Acceleration in digital technology adoption
Smart factories, including greenfield and brownfield investments for many manufacturers, are viewed as one of the keys to driving competitiveness. More organizations are making progress and seeing results from more connected, reliable, efficient, and predictive processes at the plant. Foundational technologies such as cloud computing enable computational power, visibility, scale, and speed. Industrial 5G deployment may also expand in 2022 along with advances in technology and use cases.
Additive manufacturing (3D printing)
Additive manufacturing (where materials are produced
in layers using 3D printing) will transform manufacturing
in the coming years. Especially with the introduction of 3D printed metal components from titanium and other strong and light materials. Industries leading the way in additive manufacturing include aerospace and defense, hotly followed by automotive production.
Increased automation
Automation is also vital in helping manufacturers compensate for a worker shortage and eliminate time-consuming and error-prone processes — from the plant floor to the back office. Technologies like AI, machine learning, and smart machines can improve decision making, quality, consistency, and uptime
Onshore production instead of offshore
To minimize dependency on China and other trade routes impacted by disruption, manufacturers must accelerate their supply chain resilience strategy. A key trend in 2022 that they will have to tackle is reshoring facilities and increasing their reliance on countries with whom the U.S. has friendly trade agreements, such as Mexico, Canada, Southeast Asia.
Predictive maintenance
Predictive maintenance technology automates the process of predicting problems and flaws during the manufacturing process. The result is reduced downtime and greater cost efficiencies. Predictive maintenance will be pivotal in helping manufacturing industries meet skyrocketing customer demand and achieve digital transformation.
Securing talent for the new workplace
As manufacturers embrace more automation, employees must be upskilled to work within these tech-heavy environments. According to Deloitte, more than 80% of manufacturers believe that talent pools are critical to their competitiveness. In fact, 41% have formed relationships with technical education institutions to develop their employees of the future.
Shifting from B2B to B2C
Driven by higher margins, MSRP (manufacturer's suggested retail price) pricing, brand control, and other factors, manufacturing companies have increasingly shifted their market focus from B2B to B2C. To facilitate this move, manufacturers must continually improve their operations to support e-commerce and a quality customer experience. Rapid fulfillment and delivery, secure payments, digital marketing, and online customer service will all be top priorities.
Sustainability
Finally, managing operations in a sustainable and environmentally responsible manner is now a business imperative. As the cost of energy and materials rises, regulations tighten, and consumers and investors gravitate towards more sustainable brands and business practices, many in the industry are already developing economically and environmentally sustainable business practices. As more manufacturers connect the dots between sustainability and profits, expect this trend to continue.
Inflation and rising interest rates
Due to an inflationary environment, central banks are expected to increase the lending rate at a steeper pace. This will increase the borrowing cost for the company. In addition, the manufacturers cannot pass the price rise to consumers at the same rate and that can create a further crunch on profitability.
The rising inflation can also push crude oil prices higher which will increase the supply chain costs for the manufacturers.
Cyber attacks
There has been an increased number of cyber attack cases in the past 2 years. This can lead to disruption of manufacturing and distribution processes. Manufacturers should be ready for cyber defense and resilience systems in case of an attack.
China economic slowdown
Throttled by Beijing’s zero-tolerance approach to Covid-19, China’s economy is facing a spell of slower growth. Economists are also expecting a recession in the coming time. Cement production in mid-April was less than 40% of full capacity. Shipments of smartphones dropped 18% from a year earlier in the first quarter. Excavator sales within China were down 61% in April compared with the previous year.
Source: Wolters Kluwer, Deloitte