Four manufacturing problems that keep CEOs awake at night

Just looking at the headlines, you might think that manufacturing companies are in poor shape. You’d be wrong. We recently conducted a survey of more than 3,200 manufacturing leaders and decision makers across 22 markets globally — our largest Ericsson IndustryLab survey to date — to ask them about the future of the industry. Seven out of 10 said that their financial performance is unchanged or has improved since the pandemic began.

That doesn’t mean manufacturing CEOs don’t have concerns, however. They do. But thankfully, these companies’ strong financial status puts them in an ideal position to invest in solutions. Specifically, decision makers are looking to information and communications technology (ICT) to help them overcome these manufacturing challenges.

But before considering solutions, however, we first have to identify the problems that manufacturers need to solve. Our report goes into much more detail, but we’ll hit the highlights and the top manufacturing problems here.

Efficient customization

Starting in the 1950s, manufacturers have increasingly strived to provide customized offerings that will satisfy the unique needs of specialized subsets of customers and, if the buyers are large enough, even individuals. Today, one compelling method to achieve the agility required to enable higher levels of customization is to create small, tailor-made batches adapted to real-time needs. But customizing products goes beyond the unique needs of specific sets of customers. Needs and preferences are changing so quickly, manufacturers need the flexiilty to turn production around whenever demand changes.

Our survey, however, found that only one in five manufacturers currently have small-batch production capabilities. As competitive pressure grows to provide bespoke products that meet ever more specific customer requirements and rapidly adapt to the ever-changing whims of the marketplace, manufacturing leaders are eager to deploy technologies that will provide that flexibility.

Manufacturers are looking at a number of technologies to increase the efficiency of customization. Digital twin makes planning, testing and detection of faulty processes far faster and more accurate. Cooperative, autonomous robots (cobot) enable a facility to reconfigure itself quickly to adjust to new requirements. And advanced wireless connectivity such as 5G, eliminates the cumbersome and complex wired networks that help ensure machinery remains fixed in place.

Environmental impact reduction: Certainly, CEOs are concerned about compliance with tightening regulations that aim to combat global climate change. But their concerns go beyond following the law — six in 10 of the surveyed decision makers believe it is very important to mitigate their companies’ environmental impacts through smart investments in new production tools and technology for their production facilities. In fact, seven out of 10 decision makers said that sustainability maturity is a very important factor when considering which countries to retain or locate future production facilities.

The transport sector causes a large portion of global greenhouse gas emissions, so more efficient, electric vehicles and trucks with optimized routes, as well as electric AGVs (Automated Guided Vehicles), would help reduce a facility’s carbon footprint. Additionally, AI, digital twin and other technologies that help factories identify ways to manufacture more products with less energy, scrap and waste will ease compliance with environmental regulations.

The skills and talent gap: Every year, highly-skilled and experienced manufacturing employees retire.  The current tight labor market has made an already difficult problem of hiring STEM-educated graduates even worse, especially since the nature of manufacturing jobs is becoming increasingly technical. As factories become more automated, manufacturing jobs are more likely to require oversight, troubleshooting and analysis than they are tendering and assembling. As a direct result of these trends, Deloitte and the Manufacturing Institute estimate that there will be 2.1 million unfilled manufacturing positions by 2030.

AI, machine learning and automation technologies can help fill the skills gap, while augmented and virtual reality (AR / VR) will enable manufacturers to scale the impact that a few highly skilled employees can have on the larger organizations, even across geographies.

Dangerous, dull and dirty work: CEOs are largely satisfied with how well their companies have worked to reduce this kind of unhealthy work for their employees, with only 2% saying they are unsatisfied. Production employees, on the other hand, still say that 71% of their work can be described as at least one of these terms. Especially in a market where labor is in short supply and increasingly hard to attract to the industry, CEOs must prioritize investments to make manufacturing work safer and more interesting.

Automation will play a big role here, as will cobots. By giving hazardous, repetitive, grimy work to robots, human beings can focus on more creative, analytic tasks.

These aren’t the only challenges that manufacturing organizations will face. They will also need to transform their factories from fixed machinery into flexible production facilities, a topic we touched on earlier when discussing customization. Part and parcel with creating flexible factories is upgrading and integrating older machinery into more modern additions, as manufacturers transition to Industry 5.0 facilities. And, of course, there’s the ever-present concern about lower-cost competition disrupting the business.

Industry leaders believe that ICT-based investments will enable them to overcome these manufacturing challenges and thrive for many more decades to come. Indeed, two-thirds of respondents said that they expect to be at least 80% automated within the next ten years.

We’ll go into more detail about the types of ICT solutions in which manufacturing companies plan to invest, where they stand with deployment of different technologies today and how it breaks down by sub-categories of the sector. But you don’t have to wait for the next post. Read our report, “The rise of the smarter, swifter, safer production employee: Future of enterprises 2nd edition,” where you’ll find in-depth analysis of manufacturing technology trends, plus additional results from our survey.