The big themes facing manufacturers in 2024

Manufacturers face three major challenges:

• Integrating data and technology in manufacturing operations is critical to improve efficiency and comply with industry and sustainability regulations across all subsectors.
• Addressing sustainability is becoming a critical focus, with the recognition that manufacturing industries contribute significantly to pollution and they need to adapt to changing environmental regulations.
• Adopting a positive mindset to embrace technology is necessary for manufacturing to get the most out of operations and people—many workers fear job losses due to automation—instead of recomposing people and processes to technology to improve operations.

Theme 1: Integrating data and technology in manufacturing operations

Manufacturing industries continue to face significant regulatory impact. This regulatory impact is significant in industries that deal with human lives, such as chemicals, pharmaceuticals, aviation, and automotive, as there is a moral liability attached to human life.

Sustainability regulations are creating additional data silos in the manufacturing industry. The current set of tracked data points may not support sustainability reporting, which might require data sets that no other operations use. Accessing these data points requires understanding the systems used and knowing who controls them, making integration and analysis more challenging.

The aviation and automotive industries are leading in technology adoption and changes in business models. For example, the aviation industry has been researching and adopting composite materials for lightweighting, reducing fuel consumption, and increasing the use of sustainable technologies in fuelling because the sector is responsible for a significant percentage of GHG emissions that have increased due to air travel demand. The automotive sector’s shift from car ownership to a leasing and renting business model is largely due to changing consumer preferences.

Theme 2: Addressing sustainability

Sustainability regulations are a top priority for manufacturers due to the industry’s significant environmental impact. Carbon reporting regulations have had considerable traction in recent days. For example, in March, the SEC passed a regulation mandating publicly listed companies to report Scope 1 and Scope 2 emissions. These regulations directly impact the license to operate and brand equity.

Sustainability bodies must simplify and provide clear recommendations to manufacturers. Currently, sustainability standards and regulations are very complex, mainly because there are no set standards. Manufacturers are finding it challenging to navigate the legislative landscape. Economic conditions and uncertainty about future regulations make companies cautious about investing in sustainability initiatives. For example, there is a lack of standardization in sustainability reporting.

Technology plays a crucial role in sustainability, but manufacturers struggle with selecting the right platforms and articulating the value that they have derived from them. Today, the sustainability reporting tools marketplace is crowded with reporting platforms and startups that provide promising products in the reporting space. However, with the evolving nature of the standards, not investing in a suitable set of solutions will make the investment obsolete.

Simplifying sustainability initiatives and focusing on bottom-line savings. These can help manufacturers embrace sustainability as a business opportunity. Sustainability is not necessarily a cost of business.

Theme 3: Adopting a positive mindset to embrace technology

Economic conditions and uncertainty about regulations hinder investment in fixing inefficiencies and adopting new technologies. Technology advancements outpace the industry’s ability to keep up, leading to concerns about obsolescence and competition. It has taken years for the industry to adopt the technologies in the Industry 4.0 framework. Their reluctance stems from a fear of downtime during implementation, despite recognizing the potential value derived from technology.

Service providers need to articulate the value and outcomes of technology solutions to customers to drive adoption. At the same time, manufacturing companies need to overcome the fear of automation and embrace technology to improve efficiency and competitiveness.

The Bottom Line: Manufacturers can get ahead by shifting their mindset on data and technology.

Industry-wide, manufacturing has focused on shop-floor KPIs that monitor and optimize operations. It is time for manufacturers to grasp the importance of data and technology, make data more accessible, and use technology to track KPI data and remodel their businesses. In the last decade or so, the manufacturing industry has seen a significant shift from selling products to selling products as a service. The industry has evolved with each industrial revolution; it’s time for the industry to focus and merit technology that has a significant impact on the outcome. Lastly, sustainability plays a critical role in today’s work. It needs to be accounted for in all business strategies.