REPORT: 2015 will be the year of the connected manufacturer

This year has been a turning point for the UK manufacturing sector with the EEF forecasting that by the end of 2014 the sector will have grown by 3.3 percent. We also saw UK manufacturers increase production in October to meet rising demand. Against this positive growth backdrop, UK manufacturing is grappling with increasing customer complexity, emerging technologies such as 3D printing, supply chain disruption and the challenges that a multi-generational workforce creates.

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The recent Manufacturing Success report suggests that the key to fulfilling growth ambitions, and overcoming these challenges, is through interconnectedness. Manufacturers need to think about their connections between people, businesses and things.

However, while it’s clear UK manufacturers need to capitalise on the opportunities this greater level of interconnectedness can bring, the research suggests that less than half of companies are able to exploit the opportunities that connections between people (48%), business (47%) and things (37%) can bring. In my mind, this is something that needs to be quickly addressed, particularly with the onset of new technologies such as 3D printing and smart products.

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More so, we are seeing that in a climate characterised by change and disruption, long term planning is proving difficult. Focus is now shifting to marrying long-term planning with the ability to react quickly to changes in the market.  We are seeing that the traditional production-led manufacturer is recognising that, ultimately, customers dictate how they operate and as such, there is a shift towards becoming more customer-centric in how it operates. The traditional ‘produce then consume’ model is now being replaced with a scalable, flexible and reactive model which responds to the individual needs of the consumer. Manufacturers must respond quickly to changes in the market and capitalise on new technologies in order to succeed.

This objective, however, is made more challenging by the increasing complexity within manufacturing supply chains.  Disruption is a common problem, whether through security breaches, IT outages or the weather. As a result, supply chain resilience is an area that manufacturers also need to focus on, ensuring disruptions don’t cause too much damage to business. Nearly half of all manufacturers have experienced significant disruption to their supply chain over the past year. Improving connections across the supply chain is the key to pre-empting and minimising potential disruption.

Add to that the rapidly changing digital economy, the manufacturing industry is being inundated with new technologies that transform and disrupt the way businesses operate. These disruptive technologies include smart components in products, predictive analytics, mobile applications and additive manufacturing such as 3D printing. Whilst the thought of 3D printing may be concerning for some manufacturers there are benefits including it being quicker to get goods to market, it is more cost effective and there is greater flexibility to build a wider range of products. In fact 94% of manufacturers see 3D printing as an opportunity rather than a threat.

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As new technologies continue to infiltrate the industry, there will be an increased demand for skilled workers. The UK has a shortage of skilled workers and the skills gap in Britain has been described as crippling by Vince Cable, this is something that desperately needs to be addressed. Young people, as digital natives, are the key to future success for the industry.

As the current skilled workforce retires it is necessary that the next generation are trained up and ready to fill their roles. The biggest challenge for employers is enticing young people into these roles, apprenticeships help to some extent but the industry needs to improve its image to gain new recruits. Manufacturers should capitalise on digital opportunities in order to close existing skills gaps and future-proof their organisations.

As new competition enters the market thanks to new technologies, and the demand for new skills continues to increase, manufacturers that succeed will be the ones that embrace interconnectedness and continue to grow. Manufacturers need to take notice of technological developments that will impact the industry and use them to expand and improve their businesses. Manufacturers will experience more aligned culture, processes, skills and technology that ultimately enable them to deliver greater customer centricity, supply chain resilience and a high-performing workforce that spans the generations.