Top-8 Manufacturing Challenges for 2022
Manufacturers and suppliers continue to face waves of uncertainty. Russia’s war is forcing Ukrainian factories and knowledge workers offline while also creating a humanitarian crisis. And economic sanctions designed to target Russia also have a global impact on supply chain volatility and inflation. Separately, COVID-19 outbreaks in 2022 are causing leaders in China and other countries to shut down manufacturing hubs.
In this article, we list the top eight manufacturing challenges today along with strategies to address each:
- Reshore Manufacturing to Mitigate Risk
- Extend Supply Chain Visibility
- Protect Profit Margins Against Inflation
- Design Products for Sustainability
- Invest in Digital Enhancements Wisely
- Address Manufacturing and Tech Skills Shortages
- Strengthen Brand-Supplier Collaboration
- Launch Products Faster and Accelerate Operations
Addressing Manufacturing Challenges
1) Reshore Manufacturing to Mitigate Risk
Reshoring is becoming central to supply chain resiliency strategies. Last year, 83% of U.S. manufacturers responded “likely” or “extremely likely” to reshore when surveyed. This marks a 29% increase in one year, according to the 2021 State of North American Manufacturing Report.
But how do you evaluate offshore vs. reshore decisions? Effective analysis includes determining material availability in a reshored region. And to gauge production capacity, manufacturing teams simulate production runs in targeted reshored geographies – including their factories and their contract manufacturing (CM) partners. Teams then review these results to compare factories and regions based on costs, capacity, and production speed (which are based on machine cycle times).
Manufacturing companies can implement technology advances such as automation, robotics, and artificial intelligence (AI) to accelerate production. And these types of smart manufacturing initiatives can offset the impact of labor shortages and higher wages often associated with reshoring.
2) Extend Supply Chain Visibility
Cost and production capacity insights only tell part of the story. Analysis of your supplier base, for example, may identify an overreliance on material sourcing or production in a specific geography. To reduce risk, production teams may select a supplier in an alternative region with different manufacturing methods. (This could require a hole to be machined instead of punched.) Manufacturers may need to optimize some designs for a new factory site.
Additionally, provide suppliers and distributors with material requirements based on annual production volume – not just orders for the next quarter. Sharing this level of manufacturing detail can help to mitigate risk.
3) Protect Profit Margins Against Inflation
To address growing costs (and material scarcity), consider making non-invasive design modifications to control sourcing expenses. Engineering teams can simulate product designs using different materials and receive alerts if a material substitution creates a design for manufacturability (DFM) risk, such as exceeding weight tolerances. Teams can then compare all options and determine next steps.
4) Design Products for Sustainability
C-level manufacturing executives are making strategic investments in ESG, but many companies are struggling with execution. Consulting firm McKinsey found that the majority of product managers surveyed don’t have the tools or framework to define a sustainable product – or meet regulatory reporting mandates.
And none of the McKinsey survey participants are using Greenhouse Gas Protocol Scope 3 emissions to monitor carbon output. This is a critical gap because Scope 3 includes all indirect emissions throughout the reporting company’s value chain. (Scope 3 includes upstream and downstream emissions.) Scope 2 includes indirect emissions from purchased energy generated. And Scope 1 addresses direct emissions from owned or controlled sources.
Successful manufacturers are incorporating sustainability into their overarching DFM/design for excellence (DFX) benchmarks and processes. This enables manufacturers to understand a product’s CO2 impact during early design phases, and then evaluate opportunities to reduce a product’s carbon footprint. Importantly, teams can simulate design alternatives using different materials and manufacturing processes to meet CO2 emissions, cost, and performance targets.
5) Invest in Digital Enhancements Wisely
Manufacturers are adopting digital transformation (DX) and Internet of Things (IoT) solutions to develop new capabilities and integrate critical information that was previously locked in separate systems. The digital thread ties together product design and manufacturing operations to foster collaboration and enable teams to make more informed decisions throughout the product development lifecycle.
Using automated DFX analysis, design engineers receive automated guidance to optimize specific parts for cost and manufacturability. Once engineers update the CAD files, sourcing, advanced manufacturing, and supply chain planning teams can access the latest designs immediately. The digital thread enables companies to maintain a single source of truth that all authorized users can access.
And changes to available materials or factory location/capabilities may also require design changes. For these cases, design engineers can use digital factories to run simulated production scenarios. Then the product development team can determine the best approach to address new manufacturing realities.
6) Address Manufacturing and Tech Skills Shortages
Hiring and retaining quality employees is a top focus according to 83% of U.S. manufacturers surveyed by Deloitte and The Manufacturing Institute in 2022. And as manufacturers implement digital strategies, the demand for tech workers is increasingly important. And one data point also shows scarcity in this area as more than half of U.K. design engineering firms are facing a skills shortage, according to a 2021 survey. Mechanical engineering, software development, and other technical skills are essential for manufacturing success in the digital economy.
To address the shortfall in skilled workers, manufacturers are using technology to reach beyond traditional upskilling and retraining programs. This includes embedding tasks and workflows with automated processes, real-time guidance, and connecting teams through collaboration.
Companies are also using DFX solutions with guidance so junior staff can work on more critical and complex projects. Manufacturers can do more with less via solutions that streamline operations across the entire product manufacturing process.
7) Strengthen Brand-Supplier Collaboration
Manufacturers are increasingly drawing on suppliers’ expertise and resources to help reach their goals. A successful manufacturing brand/buyer-supplier partnership model requires high transparency regarding new capabilities in development, resources (and limitations), and costs. Execution depends on each party’s ability to collaborate on product specifications and related data. It also requires data collaboration to streamline processes, and a partnership framework that eliminates costly delays that can be inherent in buyer-supplier relationships.
Manufacturing industry companies that advance data sharing across key areas stand to gain $100+ billion in total value, according to the Boston Consulting Group (BCG). The consulting firm estimates that operational improvements alone will generate these gains.
We wholeheartedly agree with BCG’s assessment that sharing digital product twin information between manufacturers and suppliers is one of the essential ways to drive value. To build on that point, brand-supplier transparency that starts during the new product development kick-off meeting can foster true collaboration and provide a smooth transition from design to procurement.
To mitigate risks along the way, manufacturing brands and suppliers need an intuitive way to communicate changes and feedback, and manage collaboration and tasks in a secure environment. And to increase responsiveness while reducing administrative overhead, consider automating tasks and providing time-saving features such as self-service capabilities.
8) Launch Products Faster and Accelerate Operations
Speed is an underlining business imperative. To remain competitive, companies are eliminating siloed information, enabling real-time collaboration across departments, and re-imagining partnerships without traditional hurdles.
Successful teams use DX technologies to gain actionable insights throughout the product development lifecycle. Businesses, for example, can improve planning accuracy by simulating production based on detailed product specifications, sourcing information, and manufacturing parameters. Manufacturers and their suppliers can then use this insight to identify the best path to market with confidence.
Despite economic uncertainty, companies that combine speed and visibility will be well-positioned to capitalize on new opportunities quickly. And they’ll have the agility to navigate around supply chain roadblocks and other manufacturing challenges.