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By: Ben Baldwin
January 9, 2023
What are the Manufacturing Trends of 2023?
A new year has finally begun. Many are ready to put the challenges of the past three years behind them and embrace the manufacturing trends of the future. Yet despite the hardships fought, the battles won, and the rewarding lessons learned, we remain in a time of uncertainty.
However, even if we are uncertain of the future, we can still prepare for it by expanding our knowledge.
Despite the industry taking great strides amid the trials since 2020, many of these challenges are persistent. With supply chain disruptions, worker shortages, and international trade prices soaring to new levels, companies need to adopt flexible and resilient business models in 2023.
While some challenges of the past may not be completely gone, 2023 is poised to experience more innovation and solutions than in previous years.
To help you pursue optimal growth in the next year, we’ve compiled a list of the 11 biggest manufacturing trends for 2023 that can help give you a competitive edge within the industry.
Manufacturing Trend #1. Continued Efforts to Curb Labor Shortages
A particular focus of manufacturers in 2023 will be figuring out ways to fight labor shortages. Despite low workforce numbers presenting their own unique set of insular problems, labor shortages have a larger impact on the whole industry than you may think.
Deloitte reported in 2022 that 45% of US manufacturing executives have turned down business opportunities due to a lack of workers. This startling statistic points to a great deal of lost revenue for the sector.
This is why 1 in 3 surveyed manufacturing executives say that retaining their high-performing employees is a key strategy for 2023.
Ongoing labor shortages have a direct impact on supply chains as a lack of labor causes inefficiencies and logistical delays. As a result, we have seen prices increase and material/product availability decrease.
Now, more than ever, workers are the most watched commodity in the industry. Companies need to attract the next generation and get them working quickly.
The pandemic has raised awareness of the essential role of manufacturing in our lives. We are now at a watershed moment when a new wave of workers is needed to further advance our use of technology and maintain U.S. economic competitiveness. This industry is critical to bolstering our economy long term.Paul Wellener, Vice Chair and U.S. Industrial Products and Construction Leader - Deloitte LLP
To combat this trend, the industry is pushing to get more people involved in the manufacturing sector through diversity, equity, and inclusion (DEI). Deloitte reports in their 2023 Manufacturing Industry Outlook that the manufacturing industry will place a higher emphasis on attracting women and racially/ethnically diverse groups to the manufacturing workforce to increase the potential pool of workers.
Meanwhile, the US government is also enacting its own DEI measures. On National Manufacturing Day (October 7th, 2022), the US Government released the National Strategy for Advanced Manufacturing where one of its key objectives is to “Expand and diversify the advanced manufacturing talent pool”.
With initiatives that encourage more people to pursue careers in manufacturing, businesses should have a broader section of the population to source labor.
Pro Tip: Even when experiencing high turnover, you can control your company knowledge and training. Use VKS work Instructions to capture tribal knowledge, share it with your evolving workforce, and empower your workers/new hires with advanced skills.
However, due to the advancements of the Fourth Industrial Revolution, the industry needs highly skilled labor.
Manufacturing Trend #2. Investment in New Skills for the Workforce
As we progress through this still new decade, we will see growing investment in training and education for the workforce. The manufacturing industry is constantly evolving. New and current workers will need the appropriate skills to keep up with industry demand.
Despite fears that automation, advanced machinery, and artificial intelligence will kill manufacturing jobs, it is in fact the skills gap that is leaving many manufacturing jobs unfilled.
But there is light at the end of the tunnel. In a recent study, 69% of polled manufacturing employees under the age of 25 reported staying with their current employer when offered training and development opportunities. This means that manufacturers can combat two key challenges of the era with one action. By advancing the skills of the workforce, companies are reducing the skills gap while holding onto valuable employees.
Under this trend, companies are increasing investment in training and retraining employees. Stanley Black and Decker has committed to closing the skills gap within their workforce by retraining 10 million of their manufacturing employees by the year 2030.
As other companies follow suit, we will see serious investment in training and educational software along with opportunities for the manufacturing workforce in the next decade.
Manufacturing Trend #3. The Global Supply Chain is Still Adjusting
As the world deals with the supply chain disruptions caused by COVID-19, 2023 will sadly continue to uphold this trend. With inflation still on the rise and labor shortages being experienced by transportation industries, the cost of shipping a container from the other side of the world is increasingly more expensive.
While the industry tries to resolve these problems, the cost is affecting the consumer, creating more waves and unpredictability in the market and supply chain.
In spite of these challenges, manufacturers are working hard to combat the issue head-on with 3 key strategies.
Diversifying suppliers: To mitigate unwanted gaps, manufacturers are working to create redundancies within their supply chains. When materials cannot be sourced or accessed from one supplier, the company has other pre-established suppliers to fill in. This redundancy safeguards companies from proverbially putting “all their eggs in one basket”.
Strengthening relationship management: To properly manage diversified suppliers in 2023, companies will need to create good relationships with suppliers. These strong relationships can help find new solutions to material shortages, new trade routes, and foster quick access when materials are available.
Enhanced digital technologies: To help companies effectively diversify and strengthen relationships with suppliers, companies are turning to digital technologies. Using work instruction software and the VKS Digital Ecosystem, manufacturers can share key knowledge with suppliers while ensuring that material/component quality is at its highest level before it reaches the manufacturing floor.
Manufacturing Trend #4. Increase in Onshoring and Localized Production
Before the events of 2020, cheap labor used to be the focus of the industry, compelling many companies to cut costs and outsource labor to other countries. The inexpensive labor was worth the increased transportation costs and additional wait times. But this was only acceptable because of the regularity of the contemporary supply chain.
Now, with the supply chain experiencing long-term unpredictability, we are seeing businesses give up their offshoring operations in favor of dependable transportation and supply chain autonomy. This is accomplished by returning production to their home countries and/or moving production closer to their intended market.
Governments are getting involved as well. Currently, East Asia holds nearly 75% of global semiconductor manufacturing capacity. But in August of 2022, the US government passed the CHIPs and Science Act which is poised to increase domestic semiconductor investment. The US is hoping to create a more sustainable and resilient semiconductor supply chain close to home.
At the same time, companies like TSMC (Taiwan Semiconductor Manufacturing Company) are building facilities in the US so that they can be closer to their intended market, such as Apple.Inc.
Manufacturing Trend #5. Digital Transformation for the Workforce
Amid the industry shifts that occurred from 2020-2022, manufacturers are seeing the fragility of their dependence on experienced labor. Specifically, on the tribal knowledge within their workforce.
Let’s face it, experienced workers leave for any number of reasons, not to mention the worker shortages we discussed earlier. If a company is overly dependent on their experienced workers, then your operation could be left in the dark when those people leave.
For this reason, 2023 will continue to see a significant increase in transformations toward a digital mode of operations. Statista reports that spending on digital transformation is expected to reach 3.4 trillion U.S. dollars by 2026, compared to 1.6 trillion U.S. dollars back in 2022. That’s a projected increase of over double the amount of spending in just four years.
Companies are already achieving stronger workforces by incorporating technology such as IIoT, smart tools, 5G, cloud computing, industrial wearables, and digital work instructions into their operations.
With proper digital transformation, companies can achieve workforce flexibility, and in turn, increase labor resiliency.
Manufacturing Trend #6. Industry 5.0 Empowers Workers
While Industry 4.0 is still extremely relevant in 2023, the industry is simultaneously experiencing the benefits of the next industrial revolution. Industry 5.0 aims to advance the manufacturing sector with connected worker technologies like IoT, big data, and cyber-physical systems that are designed to specifically aid and empower people.
With complex processes, shifting market demand, and greater product variability, the need for digitally assisted workers and connected worker technology is on the rise. The global Connected Worker market is anticipated to grow from 4.21 billion to 24.32 billion at a CAGR of 24.2% from 2021 to 2029.
Industry 5.0’s growth is set to empower workers to collaborate with systems and people as a unified team. This new revolution’s technology fosters an advanced form of information sharing, making connections between people, tools, and computers even stronger.
The adoption of this technology is expected to be intuitive since most people are already using digital assistance and connected technologies in their daily lives. Since 96% of 18 to 29 year-olds in the US own a smartphone, connected technology is projected to be a key method of engaging the next generation of workers and creating a stronger and more connected workforce.
With the diverse production demands and the capabilities of Industry 5.0 technology, connected worker technology is a must-have for 2023 and the foreseeable future.
Pro Tip: Visual work instruction software supports your employees by giving them the right information at the right time. With step-by-step instructions, pictures, videos, and annotations, the knowledge capacity of your workforce is exponentially increased.
Manufacturing Trend #7. Big Data Equals Smarter Companies
Companies are not only investing in new technologies that boost productivity. Manufacturing companies are also becoming smarter.
An incredible advantage of a digital mode of operations is the opportunity to acquire massive amounts of data, often referred o as Big Data. This data is so large and/or complex that it needs to be analyzed computationally to acquire accurate results that reveal patterns, trends, and correlations that might otherwise go unnoticed.
Big Data enables manufacturers to gain insights into their operations and their supply chains like never before; empowering companies to evolve and improve faster than in previous generations.
Big Data provides knowledge, and knowledge is power.
The market for Big Data in the manufacturing industry is expected to reach 4.55 billion USD in 2025. That is a CAGR of over 30% from 905 million back in 2019.
By installing software that captures key data, your operation and supply chain are like an open book. You can gather insight and knowledge that previous generations could only dream of.
Manufacturing Trend #8. Digital Thread Technology Connects the Factory
The growing rates of digital transformation and the use of big data over the past decade have led to some incredible achievements in the manufacturing industry. But it has also led some manufacturers to gain more complicated data than they know what to do with. And if using multiple systems, this data can be hard to manually consolidate and standardize.
For this reason, in 2023, we will see an increase in digital thread technologies that are designed to integrate with other systems and centralize data flow. Progressively, companies are weaving a resilient digital thread throughout their operations with API (Application Programming Interface) capable systems. This technology allows ERPs, BI software, digital work instructions, machine monitoring software, and other cyber-physical tools to effectively communicate with each other.
If all tools and systems can work together without direct human interaction, then the production line can achieve optimal efficiency.
Read More: At the International Manufacturing Technology Show (IMTS 2022), VKS teamed up with 6 different technologies to showcase how a strong Digital Thread can be implemented into the manufacturing environment.
Manufacturing Trend #9. Digital Twins Create Complete Virtual Worlds
Though IIoT is not a new topic of discussion, the technology continues to bring innovations to the industry. Namely, digital twin technology.
Through carefully installed IoT sensors within a machine or environment, companies gain a complete virtual re-creation of real-world scenarios in an extremely fast and accurate manner.
Digital Twin technology enables companies to
For instance, every embedded sensor within a machine gathers data in real time. This data travels to the digital twin system which compiles and analyzes it immediately. Everything that happens in the real world also occurs in the digital world, hence the name digital twin.
It's easy to see why this technology would be incredibly useful to manufacturers, especially those with machinery and connected environments.
One key proponent of digital twin technology is Rolls Royce Aerospace where each airplane engine is outfitted with hundreds of IoT sensors that gather telemetry, fuel usage, engine health, and loads more data. And if these turbines are connected together, they can learn from each other’s experience and propose intelligent solutions to problems that may affect the whole fleet.
The technology is expected to grow rapidly in the current decade. While the market for digital twin technology was estimated to be worth USD 7.5 billion back in 2021, it is anticipated to expand at a CAGR of 39% from 2022 to 2030. This incredible rate of growth shows the industry that IIoT technology is still creating big innovations and further advancing the amount of insight we can gather from the manufacturing environment.
Manufacturing Trend #10. The Growing Effort for Carbon Neutrality
With the ever-increasing focus on climate change, manufacturers will continue to make efforts to enact greener operations and achieve carbon neutrality. There are even growing discussions of how climate change is directly contributing to supply chain disruptions through the increased number of natural disasters.
The global manufacturing industry accounts for about a third of global greenhouse gas emissions. Because of this, many manufacturers are looking for cost-effective and sustainable practices for the future.
As we head into 2023, more and more consumers are looking for companies that are making strides toward carbon neutrality. Product labels that inform consumers of the environmental impact of a product will serve as powerful decision-making factors.
In a study conducted in Europe, 60% of respondents said that they try to buy environmentally friendly products as much as possible. In the same study, 21% of younger respondents stated they would pay more for environmentally friendly products. This would seem to indicate that consumers are at least looking to buy more carbon-neutral products when they can.
Additionally, as more and more companies embrace the benefits of digital transformation, they are progressively turning to paperless solutions. This has been a major contributor to decreasing the carbon footprint of many within the industry.
Pro Tip: Environmental certifications, such as ISO 1400, can help manufacturers reduce their carbon footprint. It is also a signal to consumers that your company takes these issues seriously, giving you a competitive advantage in the market.
Manufacturing Trend #11. Increased Demand from The Next Generation of Employees
For our last manufacturing trend of 2023, let’s return to the workforce and opportunities to retain and attract new talent. Amid the labor shortage felt around the globe, the job market is in a buyer’s market phase – prospective employees hold more leverage than usual. While this can seem like a costly factor for the industry, it is also an opportunity for leaders to truly listen to the needs of current and prospective employees.
Money is not the only factor workers are looking for in 2023. They are also looking for opportunities to advance professionally, workplace wellness programs, encouraged communication/engagement, transparency, and a more accommodating work-life balance to name a few.
If companies provide even a few of these perks, they are sure to make low-cost/high-reward decisions that attract new talent and help maintain the current workforce.
While keeping your employees and attracting new talent is crucial for 2023, it is important to also remember that employees that feel valued often contribute to better quality, creativity, and productivity. So while employees may have more leverage than ever, the trending demands, if managed properly, can increase productivity and workforce stability in 2023.
Pro Tip: Increase employee engagement with work instruction software. Employees quickly acquire new professional skills while also gaining opportunities to provide feedback that actually make a difference.
Despite the labor shortages and supply chain disruptions that are still prevailing issues for 2023, the manufacturing industry is facing these challenges head-on with new technologies and targeted action plans.
If we have learned anything from the course of Industry 4.0 and 5.0, it is that the manufacturing industry is constantly evolving and improving.
So let’s keep this going! Now is the time for smarter technology, resilient connections, and greater opportunities. After all, this is 2023; new levels of innovation and flexibility are the standard.
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