Apr 25, 2023

Supply chain researchers often look at the manufacturing sector for significant changes in the nation’s economic health. Increased consumer spending may naturally cause an uptick in production and distribution. Similarly, pressuring inflation rates can lessen demand, leading to overproduction and stalled assembly lines.

A look into manufacturing’s current state reveals a shift from post-pandemic recovery to natural growth. However, growth rates are now accompanied by previous challenges such as labor shortages and inflated costs. For example, the National Institute of Standards and Technologies (NIST) has reported a 33.9% price increase across major American producers between 2020 and 2022. To put things in perspective, the nation saw a 27.1% increase between 2005 and 2020, meaning rates have superseded previous price hikes within a fifteen-year gap. Nevertheless, manufacturing plants have made up 12% of the nation’s GDP, employing 14.7 million employees in the same timeframe. While harnessing great financial gain, manufacturing plans are simultaneously struggling with sourcing bottlenecks, cyberattacks, and increasing operational costs. Despite these obstacles, supply chain researchers attribute the growth to five main trends:

1. Technological Advancements – Digitization has been revolutionizing manufacturing plants before the turn of the decade. About 88% of companies intend to invest in robotic solutions in the near future. On a smaller scale, mobile computers and RFID tracking also empower manufacturing plants with higher data accuracy rates and real-time updates for WIPs. As facilities race to maintain product availability, automation systems enable teams to accomplish tasks quickly without compromising accuracy. Moreover, data and processes can be tracked later to verify product quality and target potential issues before inventory reaches the customer. 
   
   
2. New Stocking Strategies – Previous inventory handling models like Just-in-Time inventory management can’t always secure agile adaptability in the event of change. Consequently, many businesses now adopt new mechanisms like Just-in-Case management to retain higher levels of safety stock for high-demand products and raw materials. By securing raw materials before demand spikes, manufacturing plants can mitigate the effects of shortages within their business.  
   
   
3. New Talent – Millennials and digital natives are expected to represent over three-fourths of the American workforce by 2025. On the other hand, research suggests 2030 may see over 2 million unfilled jobs within the manufacturing sector given today’s labor turnover rates. To encourage retention, companies now leverage digital technologies to expand employees’ skillsets and automate repetitive, mind-numbing tasks.    
   
   
4. Prioritization of Actionable Insight Acquisition – Visibility has become the cornerstone of effective supply chain management. Therefore, factories have become one of the largest consumers of IoT systems since digitization increases operational visibility. New networking systems such as WiFi 6 and 5G provide modernized support for data sharing, creating a demand for qualified connectivity providers to deliver a tailored infrastructure to support actionable insights.  
   
   
5. Sustainability – Lastly, manufacturing and distribution centers alike are facing consumer pressures to maximize sustainable practices within their daily operations. While eco-friendly systems protect the plant, they can also boost profitability since they aim to consume fewer resources.
   

Each one of these factors has resulted in massive impacts felt across the supply chain. That’s why we want to take time and explore the effects of manufacturing changes within the on-demand market. As we get ready to uncover the extent of automation’s role in the modern factory, reach out to our team for specific modernization strategies you can implement in your facility today.