Source One just shared their predictions for Procurement in 2019. In this guest blog, Russ Davidson of Software Connect takes a closer look at what's next for Manufacturing companies.
Bulk material handling began in the late 1700s. The US Industrial Revolution begins in 1820, powered by coal power. Lean Manufacturing has its roots back in the 1930s from Toyota, becoming widely adopted in the 1990s. Today, we are seeing technology movements involving robotics, 3D printing, industry 4.0, IoT and cloud technology, and more that are making the waves through manufacturing.
The International Data Corporation (IDC) says that new digital technologies, competitors, ecosystems, and new ways of doing business are the reasons that manufacturers are changing rapidly. So what are these new digital technologies, these new ecosystems, or these new ways of doing business?
Here are a few trends to look into more in the 2019 calendar year:
Evolving WorkforceManufacturers are facing an ever-widening skill gap. In 2011, Deloitte and the Manufacturing Institute said by the end of the decade, there could be 3.5 million openings in manufacturing and 2 million of those positions unfilled due to a shortage of qualified workers. It looks like these predictions are staying par for the course, as there are over 500,000 open positions at US manufacturing companies. Over the next 10 years, 53% of the positions may stay vacant because of this skill gap. Job shortages result in manufacturers having to turn down new business, as maintaining current production levels to meet current customer demand remains the main focal point.
So what is a manufacturing company to do? What is the workforce to do? The answer is to change gears (metaphorically of course). Workers should be looking to change their skill set, rather than give up hope.
One may look into the rise of robotics and automation, which could have a negative effect on the number of available employees with outmoded skillsets. These type of processes (robotics) are replacing human workers. However, the argument can also be made that they are creating new job opportunities. The use of robotics and automation requires workers to change their skillsets to manage these operations, program them, repair them, etc. The market research company MarketsandMarkets projects the industrial robotics market to grow from $38 billion to $71 billion in a 7-year span (2016-2023). What this means is that college graduates could see their skillsets become obsolete much more quickly than their parents before them. They will need to ensure they have the proper qualifications and willingness to learn when it comes to training and education for these systems.
Cloud Adoption RatesIn 2013, only 17% of executives indicated they were planning to use SaaS to improve their operations. Flash forward to 2018, and manufacturing companies still remain hesitant; MRP software buyers were 45% less likely than other industries to purchase a hosted (cloud) option.
Proper education and a willingness to change can only go as far as the individual will let them. But can manufacturing continue to resist cloud adoption in the face of new technologies arriving? 2019 will be the year that traction finally starts moving for the rollout of 5G networks. With new infrastructure allowing for it, manufacturers wanting to stay ahead of the curve will need to fully invest in IoT for as much real-time control and insight that cloud technology can give them. The market already sees 3.6 billion connected devices being used for daily tasks in 2018. Where will this number be in 2019?
Many cite security concerns, hesitation to move to subscription-billing, and an “if it ain’t broke, don’t fix it” mentality to staying away from the cloud, however, the cloud will offer these four key benefits to companies still stuck on legacy on-premise systems:
- Agility: Anytime anywhere access for your workforce to communicate with machines, orders, vendors, and more
- Cost Control: Subscription pricing allows buyers easier chances of balancing their capital and operating expenses
- Productivity: Let your workforce focus on core competencies
- Growth: Accelerate access to your supply chain and business partners
Shifting Customer Demands and an Uncertain FutureAs customer demands change, manufacturers will need to adopt in order to meet their needs. While manufacturers struggle to move to a SaaS model, customers are moving towards an even broader XaaS (Anything as a Service), which covers anything from SaaS, Platform as a Service (PaaS), and Infrastructure as a Service (IaaS). Basically, anything that can be delivered as a service via a network. This can include virtual machines hosted in vendor’s data centers, infrastructures such as Azure, and even online storage and databases. Even Malware protection can be a service.
The core takeaway is that customers seek on-demand services, and manufacturers will need to look into what sort of value they are offering their customers and if they are meeting their expectations. As manufacturing companies will look to become more intelligent and add new technology, they’ll also need to ensure they meet available regulations, provide adequate safety, and deliver quality products.
Author Bio: Russ Davidson is a Digital Marketing Specialist at Software Connect, a company that provides free MRP software recommendations based in Milwaukee, WI. Since 1996, we’ve helped thousands of companies find the best solution for their needs by understanding software requirements and pointing them in the right direction.