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IMA Executive News & Views Blog

Ten Manufacturing Trends to Watch in 2017

As the New Year begins, the editorial team at the Manufacturing Leadership Council offers its predictions for the year ahead. Contributors to this blog include David R. Brousell, Jeff Moad, Sankara Narayanan, and Paul Tate.

Trade Tensions Loom as Global Uncertainty Dominates 2017

Political upheavals during 2016 in both the U.S. and Europe have created unprecedented levels of uncertainty about the freedom of international trade for manufacturing companies over the next decade. The prospects of a major trade deal between the U.S. and 12 Pacific Rim countries, known as the Trans-Pacific Partnership (TPP), now seem dead in the water following statements by the incoming Trump Administration to abandon the deal. A similar Transatlantic Trade and Investment Partnership (TTIP) deal with Europe is stalled. And the U.K.’s Brexit vote last June has thrown the traditional trade relationships between many European companies into disarray and could take up to a decade to resolve. Large corporations may be able to negotiate their way through the minefield of future trade agreements, but small- and medium-sized manufacturing enterprises will need to be vigilant and flexible if they wish to maintain broad and open access to key export markets around the world.

The Coming Collision Between Jobs and Automation

Faced with a dramatically changing political environment stressing nationalism and protectionism, U.S. manufacturing’s profile will rise in 2017 as the debate over how best to expand manufacturing jobs takes place. That debate will become increasingly illuminated by a growing understanding that automation, in contrast to off-shoring, has played a key role in not only job elimination in the past but also in defining what jobs and skills are needed in the future. It will also become increasingly clear to policy makers that automation isn’t slowing down, and that the adoption of advanced automation and information technologies will continue to result in not only further low skill level job losses but also fewer mid-level positions, exposing the fragility of the idea of “bringing back” jobs to the U.S. This dichotomy will force a national conversation about how far industry should automate in relation to needed employment, once again pitting those who perceive the emerging digital global economy as a tailwind against those who perceive it as a headwind.

The Skills Shortage Hits Home

Meanwhile, the ongoing debate about whether the manufacturing skills shortage is real will finally come to an end. A growing U.S. economy, lower unemployment levels, and expected lower taxes on businesses under the new Trump Administration will spell accelerated expansion and an increased need for more manufacturing workers, engineers, and managers. At the same time, the push toward Manufacturing 4.0 will create a growing demand for software engineers in manufacturing. The result: Manufacturers that have already created a Next-Generation Workforce strategy and supply chain will prosper, while others will struggle to attract the human capital needed to take advantage of new opportunities.

M4.0: It Will Resemble a “Digital Wagon Train”

The journey to Manufacturing 4.0, the next wave of industrial progress built on digital technologies that many manufacturers are now beginning to undertake, will come to resemble a “digital wagon train”, traveling slowly, at times haltingly as companies come to grips with the fact that M4.0 is much more of a cultural and leadership transformation than a technological challenge, requiring deep changes in leadership orientation and practices to deal with the complex, multi-layered transition to M4.0. Manufacturing leaders will need to make tough decisions about vision, strategy, alignment, execution, and culture to achieve the promise of M4.0. The challenge will come down to whether leaders are personally ready for the epochal transformation in front of them. Spiritual, mental, emotional, and physical energies will need to be harnessed as much as adopting and integrating new technologies.

M4.0: Manufacturing Leaders Must Broaden Their Horizons

As part of that reorientation, manufacturing leaders will also be required to broaden their horizons as Manufacturing 4.0 creates new, digitally-enabled opportunities to enhance operational efficiency by building new workflows that link previously isolated functions such as manufacturing, supply chain, and new product development. Leaders will be forced to gain deeper knowledge of how other, contiguous functions work in order to understand the opportunities for cross-functional collaboration, ultimately resulting greater customer value. And manufacturing leaders will be expected not just to understand how contiguous functions work, they will need to be able to build stronger alliances so that they can influence decisions made across functional boundaries.

Machine Learning and AI Enter the Mainstream

Having spent much of the past decade perfecting the sensing, collection, and organization of data from the plant floor and across the supply chain, manufacturers in 2017 will get serious about leveraging a new generation of deep machine learning, artificial intelligence, and natural language tools that will not only turn all of that data into new, real-time insights about how the business is operating, but also deliver valuable recommendations for improving operations or even heading off problems. Already, for example, manufacturers are applying machine learning protocols to detailed part quality, product testing, and field performance data to quickly isolate and fix the underlying causes of quality problems.

The Digital Thread Stitches Together the Supply Chain

Until now, manufacturers have tended to aim their Manufacturing 4.0 initiatives at cutting costs and improving efficiency of internal processes such as equipment maintenance and quality. Increasingly, however, manufacturers—particularly those that rely on partners for production and assembly—will endeavor to build platforms that securely give external partners access to the “Digital Thread.” These digital platforms will enable visibility into product and design change data and applications that enable collaboration. The result will be reduced part tooling costs, increased design reuse, faster and less expensive prototyping, and much more flexible production.

Blockchain To Emerge as New “Trust” Platform for Manufacturing Value Chains

Originally developed to support the Bitcoin digital cryptocurrency, the ability of the underlying blockchain technology to create deeply-encrypted, immutable records in a highly-secure distributed ledger will become increasingly important as a way to increase trust between collaborating manufacturing enterprises. In 2017, blockchain technology will begin to be developed and adopted by innovative manufacturing companies as a more secure, and ultimately disintermediating approach to creating more agile supply chains that can automatically negotiate and close new financial and supply-side partnership deals, ensure IP protection, provide trusted proof of product provenance and certification, and ratify material traceability and transparency.

Manufacturing Cybersecurity Threats Demand Urgent Rethink

Increased connectivity as part of a Manufacturing 4.0 transformation strategy will inevitably create greater vulnerability to digital disruption, interference, and malicious attack for the world’s manufacturers. One in five manufacturing companies already report that cybersecurity concerns have materially slowed, or prevented, one or more Manufacturing 4.0 projects or initiatives, according to the latest Manufacturing Leadership Council Cybersecurity survey. Over half also believe that in the next five years, cybersecurity concerns could hinder the speed and scope of adoption of M4.0 technologies and approaches in some way. Traditional cybersecurity policies are no longer adequate in this increasingly connected, data-driven world. Manufacturers of all sizes will need to rethink, redesign, or radically improve their cybersecurity strategies to better protect key assets, networks, products, and personnel as they move along their journey to Manufacturing 4.0 in the year ahead.

Use of Advanced Analytical Software to Increase

Manufacturers will strive to hone their skills in using advanced analytical software, already one of the most desired technologies, to not only improve decision-making but also to identify new business models and opportunities. Expect to see many companies extend their expertise with the software from a largely diagnostic activity today to increasingly predictive and even prescriptive undertakings with the technology. Building the capability to travel this maturity curve with the software will determine which companies create new competitive advantages, potentially enabling them to disrupt and even reshape their markets.

Source: Manufacturing Leadership / Frost & Sullivan’s GIL Community blog