
2. The Continuing Urgency of Cybersecurity
While advanced technologies are streamlining many aspects of traditional manufacturing operations and breaking down longtime barriers that can impede innovation and collaboration across the entire value chain, they are also creating more opportunities for cybercriminals to compromise manufacturers.
According to data from the 2023 RSM U.S. Middle Market Business Index survey special report on cybersecurity, 20% of middle market executives claimed their company experienced a data breach within the last year.
Also in this year’s data, 35% of middle market executives disclosed that they experienced a ransomware attack or demand, up from 23% last year.
Manufacturers—and any third parties they work with—need to raise the bar on protecting themselves in an environment where workers, machines, supply chains and organizations are becoming ever more digitally connected.
Understanding which critical information and intellectual property assets need protection from potential cyberattacks—and taking action to put those protections in place—will increasingly become a source of competitive advantage.
3. Reimagining Global Supply Chains
While manufacturers historically have focused on making their supply chains more cost-efficient, few have considered addressing vulnerability to trade risks or global pandemics.
The past few years have shown that companies that have invested in technology and focused on supply chain agility have an edge against their competition, and that will continue to be true as we look to the future.
Manufacturers need to take advantage of technology to create more connected supply chains, providing an opportunity to link various pieces of the supply chain together to receive more data.
Companies prioritizing digitizing their supply chains will be more resilient and better positioned to respond to future supply and demand disruptions (for instance, the manufacturing construction boom in 2023).
Digitization will be essential in the new era of globalization as companies diversify where they source and make their goods.
4. The Battle for Manufacturing Talent
As manufacturers grapple with technology’s increasing role throughout their organizations, the impact on their workforce will be significant.
The dynamic and fast-paced environment created by today’s advanced technologies—from intelligent robotics to big data and the industrial Internet of Things—will require the current workforce to adapt.
It will also require companies to be more intentional and creative in attracting and retaining talent.
We expect this will bring a renewed emphasis on cultivating new skills for an environment where analytics increasingly drive business decisions and humans more commonly coexist with robots.
Manufacturers will need to reassess and update their training and workforce development strategies to keep pace with this industry shift.
Companies will also need to have a clear understanding of which core offerings to focus on and which might make sense to outsource.
5. Economic Pressures and Market Shifts
The era of low inflation, rapid growth and inexpensive capital is transitioning to a new state.
Globalization is not dead, but the makeup of its participants has shifted as businesses diversify where they source and make their goods.
In the U.S., legislation in recent years—including the Inflation Reduction Act and the CHIPS and Science Act of 2022—has also shaped a new era of industrial policy that is driving increased construction investment for U.S.-based semiconductor manufacturing and green technologies that support the energy transition.
Canada as well is actively shaping its policies to onshore supply chains and attract investments in priority sectors, such as clean technology, advanced manufacturing, agribusiness, life sciences, EV supply chain, and critical minerals exploration.
Governments at both federal and provincial levels offer investment tax credits and incentives, funding, and grants through various innovation funds and programs, government financing, and targeted support negotiated directly with manufacturers.
The 2023 federal budget amplified these measures, introducing a 30% refundable Clean Technology Manufacturing Investment Tax Credit for capital investments in eligible property used in clean technology manufacturing and critical mineral extraction and processing.
Manufacturers need to understand how to take advantage of opportunities in these policy changes to capitalize on this wave of opportunity.
The fact that clean energy incentives are a significant component of recent legislation underscores the importance of environmental, social and governance issues for manufacturers, too.
As ESG gains more traction among various stakeholders, decarbonization will likely need to become a bigger priority for manufacturing, automotive, and energy companies.
6. The Rise of Artificial Intelligence
Manufacturing is one of many sectors across the economy adopting generative artificial intelligence and exploring its potential to revolutionize processes and unlock new human capabilities.
For manufacturing companies, the potential of AI—generative or otherwise—to enhance predictive maintenance, optimize the supply chain, and improve quality control is only the beginning.
Increased productivity, enhanced decision making and improved cost savings will continue to drive broader adoption of the technology across the middle market.
While challenges exist, if companies plan carefully, invest in infrastructure and focus on ethics, AI will continue to revolutionize the industry.
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