Going into 2023, manufacturers will be in a precarious position. With supply chain disruptions this past year, navigating the increasingly complex market can be best defined by five interconnected forces: global competition, rapid technology change, material scarcity, worker shortage, and cyber security. Conquering this new environment will present the survival of the fittest landscape for suppliers worldwide.
Global Competition
The new digital age has presented significant opportunities for companies of all sizes to integrate vertically. The digital age has caused a shift in the global competition for manufacturing as more and more firms are becoming self-sustaining. Suppliers in certain regions previously monopolized the sector are no longer the only cost-saving production source.
Rapid Technology Change
In a survey conducted by the Manufacturing Leadership Council, manufacturers have stated that disruptive technologies like artificial intelligence and machine learning usage have been adopted with enthusiasm. Increasing digitalization has allowed competitors to create sustainable competitive advantages through improved operational efficiency and reduced costs. While the technologies have quickly become industry standards and the driving support for best practices, manufacturers must remain vigilant and responsive to the ever-flowing stream of innovations.
Manufacturing Leadership Council
Material Scarcity
Due to the disturbances caused by the pandemic, and Russia’s invasion of Ukraine, raw materials and resources have halted production, which has squeezed the supply chain for manufacturers. This has continued to result in severe delays in distribution and meeting delivery times. Lean production has become the norm for many manufacturers to adapt to restrictions on required material inputs.
Worker Shortage
As Generation X reaches retirement age, the manufacturing industry is expected to see a drastic shortage of skilled labour. Hiring requirements have changed since this generation began their careers. The new era of widespread automation has spurred a growing demand for technological and mathematical expertise.
For younger professionals entering the workforce, manufacturing is not a first choice for the ambitious-minded. The reason is the misconception that upward mobility is limited and the technical skills required are minimal. Sourcing motivated and experienced employees with highly specified capabilities have become increasingly challenging. However, with the potential of an impending recession and rising unemployment, manufacturers may be able to scout preferable candidates that would otherwise not be available.
Cyber Security Threats
While providing many advantages, the expanding digitalization of manufacturing has also incurred looming threats. Mitigating the risks associated with network breaches has become vital for manufacturers to protect valuable data and prevent potentially devastating collapses in operational systems. This issue has grown dramatically in recent years, and in the fourth quarter of 2021, the manufacturing industry was dubbed the year’s most attacked industry. Manufacturers have been forced to adapt by prioritizing investments in their security as the rate of attacks continues to rise.
Remaining Competitive Despite Changing Conditions
For manufacturers, especially smaller firms, the challenges mentioned will limit scalability in the short term. However, they will also determine which competitors will rise to the top in years to come. Being equipped for the intensity that these forces will bring forth by quickly adopting innovations and efficiencies while investing heavily in cyber security and employee recruitment are the best defences for companies in this sector.