6 Trends Influencing the Manufacturing Industry in 2022

Manufacturers have had plenty to contend with since the arrival of Covid-19. On top of the unprecedented supply chain disruptions, in 2020 and 2021 the sector was also hit by other pandemic-related issues including the Great Resignation.

And anyone hoping for some respite in 2022 has been left sorely disappointed. The war in Ukraine, soaring transport costs, and inflation are among the challenges added to the mix so far this year.

If there has been a silver lining, it’s that the turmoil of the past few years has forced manufacturers to adapt and become more resilient. Smart operators have taken the opportunity to rethink their processes, re-evaluate their operating models, and embrace new tools and technologies.

In this post, we’ll look at six industry trends that are helping manufacturers not only survive the pandemic, but also set themselves up for success in the years ahead.

The incentive of cheap offshore labor used to be an attractive option for manufacturers wanting to keep costs down. But the spiraling cost of shipping since the pandemic has made many realize the dangers of depending on facilities that are far from their home base or major markets.

As a result, manufacturers are increasingly looking to ‘re-shore’ their operations—bringing production closer to home in a bid to reduce costs and commercial uncertainties.

On top of addressing the problem of high shipping costs, localizing production has other benefits including enhanced control of supply chain management, better production supervision and communication with the workforce, and freedom from trade wars and tariffs.

The skills gap—the divide between the skill base of the workforce and those required by manufacturers—continues to be one of the most pressing issues facing the manufacturing industry.

Prior to Covid-19, the U.S. was expected to have 2.1 million unfilled manufacturing jobs by 2030, according to Deloitte, and recent trends, including the Great Resignation, have exacerbated the problem.

There is a growing realization that closing the skills gap requires a significant effort from the manufacturing sector, and is not something that any organization or institution can do on its own.

There is now a trend emerging across the industry of focusing on retaining existing employees and securing a new generation of workers. This includes increasing employee recognition and feedback opportunities, and improving work/life balance as well as work hour flexibility.

(For a deep dive into the issues, and what needs to be done to solve them, read Tulip’s Critical Look at the Skill Gap in Manufacturing.)

Part of the challenge of addressing the skills gap, and building a resilient industry, is ensuring the manufacturing workforce participates in continuous learning and skill development.

A study by the Manufacturing Institute demonstrates the importance of ongoing staff development: 69% of employees under the age of 25 reported staying with their current employer because they are offered training and development opportunities.

Worryingly, at the same time, the study found there is a gap between how leadership views development and how frontline workers do. Nine in 10 leaders reported being satisfied with the training and development their firm offered while two-thirds of frontline workers weren’t.

Another trend manufacturers are embracing is the adoption of automation and augmentation across their production processes.

Process automation—including the adoption of smart tools, IoT sensors, and other technologies—results in a more flexible workforce, and therefore increased labor resiliency. Equipping staff with smarter tools enables them to perform a wider range of complex tasks, and can even compensate for a collective lack of workforce experience.

Likewise, worker augmentation—the use of technologies to supplement a job and create efficiency—frees workers to focus their efforts on higher-value work.

The concept of the “composable enterprise” has been gaining traction since the term was first introduced by Gartner in 2020.

Composable enterprises are those that opt for a modular approach to developing a personalized tech stack, with Gartner’s definition being: “an organization that delivers business outcomes and adapts to the pace of business change … through the assembly and combination of packaged business capabilities (PBCs). PBCs are application building blocks that have been purchased or developed.”

In other words, the composable enterprise gets to pick and choose between a wide range of tools to stay ahead of competitors and satisfy customers.

Composable manufacturing systems are seen to have the potential to help the manufacturing sector cope with current challenges and disruptive technology trends. Through APIs and no-code/low-code platforms, businesses have the ability to “compose” their IT architecture without committing to specific tools.

With the amount of data collected and analyzed in smart factories growing exponentially, manufacturers are turning to 5G networks and edge computing to support their information processing requirements.

5G networks and edge computing offer manufacturers the chance to truly take advantage of technologies such as automation, artificial intelligence, augmented reality for troubleshooting, and IIoT.

5G networks offer many advantages over 4G technology and fixed Wi-Fi infrastructure, including low latency, high reliability, mass connectivity, and wide coverage, all at a reasonable cost.

Meanwhile, edge computing enhances data aggregation and processing by placing computing resources close to where data is collected.

(For a detailed look at how manufacturers can benefit from the use of edge devices to power their IIoT and machine monitoring initiatives, download Tulip’s guide to Edge Computing for Manufacturers.)

While the manufacturing industry has been beset with supply chain issues, labor shortages, and other challenges in recent years, it is also a sector with a bright future thanks to the emerging trends outlined above.

By embracing the potential of new technologies and adopting innovative processes and staff development initiatives, smart manufacturers have to ability to operate on a level that meets and even exceeds their customers’ demands.

If you’re interested in learning how Tulip can help facilitate many of the operational improvements outlined in the trends report above, please reach out to a member of our team today!