What’s Ahead in 2016 for Manufacturing?
The year 2015 is rolling up, so the time has come to start thinking about what’s on deck for manufacturing in 2016. The biggest story in terms of looking at the future of manufacturing is the ever-increasing rate of change. Changing economics, technology and geopolitics all impact the world of making stuff, and that impact is being felt almost everywhere in the world of manufacturing.
I think it is important to note that nothing really stands by itself in this discussion; almost anything we talk about is influenced by or influences other categories. But, that doesn’t mean that we can’t look at 2016 through assorted lenses to see what the future might hold. I see five categories that are active in manufacturing.
- The Long View
Let’s look at these individually.
Technology is a huge disruptor. Virtually every technology that supports manufacturing is developing rapidly. We will see this trend continue to develop.
Robotics, 3D printing, MES, ERP, CPQ, CAD and other technologies are all delivering great advantages to manufacturers that are taking advantage of them. Most of this is driven by digitalization. As that technology wave sweeps through, it will continue to support great change as memory increases, processor speeds increase and prices continue to drop.
The overall effect of this development is the ability for manufacturers to deliver more product faster with higher quality and lower cost. Manufacturers are learning that this technology can have a profound effect on the business models they are currently using.
One effect of the new technology is to change the calculus regarding the economics of offshoring. This will impact more and more companies in the next few years and beyond.
Automation is often cited as the destroyer of jobs. However, today those same lower-tier jobs that were displaced can be executed by machines more efficiently than using low-cost overseas labor, which is pricing itself out of the market in many of the traditional offshore destinations.
The automated assembly line, coupled with higher-quality output, and lower logistics costs with shorter supply and distribution chains make a compelling argument for bringing the factory back onshore. So a thousand lower-paying jobs are replaced by several hundred higher-paying jobs. This should be good news for North America, Europe and Australia.
There are very real issues that will challenge manufacturing in the next year and well beyond.
Education and selling the benefits of a manufacturing career are still a problem in some developed countries. Many still see manufacturing as a dirty, dangerous, dehumanizing way of earning a living. Organized labor, our public school systems and our junior and technical colleges must step up to the plate and sell people on the benefits of a manufacturing career.
A tepid US economic recovery is well underway, and yet we still do not have robust economic growth worldwide. The European default problems associated with the smaller economies of the EU casts an air of uncertainty that inhibits growth.
More recently, the destabilized Middle East has begun to extend its brand of destruction and chaos beyond the Mediterranean basin into Europe, North America and Asia. This is obviously a wildcard in the deck of economic planning.
Climate change will continue to offer challenges to the economies of the world. Regardless of the validity of any particular climate change claim, the fact is that clean, potable water is increasingly in short supply.
Technology sometimes evolves smoothly and gradually, and in other times, it develops in fits and starts. Technology will always be in play when looking at disruption.
The biggest disruption coming to 2016 is in the area of selling. The idea of high-paid cowboys running around the country closing deals and making rain is all but obsolete. The role of “sales professional” is undergoing radical redefinition. No one answers their phone, direct mail goes directly into the recycle bin and shoe leather cold calling is finished. The buyer has taken firm control of the transaction.
Selling is not so much selling as facilitating. Buyers buy. They look for information and they trust sources that deliver reliable information. Virtually all of the associated selling processes including product inquiry, quotation delivery, configuration, ordering and shipping are directed by the buyer. The effective salesperson facilitates these processes on behalf of the buyer.
Tools like CPQ and CRM will help sales, or in some cases, directly help buyers themselves. Sales portals function as online showrooms and ordering facilities. Increasing the availability of information, the quality and accuracy of information dispensed and solving problems on behalf of the buyer is what sales is all about today. Sales agents that insist on controlling the conversation are seen as obstructive and will likely derail any possibility of a deal.
The Long View
When looking at trends in the context of a single year, care must be taken to keep things in perspective. Conditions that are present one year will be distant memories five years later.
Technology is ever-evolving, and it will always be disruptive at some level. For manufacturing, technology is key. The whole process of manufacturing relies on tools. The real disruptor is the pace of change, not the change itself.
If we look at what is critical today, we see the following:
Worldwide economic malaise – A recovery that is oozing along but not building momentum.
Global unrest – Middle-east issues, European Union issues and China’s economic downturn coupled with expanding military ambition, African unrest on multiple levels and political polarization.
Technology – Better and faster development cycles continue to pick up speed. Companies often struggle with choosing priorities.
Globalization – Remember this buzzword? It is still a long-term issue; it just looks different today. Supply chains still stretch across continents, but they are doing so with less frequency. Competitive pressures, technology and politics are re-establishing the onshore manufacturing option, but there’s also a willingness to place manufacturing near the markets that are being addressed and to offset long supply and distribution chains.
There is danger in creating a long-term problem by overreacting to a short-term condition, so beware.
There are two constants that should always be remembered. First, there is a huge amount of work to be done. There are huge countries with huge populations that are largely ignored by the developed world. The upside growth potential is staggering.
Second is change. Change is constant. Change will continue, and it will evolve at a faster rate than ever. Companies that can quickly adapt and learn from change will achieve the ultimate competitive advantage.[i]
[i] Jack Welch, Brainy Quote, http://www.brainyquote.com/quotes/quotes/j/jackwelch173305.html