There’s no shortage of articles that will opine about how tumultuous 2020 was for the economy, jobs, and industry as the world grappled with the impact of COVID-19 on business and daily life. However, there’s reason to be optimistic, especially in manufacturing.
Despite 60% of manufacturers feeling the impact of COVID on operations, a recent survey of senior leaders of manufacturing and distribution companies noted significant or modest growth in company revenue during the pandemic. Demand for products is surging, requiring new and innovative production methods, and many manufacturers have stepped up to the plate. As we close out the year, we’ll better understand just how much manufacturing changed in 2020. But economic uncertainty aside, the unprecedented supply chain disruptions of the year are a blessing in disguise for manufacturers, as they encouraged the often stagnant industry to move faster and become more resilient than ever before. If there were a year to push the industry forward towards progress, this was it.
In 2021, manufacturing will see a fundamental shift in how its leaders view progressive change – from unrealized vision to practical reality. As a result, an industry that’s nimbler and more flexible will emerge. Here are five ways I believe the industry will evolve (for the better) next year – some long in the making, others resulting from the 2020 effect:
We’ll see a shift to localized production
In 2021, the industrial manufacturing sector will take a page from the consumer-driven “farm to table” trend that has taken hold in the agriculture industry over the last decade, with a shift to localized production. This will primarily be driven by the threat of ongoing trade war/tariffs threatening global supply chains, encouraging manufacturers to move production activity closer to the customer. In the future, manufacturers will want to build where they sell for several reasons, including faster time to market, lower working capital, government policies, and increased resiliency. This won’t be an easy or overnight shift. Naturally, the larger the manufacturer, the longer and more expensive any reshoring process will be, but the challenges of 2020 have created more urgency in adopting this type of production.
Digital transformation of the factory floor will accelerate
The pandemic reminded manufacturers about the fragility of relying on labor, access to physical space, and centralized factories half-way around the world to produce goods. Fortunately, advanced technology – sensors, machine learning, computer vision, robotics, cloud computing, edge computing, and 5G network infrastructure – has proven to increase supply chain resiliency for manufacturers who adopt it. While manufacturing lines present a unique set of challenges, tech companies will continue to focus on bringing the value of these advancements to verticalized settings as the industry realizes they must diversify their factory operations and embrace Industry 4.0 technology to become more resilient.
Manufacturers will respond to increasingly high expectations from both consumers and customers
According to eMarketer, American consumers will spend approximately $710 billion on e-commerce in 2020, translating into an increase of 18 percent for the year. With demand for products surging, manufacturers will be more pressured to churn out high-quality products quicker, more efficiently, and at a lower cost than ever before. Beyond shopping behaviors, we’ll also see a shift in the relationship between manufacturers and customers. Broadly speaking, customer service has leaped forward this year, with companies prioritizing personalized experiences, radical transparency, and rapid response. Customers have become accustomed to this type of service and will demand the same experience from their manufacturing partners. As a result of these changes, we’ll see more manufacturers embrace high mix/low volume manufacturing, a 180-degree pivot from the mass production that has long defined the industry, and a greater focus on data-driven insights and experiences.
We’ll see increased investment in the workforce (and less lip service)
Despite the doomsday headlines of years past, it’s clear by now that automation is not just replacing existing work but creating new work. This is a crucial takeaway from MIT’s recent report, The Work of the Future: Building Better Jobs in an Age of Intelligent Machines. With production moving closer to the consumer and advanced technology becoming a mainstay on factory floors, we’ll see manufacturers take on more accountability in this shift – creating better, higher-paying jobs for factory workers. Manufacturers will follow the lead of companies like Stanley Black & Decker, which is committed to empowering millions of factory workers by 2030 through retraining, access to STEAM education, vocation/trade skills and Makerspaces. This will be a big priority for the industry, especially as policymakers focus on economic recovery and job creation with a new administration at the helm.
Sustainability will become a selling point, not an afterthought
Manufacturing has long been one of the most significant contributors to environmental pollution. With a new administration that prioritizes science and the environment, expect that efforts to make manufacturing more sustainable through more efficient factories will focus on creating green jobs and cutting back on the industry’s high volume of waste. A distributed network of smaller, local, and energy-efficient factories can reduce energy consumption by shortening transportation routes to customers, removing our reliance on human operators, decreasing waste from fewer defective parts, and lowering the industry’s overall carbon footprint.
Ultimately, manufacturing is an industry in a state of constant evolution, though historically, much of that change has been of the “slow and steady” variety. With the forcing function of 2020 and a new administration, in 2021, we’ll begin to see the evolution of an industry that’s more responsive and adaptive to both markets and consumers, leaving us with a better sector than we had pre-2020. This agility is poised to be a rising tide that lifts all ships.