The manufacturing industry faces several challenges in 2023 amid an already sluggish economy. Inflation, supply chain disruption, a retiring workforce, labor shortage, and high customer demand signal tough times ahead.
But it’s not all doom and gloom. Leading manufacturers are flipping challenges into opportunities, accelerating digital transformation, and modernizing their working environments for the next generation of manufacturing employees.
Read on for the five key industry trends facing manufacturers in 2023. And find out how you should optimize your business accordingly for long-term success.
The Five Key Manufacturing Trends of 2023
1. A Sluggish Economy
Recession or no recession, economic activity will continue to slow through the first half of 2023. High inflation will increase the price of raw materials and the cost of energy, freight, transportation, and wages even further.
This gloomy economic outlook comes at a time of ongoing supply chain insecurity. The Russian invasion of Ukraine, coupled with labor shortages (more on this later), have made products and parts harder to source and more expensive. According to Accenture, supply chain issues could result in a €920 billion loss to GDP across the Eurozone by 2023.
To combat inflation and supply chain woes, manufacturers need to reduce spending. But how?
Establish End-to-End Data Visibility to Pinpoint Areas of Inefficiency and Leakage
Manufacturers connecting their people, processes, and systems via a consistent digital thread can gain a real-time view of the entire production process. They can identify bottlenecks and inefficiencies and take fast, decisive action to reduce delays and wasted resources.
Invest in Technology that Drives Efficiency and Reduces Costs
Manufacturers must think long-term and find technological solutions to see them through this current downturn, the next, and the one after. Simulation, engineering automation, and the internet of things will have the most significant impact…
Simulation and Digital Twins
With simulation and digital twins, manufacturers can use computers to analyze products, processes, and other physical assets virtually. It’s faster, more thorough, and far less expensive than making physical prototypes and testing them in the real world. It means manufacturers can launch better products faster, for less.
Design and Engineering Automation
Engineering automation streamlines and automates repetitive tasks. It improves design performance efficiency and reduces labor costs and wasted resources. Valuable engineers can spend less time on repetitive, menial tasks and refocus energy where it matters, increasing the volume and innovativeness of their output.
Industrial Internet of Things (IIoT)
The internet of things is a network of physical objects embedded with sensors that collect and exchange data. Manufacturers can harness the power of the internet of things to optimize production processes and reduce downtime through predictive maintenance. All without human input
2. The Great Resignation Continues
The Great Resignation–a trend that saw thousands of workers voluntarily leave manufacturing jobs for better wages and work-life balance–has left the sector depleted of talent. The bad news is; it’s not over.
The manufacturing industry is in for a tough time. The competition for talent will be fierce. According to a recent report from PwC, one in five workers say they’re “extremely likely” or “very likely” to switch employers within the coming year.
How Should Manufacturers Respond?
Manufacturers have an essential role to play in shaping the future of work
The responsibility lies with manufacturers over the coming year to create a modern, diverse, and authentic working environment appropriate for the new world of work. To attract, engage, and retain talent, companies need to offer job flexibility, competitive pay, and benefits that encourage a healthy work-life balance.
3. Boomers are Retiring (and nobody wants to replace them)
Further exacerbating the current skills gap is the aging workforce in the manufacturing industry and the retirement of the baby boomers. Nearly one-quarter of the manufacturing sector’s workforce is 55 or older, and as they retire, the industry loses a significant amount of knowledge, skill, and expertise.
The reality is, for the younger generation of digital natives (millennials and Gen Z,) the manufacturing industry just isn’t viewed as sexy. Companies like KETIV are working to revitalize American manufacturing, but the education system still fails to prepare younger people for a manufacturing career. The “brain drain” is a big concern.
Digital Manufacturers are Stealing All the Top Talent
Manufacturers that undergo digital transformation often find it easier to attract and retain top talent. They can offer employees modern and efficient ways of working with digital tools and technologies that remove frustrating obstacles and let them achieve their potential.
Companies at the forefront of digital transformation are seen as more innovative and dynamic, which can be attractive for top talent looking for exciting and challenging work.
Companies Can Address the Skills Gap with No-Code Software and Artificial Intelligence
Digital technology is changing how work is done and creating skills gaps in the manufacturing sector. Even with improved hiring and retention, these gaps must be addressed by broad re-skilling and upskilling of the existing workforce.
Technology offers us a solution to the re-skilling imperative. First, manufacturers can upgrade to no-code software that allows non-coders to build and maintain apps for efficiency and automation. Second, they can provide access to artificial intelligence that handles the most technical tasks.
4. Rising Customer Expectations
As we move into 2023, B2B buyers seek more engaging and personalized experiences. Manufacturers that can provide immersive journeys tailored to their customers’ needs will have a competitive edge and stand to gain significant market share.
Provide Immersive Experiences with Virtual and Augmented Reality
Manufacturers selling online should consider adding augmented and virtual reality functionality to their websites. Apple has just announced the launch of its new Reality Pro headset. Other technology companies are sure to follow suit. AR and VR are finally going mainstream, and you can get ahead of the pack if you act now.
Manufacturers selling complex, configurable products can use a solution like Tacton CPQ to embed VR and AR into their product configuration process. The software lets buyers design their products in a fully immersive experience, which dramatically increases conversion rates.
5. Product-as-a-Service (PaaS)
Product-as-a-service–the concept of selling a product’s services and outcomes rather than the product itself–looks set to have its year in 2023.
The IoT, AI, and predictive analytics have reached a sufficient level of maturity for PaaS to be highly profitable. The right manufacturers can gain recurring revenue, improved loyalty, and a closer relationship with customers that generates valuable insights.
There are considerable benefits for the modern buyer too. Reasons why PaaS (and the as-a-service model in general) is so popular include:
Flexibility: They can switch products and suppliers easily
Affordability: They can pay-as-you-go, making high costs easier to swallow
Low Risk: Products often have a trial period, extended warranties, and maintenance included.
Sustainability: The environmental impact is lower
2023 is shaping up to be a challenging year for manufacturing operations. But it’s not all bad news. This could be your opportunity to invest in digital transformation and modernize your work environment to be ready for the digital age and the next generation of employees.
Ready to modernize with simulation, automation, AI, and IoT? Contact KETIV for all the help you need. Together, we can shape the future of American manufacturing.