The Top 5 Challenges for Manufacturers in 2021
Jesse Kelber - October 15, 2019
The manufacturing industry is in a bit of a pickle. Emerging technologies are coming at it from every direction, as digital transformation and integrated supply chains are being touted as the solution to all their woes. Industry 4.0, Logistics 4.0, AI, IoT, RFID, there are enough buzzwords and acronyms to make even the most seasoned production planner’s head spin. What’s a planner to do? As with so many areas of life, the key is to move one step at a time. See if any of the following five challenges apply to you, and if so, start by addressing them. Then, when you can see your way clear of that challenge, you’ll have a better understanding of what to address next for the greatest impact.
We’re not saying that globalization is a problem. What we’re saying is that it’s an irresistible force to be reckoned with, and that any manufacturer operating in 2019 needs to have a firm grasp of where they fit into the global supply chain. Between the US/China trade situation and ongoing Brexit concerns, JIT manufacturing is going to take a hit this year. Combine those uncertainties with fluctuating sanctions on various countries, shifts in which markets are paying a premium for your product and which countries offer the best tax incentives to lure in factories, and you start to see why this is our #1 challenge facing manufacturing this year. Making sure your regulatory compliance team is ready and up-to-date on the situation in each country you do business in is your first stop toward reigning in this challenge.
2. Labor Shortages
Global employment rates are at all-time highs. Yet, at the same time, manufacturing is growing at unprecedented rates. You can see where that might present some problems when it comes time to staff your new warehouse, or add a dozen trucks to your fleet. The explosive growth in online shopping has led to heavy demand for last-mile delivery drivers, and these roles often pay better than traditional truck driver positions. Key here is to increase visibility into your logistics processes, as this will lead to you being able to combine shipments and improve your routing/distribution network.
The shortages continue all the way up the chain with a shortage of warehouse workers as well. From there the shortages go all the way up the line to non-blue collar workers like software developers and data analysts. The latter categories can’t be overlooked with the increasing speed of digital transformation that’s rocking manufacturing leading to more of these types of workers being needed to keep up with the data flow. The fact that the main competition for these workers is from the tech industry means manufacturing concerns will have to step up their offerings in order to attract and retain this talent.
3. Data Integration: The Digital Supply Chain Is Here
The supply chain is going digital. Industry 4.0, Logistics 4.0, and digital transformations are making themselves known up and down the supply chain. For manufacturers, the key pieces to ensure a smooth integration are IoT sensors, RFID for inventory tracking, and a robust IT infrastructure that is ready for the massive amounts of data these technologies produce. It’s that last piece that provides the potential challenge. Many manufacturers are operating with outdated and insufficient IT infrastructure, if that’s the case for you, you know where to start. Advanced analytics powered by AI provide the next phase, parsing through all that data and generating demand forecasts and enabling the most accurate production planning ever possible. Deploying these Industry 4.0 technology solutions in your manufacturing organization will also enable a smoother integration into the supply chain when both your suppliers and logistics providers are ready to go digital, provided you have the digital backbone in place to support these advancements.
4. Direct-to-Consumer Manufacturing
The rapid growth of ecommerce has led many manufacturers to ditch their traditional distribution networks in favor of selling direct to their consumers. This is a risky endeavor, as the bar to entry is higher than some expect. We suspect this misconception stems mainly from watching the success of producers who go D2C from day one, and thinking that the conversion will be smooth based on these successes. The thing is, existing manufacturers have existing infrastructure that can be costly to transition. Network design, packaging and shipping, logistics and more all need to shift focus to go from a distributed network model to a D2C model, and many companies struggle financially with making the jump.
The concerns here are primarily operational. For an existing production facility built around a distributed model, the warehouse and loading dock are optimized for palletized shipments going out all at once. Transitioning to a model where each individual item must be packaged, labeled, and then shipped to disparate locations one at a time is a big leap. The challenges of shipping what is now a vastly larger number of individual packages, and the need for a complete revamp of the shipping model becomes necessary.
5. Additive Manufacturing
A close relative of D2C manufacturing, additive manufacturing comes with it’s own set of potential issues. The ability to create custom orders, based on specs provided by the consumer themselves is still a relatively new feature of the manufacturing world. The rapid development of 3D printing capabilities alongside other developments in emerging technology such as AI and machine learning have combined to allow nearly instantaneous, fully customized production. And once again, we see the impact of ecommerce in action, with consumers’ expectations of instant ordering and next day delivery—meaning more manufacturers are looking at additive practices as the next step necessary to keep their customers happy.
There are many factors influencing the direction of manufacturing in 2019. Increasing adoption of Industry 4.0 technologies, continuing digital transformation across sectors, and the changing demands of an ever shifting consumer demographic, for starters. The uncertainty is palpable. What is not uncertain, however, is that technology will continue to play a larger and larger role in production lines and logistics. The ability to adopt and adapt will serve you well in the coming years, and the best way to do that is by ensuring your own digital transformation. Integrating yourself into the supply chain will be key moving forward, and a great place to start is by ensuring you’re ready to address these five challenges.