A new year has finally begun. Many are ready to put the challenges of the last two years behind them and embrace the manufacturing trends of the future. With the hardships fought, the battles won, and the rewarding lessons learned, we remain in a time of uncertainty.
But just because we can’t predict the future doesn’t mean we can’t be prepared for it.
Manufacturing trends for 2022 are affected by the ways in which the manufacturing industry has risen to the challenges posed by the past two years. Many of these challenges are still present. With supply chain disruptions, worker shortages, and international trade prices soaring to new levels, companies will need to adopt flexible and more resilient business models in 2022.
To help you and your company pursue optimal growth in the next year, we’ve compiled a list of the top 10 biggest manufacturing trends for 2022 that may help give you a competitive edge within the industry.
A particular focus of manufacturers in 2022 will be figuring out ways to fight labor shortages. Despite low workforce numbers presenting their own unique set of insular problems, labor shortages may have a larger impact on the industry than you think.
As workers retire and fewer young people join the manufacturing sector, there are not enough people with the appropriate skills to take up the reins. By the year 2030, it is estimated that 2.1 million jobs will be unfilled. This has a direct impact on supply chains as a lack of labor causes inefficiencies and delays in shipping and logistics. This has been evident with the supply chain disruptions of the past two years under the pandemic. As a result, we have seen prices increase and material/product availability decrease.
To combat this trend, the manufacturing sector is focusing on retaining its employees and securing a new generation of workers. Increasingly, companies are changing their workplace cultures to meet the needs of the current and next generation of employees. This includes:
However, due to the advancements of the Fourth Industrial Revolution, the industry cannot simply hire or engage anybody. It needs highly skilled labor.
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 and workers will need the appropriate skills.
We’ve all heard the rhetoric. Automation, advanced machinery, and artificial intelligence will kill manufacturing jobs. Since the Second Industrial Revolution, this theme has been a common fear. But this has been proven wrong time and time again as new technologies have led to greater productivity, more workers, more skilled labor, and higher wages.
As we dive deeper into the second decade of Industry 4.0, companies need workers trained in the new and advanced technologies of the era. In fact, it is 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.
As the world deals with the supply chain disruptions of the past 2 years, 2022 is bound to see a further increase in onshoring and localized production. Cheap labor used to be the focus of many businesses, compelling them to outsource labor to other countries. Now with recurring bottlenecks in the global supply chain, we may see this focus shift towards inexpensive and more dependable transportation as a key deciding factor in where products are manufactured.
In the early days of 2020, Covid-19 first hit hard in China, creating a ripple effect through the global supply chain. This caused serious slowdowns in shipping and production as China held about a quarter of global manufacturing. Companies dependent on China were left with little ability to meet their customer demand.
According to the Drewry World Container Index, the cost of sending a container from Asia to Europe has risen to 10 times the price it was back in May of 2020. And the cost of sending a container from Shanghai to Los Angeles has increased by a factor of 6.
But despite these soaring prices, the market is not letting down. Consumers still expect their products to arrive quickly and cheaply. And according to Bloomberg, the problem is continuing to advance with many manufacturers concerned about how they will get the required materials they need.
These events have caused many manufacturers to realize their dangerous dependency on facilities that are far from the intended market. For this reason, manufacturers are looking to shift more towards localized production.
The benefits of onshoring include:
Reduced shipping costs Localized control of supply chain management. Production supervision Better communication with the workforce Freedom from trade wars and tariffs
Because of the inherent unpredictability of the current global supply chain, switching to localized and domestic production is proving to be an important consideration for 2022.
It is no doubt that companies with an online presence have and will continue to fare well within the coming decade. Though the online shopping trend is far from new and still not up to the revenue seen by traditional retail, e-commerce has taken a huge leap forward since the beginning of the pandemic. And the growth doesn't look like it's stopping anytime soon.
In 2022, Americans are expected to spend a record 1 trillion dollars online. Adding to this, Nasdaq predicts that a staggering 95% of purchases will happen online by the year 2040 while it is expected that department store sales will decline in the coming decade.
But e-commerce also has its unique challenges. Now that the market has grown accustomed to the ease of shopping online, companies will need to pay close attention to taking care of their customers. For instance, 18% of online shoppers admitted to abandoning checkout pages that are too complicated. If companies don’t adjust to the needs and expectations of the market, then their e-commerce sales are likely to leave significant revenue on the table.
With over 2 billion people worldwide buying products online, the e-commerce market is already a massive force that is still expanding. Companies that can hop on the proverbial e-commerce train and improve their online sales presence will be better able to face the new year with a strong and diversified sales market.
One method that manufacturers are using to become more resilient in 2022 is to expand their operations to include more production lines. Under a mixed-model assembly line, workers are taught multiple processes and procedures to fabricate a variety of products. This provides companies with the opportunity to diversify their operations and augment production based on their circumstances and the demands of the market.
Mixed-model assembly has grown over the past decade with the emergence of Industry 4.0 and will continue to expand into 2022. With the growth of e-commerce, consumers are expecting access to products that are more varied and more customized.
As we’ve discussed in The Connected Worker Platform and the New Connected Economy, mixed-model assembly will help you achieve greater product flexibility, shorter lead-times, and significant cost-cutting. In light of the supply chain disruptions in recent months, mixed-model assembly enables manufacturers to be less dependent on one mode of production; making them flexible and resilient to market changes.
Pro Tip: With mixed-model assembly, it can be difficult for workers to remember the ins and outs of every product line. Use visual work instruction software to guide employees through every process and procedure. With a comprehensive guide helping employees complete their complex tasks, every employee builds with confidence and expertise.
Amid the industry shifts that occurred over the course of 2020 and 2021, 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 brought on by the events of the past two years. If you are overly dependent on your experienced workers, then your operation could be left in the dark when those people leave. Although this can have devastating effects, businesses can do a few things to make employee turnover a smoother transition.
In 2022, we will see a significant increase in transformations towards a digital mode of operations. Companies are already achieving stronger workforces by incorporating technology such as IoT sensors, smart tools, 5G, edge and cloud computing, industrial wearables, and digital work instructions into their operations.
The digital transformation is not meant to replace workers, it is there to empower them and usher in the next generation. Workers with stronger, faster, and smarter tools will be better equipped to perform varied and complex tasks despite a potential lack of experience.
With the adoption of this manufacturing trend, companies can achieve workforce flexibility, and in turn, increase labor resiliency.
Coming into 2022, connected worker technology is set to experience substantial growth. According to Polaris Market Research, 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.
This empowers the worker to capture key manufacturing data in real-time and collaborate with systems and people as a unified team. Essentially, Connected Worker technology fosters information sharing. Making connections between people, tools, and computers even stronger.
Most people are already digitally connected within their daily lives. So this technology should be transferable to create a stronger and more connected workforce. Since 96% of Americans aged 18-29 own a smartphone, this is projected to be a key avenue into engaging the next generation of workers - potentially providing part of the solution to the skills gap and worker shortages.
With the diverse production demands and capabilities of Industry 4.0, connected worker technology is a must-have for 2022 and the foreseeable future.
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. 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.
Over the next five years, the market for Big Data in the manufacturing industry is expected to reach USD 4.55 billion 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.
With the ever-increasing focus on climate change, manufacturers will continue to make efforts to enact greener operations and achieve carbon neutrality. 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 2022, more and more consumers are looking for companies that are making strides towards 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 said that 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 digitally transforming their operation while gathering large data caches, 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.
It is appropriate that our last manufacturing trend of 2022 would be about strengthening the workforce. As we’ve discussed, the growing skills gap and the amount of unfilled jobs is growing. For this reason, we will see an effort to get more people involved in the manufacturing sector in this next decade through diversity, equity, and inclusion (DEI).
In 2020, NAM (the National Association of Manufacturers) put out a pledge that by 2025, manufacturers will take action to increase equity within the industry. Nam further states that this will create 300,000 pathways for job opportunities for minority groups. Adding to this, in July of 2021, the state of Washington passed the Strength Through Manufacturing Act which aims to see the number of manufacturing firms owned by women and minority groups double in the next 10 years.
With initiatives that widen the scope of people in the manufacturing sector, businesses have a broader section of the population to source labor from. This makes their business more resilient to worker shortages and the whole industry more flexible to any challenge that may come in the future.
Despite the labor shortages and supply chain disruptions that are seeming to make the beginning of 2022, the manufacturing industry and governments around the world are facing these challenges head-on. If we have learned anything from the past decade, 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 Industry 4.0; new levels of innovation and flexibility are the standard. In this new year and decade, seize knowledge, gain insight, and pursue growth.
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