The manufacturing sector has been going through a period of frequent, disruptive changes in its attempts to recover from the economic recession of the late 2000s. Gradual recovery has hit a tipping point into growth, but 2019 could end up standing as a pivotal year in determining if manufacturers have developed resiliency against economic challenges. In this environment, supply chain and logistics management serve as central figures in helping manufacturers adapt their processes and capabilities in a new operational reality.
Continued Growth on the Horizon
According to research from Deloitte, the U.S. manufacturing sector grew by 3 percent year-over-year in 2018, based on the Oxford Economic Model. This represents consecutive years of annual growth in the industry, and the trend is poised to continue with manufacturing expanding at a 3.7 percent rate in 2019. This projection is backed by more than data. Deloitte also found that industry leaders are fairly confident in the positive outcome, and a variety of economic conditions point to the industry returning to output levels not seen since the Great Recession.
While these growth projections are exciting, there are challenges ahead, particularly in terms of a tight labor market, high material costs and trade-related issues. These challenges put an emphasis on the importance of improving operational and spending efficiency in order to withstand difficulties that are on the horizon and take advantage of growth opportunities. Deloitte's research points to this by emphasizing three key strategies that are emerging to help manufacturers prepare for future disruption:
- Engage in merger and acquisition activities.
- Implement emerging digital technologies.
- Strengthen the supply chain to be ready for trade-related challenges.
Deloitte isn't alone in putting a focus on efficiency-related measures for manufacturing. The impetus is evidenced in a variety of studies looking ahead.
Using 2019 to Build for Long-term Growth
A PricewaterhouseCoopers study found that industrial manufacturers are facing new challenges in sustaining growth. In essence, the research indicates that industrial manufacturers have long used the economies of scale afforded them to maintain customer loyalty and position themselves for profitability. But with technology allowing for more customization and digital tools leading to new customer expectations for transparency and efficiency, industrial manufacturers are facing pressure to change quickly or risk falling behind.
Innovation centered around digital technologies are core to this change, with 72 percent of manufacturers polled by PwC saying they want to be considered digitally advanced by 2020. Just 33 percent of those involved in the study are regarded as such today.
Microsoft also emphasized the growing role of technology in helping manufacturers establish intelligent operations in 2019. For the year ahead, the tech giant expects the convergence of IT and operations technologies to blend with increased use of cloud services. Further, it expects smarter manufacturing technology to help drive industry advances in 2019.
Digital innovation is changing how manufacturers produce goods and interact with customers. As these trends develop, it is vital to ensure the wave of innovation coming in 2019 also makes it to the supply chain.
Supply Chain and Logistics Management in the Digital Manufacturing World
Imagine you've updated your sales process to allow for realistic quotes of custom products and direct integration to work orders, so your sales team can pass details on to the production floor. This kind of process improvement drives more predictability for the customer, creates a digital paper trail so clients can track progress on their orders, and in practice, it aligns with the kind of customer expectations Deloitte highlighted as shaping the manufacturing sector moving forward.
At the same time, your production team is working side-by-side with intelligent machinery and robots that support everything from automatically documenting processes and tracking performance metrics to supporting stronger maintenance to using cameras and sensors for quality control. This kind of intelligent operating vision falls in line with much of what PwC and Microsoft point to in terms of the need for rapid digitalization.
However, none of these capabilities would deliver their full potential value unless supply chain and logistics data is being delivered to relevant stakeholders at each level of the project. Sales workers need visibility into inventory levels across warehouses, projections of when vendors can typically complete orders, and cost estimates for materials and shipping so they can provide an accurate quote quickly. Production and warehouse teams must work hand in hand to move goods to the right places at the right time to optimize inventory levels and ensure orders leave the warehouse floor and get to customers on time.
Manufacturing logistics services can be the lifeblood of businesses trying to adapt to today's digital reality. Enterprise logistics providers can work closely with your teams to implement robust digital technologies to gather data and make it actionable to users. From there, they can work with you to use that information to refine processes to align with your business goals. Transportation Insight is leading this level of innovation in the logistics services space. Contact us today to learn how we can help your organization.