I recently read a book from McKinsey, The Titanium Economy, where the authors describe the value of the manufacturing trade on our economy and how thousands of lesser-known entities are constantly innovating, creating stakeholder value that rivals the largest tech firms in terms of performance and profitability. It struck a chord with me, as our Manufacturing Practice meets with and visits clients regularly, and our teams have observed precisely the same thing.
Many manufacturing companies have state-of-the-art facilities, a culture of continuous improvement and transformation, and are quietly innovating every day to make their organizations smarter, faster, and better—right here in America.
These companies are often contrary to public opinion—that of dingy old-world manufacturing—but are clean, modern, and buzzing with technology to bring competitive advantage. U.S. manufacturing is advanced and creates products the macro economy depends on for our future well-being—from health-related products, transportation, electronics, and even the future of sustainability and energy.
This transformation may be less flashy than most high-tech firms, but at the core is a constant goal to improve productivity, resilience, quality, and safety—contributing to organizations capable of producing the best products in the world. Every day, U.S. manufacturers are making it happen.
How can we help U.S. manufacturing do more? How can we help them adopt new and proven technologies that enable their innovation and business goals?
2023 Realistic Trends to Enable Innovation and Scale
The industry’s ability to invest in practical improvements to its value chain, including how people, processes, and tools work has made U.S. manufacturing so resilient. Unlike their flashy Silicon Valley peers, manufacturing’s quiet and relentless focus on continuous improvement initiatives delivers results that make the business more competitive, more profitable, and capable of scale. It’s the practical and incremental approach that creates sustained growth and value for the business, stakeholders, employees, and their communities.
With this in mind, this year’s 2023 manufacturing trends are focused on the practical investments we see our manufacturing clients making to improve their businesses, unshackle their employees, and create more resilient and innovative organizations.
Trend #1: Security
Nothing is more disruptive to the advancement and morale of an organization than the impact of cybersecurity events. Manufacturing has become the target of attackers creating havoc in IT and Operational Technology (OT), making it the #1 attacked industry. Perhaps more concerning, 61% of incidents against manufacturing are conducted against OT environments. Because of this rising threat to operations, manufacturing leaders rate financial and/or downtime resulting from cybersecurity events as their top concerns in the Connection Annual Manufacturing Security Survey, December 2022.
Perhaps more concerning is the impact to organizational risk and a manufacturer’s ability to obtain and retain cybersecurity insurance. In the same Connection Annual Manufacturing Security Survey, 65% of manufacturers have experienced challenges with cybersecurity insurance such as increasing premiums and difficulty meeting insurance compliance requirements. In fact, 18% of respondents said they were dropped by their insurance policies. In 2021, the average cost to remediate a cybersecurity event in the manufacturing industry was $4.7 million, and without access to cybersecurity insurance, manufacturers will be stuck with the impact and bill.
With cybersecurity risks so apparent, especially in OT environments, we see a trend of investment into policies and technologies to help minimize cybersecurity incidents. These include enhancing access control to simplify and support the way industrials work, employee training, native industrial security monitoring at the network and appliance level, zero trust infrastructure, and integration of OT monitoring with Corporate IT SIEM and SOC to provide the ability to mitigate some of the most common breach attack vectors and reduce the breach lifecycle to minimize impact, downtime, and overall cost of a successful cybersecurity attack.
Trend #2: Rethinking Industrial Workforce and Edge Devices
80% of industrial workers don’t sit at a desk. Think about that as you plan that next factory, warehouse, or maintenance workforce upgrade, or if you’re deploying work instructions, on-the-job training, or workflow solutions in any of these environments. Today’s industrial workers want to use end-point devices that match their work style, environment, provide access to the latest digital tools, and optimize how they make it happen.
Those manufacturers we work with that invest in modern industrial workforce solutions see significant productivity, knowledge capture, and improved compliance through the use of the right-fitting solutions. Each manufacturing company and industry are unique, but this can include the adoption of tablets, wearables, augmented reality, touchscreens, and products designed to support how workers work. In addition to the people and process, many of these devices also need to comply with industry standards, regulations, and the rigors of harsh environments.
Unfortunately, 89% of buying decisions related to this workforce are still made from the top down. Keep this in mind. Investing in your people and providing them with the right tools will help make workers more productive, support talent acquisition and retention, and set the groundwork for multiple phases of digital innovation.
Trend #3: Automate Non-Value-Added Tasks with IoT Sensors and Automation Platforms
In today’s modern factories and warehouses, optimizing the workforce you have is critical. This means eliminating the need for mundane and non-value-added tasks like collecting measurements about the environment, screens, meters, or other data points that could easily be automated by sensors or automated data collection. Furthermore, as the industry faces labor shortages and turnover, existing processes can break down, impacting compliance or an organization’s ability to collect the data to inform the overall value stream.
In these situations, manufacturers are implementing industrial IoT sensors and IoT software platforms that make it easy to connect, integrate, and automate with sensors, programmable logic controllers, building management equipment, or disparate systems. Businesses that successfully go on this journey are more connected, able to produce better insight, integrate with suppliers, improve customer experience, and create a more resilient business.
Trend #4: Leveraging Cloud to Go Fast and Innovate
Cloud is an area that gets a lot of attention these days. Are we talking about Co-Location, IaaS, PaaS, SaaS, or all of it? The short answer is that it depends on what your business seeks to accomplish.
Many of our manufacturing clients move to the cloud to transition everyday low-business value capabilities to shed on-premises tech estate, limit the drain on their overworked IT resources, or deliver more unified infrastructure. This is widespread for security and federated identity management, databases, or everyday productivity tools we now have come to depend upon, like Microsoft Office 365.
Other manufacturers are looking to radically transform business processes, speed access to the latest features, APIs, and security, or perhaps unleash their research, design, and engineers with access to cutting-edge platforms that allow them to integrate factories, automate, implement Artificial Intelligence and Machine Learning, or create entirely new revenue streams with smart, connected products to enhance customer experience with new services.
It’s essential to understand your business goals, where you seek to innovate, and then tailor the strategy to include the proper infrastructure and cloud offerings to match. When done properly, hybrid cloud is quickly enabling organizations to shed tech estate, accelerate innovation, and focus on their business’s core to support their growth, productivity, and profitability goals.
Trend #5: AI and Machine Vision
Before, during, and after the pandemic, manufacturers have struggled to attract and retain a skilled workforce that keeps pace with the growth. This leaves manufacturing leaders with a choice. How do they staff their growing business? How do they retain and invest in the employees who remain? And what do we do with the monotonous tasks that humans are least good at (or perhaps most error-prone with fatigue and complacency)?
This is where AI and Machine Vision solutions fit best. Machine Vision solutions have been used in manufacturing for a long time—it’s not new. Just look to automated optical inspection machines seen in many industries. These high-cost, high-complexity, and niche solutions do one and only one thing well. Ask those solutions to detect adjacent quality issues, deviations from multiple process points, or workplace safety events, and you will quickly find no transferable solution. Or is there?
The answer is yes. Machine Vision platforms, cameras, and cloud solutions have come a long way. Today, it’s conceivable to identify a top-impacting quality or safety challenge with clear cost impacts, and within one month, have a viable Machine Vision model in production. That same investment in infrastructure can then be used in phase 2, 3, and 4, allowing you to solve one problem and move on to another, creating compounding business value over time, implementing automated corrective actions not dependent upon people, and allowing your vital people resources to work on higher value and more creative problems to help the business grow.
AI and Machine Vision are no longer a dream—they are a reality—and used by manufacturers today to solve a wide range of everyday challenges. Those organizations that invest, conduct pilots with partners, and incrementally deploy Machine Vision use cases will see cost savings, be able to scale, and create differentiation to outcompete in the marketplace.
Let’s Make It Happen
We understand that manufacturers are at different points in their smart manufacturing initiatives. Our Manufacturing Practice regularly works with manufacturing organizations to help them grow and improve their business through the application of enabling technologies.
Our Manufacturing Practice has a team of experts from trade, an evolving portfolio of manufacturing solutions, and expertise to assist IT and OT teams by augmenting their existing skillsets with complementary advisory services to help your business accelerate technology adoption where it matters most. If your business is interested in learning more about how we support our clients or the topics covered, engage Connection’s Manufacturing Practice to learn more about this technology, available services, and the many use cases that may benefit your organization.
Ryan Spurr
Ryan Spurr is the Director of Manufacturing Strategy at Connection with 20+ years of experience in manufacturing, information technology, and portfolio leadership. He leads the Connection Manufacturing Practice, go-to-market strategy, client engagement, and advisory services focusing on operational technology (OT) and information technology that make manufacturers more digitally excellent.
