By Wasana Nadeeshani Sellahewa
(Commonwealth) _ The manufacturing sector continues to exceed expectations despite supply constraints, a manpower deficit, and an unsteady economic climate. Leaders must make use of digital technology, implement work-related futures strategies, and promote supply chain resilience if they are to sustain this development. Our 2023 forecast examines five trends in the manufacturing sector that might assist businesses in leveraging risks to their advantage and achieving growth.
Beyond predictions from the previous two years, manufacturing has shown continuous success in 2022, building on the momentum it garnered after the epidemic. Despite recent highs in both global demand and production capacity, there are signs that the prognosis may not be as favorable in the near future.
Concerns about inflation and the state of the economy are currently present in the sector. Additionally, manufacturers are still struggling with the talent shortage, which might slow the industry’s expansion. Furthermore, in 2023, supply chain problems like delays in sourcing, backlogs in global shipping, cost constraints, and cyberattacks will probably continue to be major obstacles. Our 2023 manufacturing market overview covers five key themes to take into account for manufacturing playbooks in the coming year as executives go beyond leading amid change and overhaul their approach.
In recent years, manufacturers have expanded their digital spending and sped up the implementation of innovative technology. Both businesses that expedited their digitization during the pandemic and those with a higher level of digital maturity had stronger resilience. The requisite agility may be developed with further investments in cutting-edge manufacturing technology.
In 2023, it’s anticipated that most manufacturers will continue to place a high premium on addressing the tight labor market, employee turnover, and evolving talent models. Jobs available in the sector are still close to all-time highs despite a record number of new hiring. Furthermore, voluntary separations continue to outweigh layoffs and terminations, showing a significant turnover in the workforce. Operational efficiency and profit margins are declining as a result of the ongoing labor scarcity, which is made worse by supply chain constraints. Manufacturers are adopting a number of strategies to reinforce their talent retention strategy.
According to 72% of the executives questioned, even in the upcoming year, the sector faces the greatest uncertainty due to the continued supply chain disruptions and the persistent lack of crucial resources. In addition to using digital technology more often, manufacturers are reducing these risks by implementing tried-and-true strategies like expanding local capacity and shifting away from just-in-time procurement to provide redundancy to the supply chain.
Positive economic indicators seldom coexist with long-standing supply chain and labor problems. But this is the path the US manufacturing sector will go after the epidemic in 2022. Following the introduction of vaccines and increasing demand in 2021, the recovery picked up speed. Strong gains in new orders for all key subsectors indicate growth continuing in 2022 as industrial production and capacity utilization exceeded pre-pandemic levels in the middle of the year.
As these measures promote future competitiveness, manufacturers will probably continue moving toward the transition of smart factories. The technological underpinning for their smart factories is being built by several enterprises. A metaverse platform for their goods and services is actively being developed by one in five firms, who are already experimenting with underlying solutions.
In 2023, manufacturers may need to keep a careful eye on the rapidly changing environment for environmental, social, and governance (ESG). An intricate web of reporting laws, ratings systems, and disclosure standards is voluntarily adhered to by many firms. However, authorities throughout the world are also enforcing increased disclosures for nonfinancial data. By implementing operational improvements throughout their value chains, manufacturers are advancing toward their ESG obligations.
