As not only the year but the decade winds down to a close, manufacturers are looking ahead to the 2020’s, a new decade and a new era of manufacturing challenges.
Technology moves so fast now that it’s not really possible to say when the new era of manufacturing began, or even to say what the landscape will look like in ten years, but it’s safe to say that Industry 4.0 is here now, and rapidly evolving.
Every day, new technologies are presenting both incredible opportunities for unlocking hidden value in manufacturing processes and the inevitable hurdles along the way. Combined with ever-changing global political and social pressures, these forces present several major manufacturing challenges in the coming year.
Here’s our take on what the analysts and experts say the top six manufacturing challenges will be next year.
Top Six Manufacturing Challenges in 2020
- The skills gap/labor shortage
As the experienced baby boom generation retires in droves, taking their knowledge with them, manufacturers will continue to struggle to attract and retain workers with the skills they need. According to Deloitte’s 2020 Manufacturing Industry Outlook report, manufacturers continue to report difficulty filling critical jobs. As an estimated 2 million skilled manufacturing jobs go unfilled by 2025 and competition for skilled workers intensifies, manufacturers will be forced to take skills training into their own hands. Since high school students are not graduating with the necessary STEM skills, manufacturers will have to partner with local educational institutions to support trade and technical educational programs and offer apprenticeships and internships. In order to create the workforce they need, they will also have to train their staff themselves. A number of trends in manufacturing training, including simulation-based training, will play an increasingly important role in manufacturer’s ability to maintain and expand production.
As wages in China climb, many manufacturers are also looking to establish a cheaper labor force in Vietnam or Bangladesh, but these new workers will still require ground-up training.
- Supply chain collaboration
In the coming year, supply chain issues will continue to challenge manufacturers, but will also present an opportunity for proactive manufacturers to get ahead of the competition. Interestingly, good old human nature is at the bottom of two supply chain problems.
The first, lack of trust, is as old as the hills. Buyers and suppliers often have adversarial relationships, each suspecting the other of trying to gain an advantage over them. Recent research has found that trust in the supply chain leads to greater supply chain collaboration, which is in turn correlated to better corporate performance. Manufacturers that engage deeply in order to get to know their suppliers, and to encourage trust building among supply chain partners (as GM did with its 2016 Strategic Supplier Engagement initiative) by applying proven trust-building models can improve supply chain performance and make competitive gains.
The second problem is that supply chain partners aren’t going to embrace efficiency initiatives if they don’t see what’s in it for them. Many suppliers fear that savvy consumers will demand that cost savings be passed on to them, removing any incentive to change. All partners and manufacturers must feel confident that the newly found efficiencies will benefit them, or they won’t contribute.
- Consumer expectations: the Amazon effect
Why’d Amazon have to go and spoil things for everyone else?? This is a question many a frustrated manufacturer is asking these days. Amazon’s ability to deliver a vast array of products in astonishingly short time frames has raised the consumer expectation bar very high. Manufacturers are going to have to become increasingly agile to please demanding customers who have been taught to expect Amazon-like efficiency and are cranky when they don’t get it.
- Keeping up with new tech: robotics and automation, AI and machine learning
To stay competitive, manufacturers will be increasingly integrating robots, cobots, and other forms of automation and machine learning into their processes. This will no doubt result in the creation of many new types of jobs as humans and robots work together—jobs we don’t even know about yet—as well as require the development of new processes. Manufacturers need to stay on top of IoT, 5G connectivity, advances in sensors (including and how to repair them), and the need for data analysis.
- Trade war/election effects
Geopolitical pressures are always at work on manufacturers because raw materials and finished products are purchased and sold internationally. 2020 is an election year in the US, and uncertainty of the outcome and its effects on tariffs and trade flows may cause manufacturers to hold off on capital expenditures or hiring during the year until the dust settles.
Move over, ransomware. There are two new cyberthreats to worry about: banking trojans and cryptominers.
Banking trojans are malware that steal information, credentials or money, create botnets or inject malicious code into browsers. They initially targeted banks, but as banks hardened their security, the trojans found easier targets, including online advertisers, social media sites, and communication platforms to name but a few.
Cryptominers (short for “cryptocurrency miners”) are essentially malware that co-opts its unknowing victims’ computers into contributing their computational power to the vast task of making a profit by manipulating digital currencies (such as bitcoin). Remember the old adage “Many hands make light work”? Well, cryptominers want your computer’s hands—admittedly, not a perfect analogy!—plus as many others as they can get, to help them make money. It’s estimated that 42% of organizations around the world were already infected in 2018.
Manufacturers will have to be aware and take measures to protect themselves and their customers, or risk losing them.
2020: a continued risk for disruption
According to Deloitte, manufacturing is at “continued risk for disruption” in 2020. The industry seems to be sensing this on some level: the National Manufacturer’s Association’s 2019 3rd Quarter Manufacturers’ Outlook Survey found that only 67.9% of manufacturers surveyed are optimistic about the business outlook in 2020, down from the all-time high of 93.9% in 2018, and the lowest reading in three years.
While it may take a bit more effort to thrive and survive next year, manufacturers who proactively position themselves to tackle these manufacturing challenges are more likely to emerge at the head of the pack.