There are thousands of technology innovations now available to manufacturers, from new equipment to robotics, software, business intelligence tools, wearables, and sensors. The sheer number of choices available means manufacturers must work harder than ever to find the signal in the noise.
That’s why, each year, we survey manufacturers around the world, asking them their goals, predictions, plans and ultimately, how manufacturers cut through the clutter to identify and leverage the right technologies to run their businesses. We’re proud to again share the results of that survey in our 4th Annual State of Manufacturing Technology Report.
Here’s what you should know about the intersection of manufacturing and technology, and what’s next for manufacturers.
With Growth Comes Some Pain: Key Factors Driving Technology Decisions
We found that manufacturers are generally optimistic about the future—55 percent of respondents are confident in their company’s projected growth over the next 12 months. Numbers at the end of 2018 support this: The Manufacturing Purchasing Manager’s Index (PMI) grew for the last 27 consecutive months.1 And while this is good news, growth doesn’t come without some pain.
As manufacturers scramble to meet increased market demand, filling open positions becomes critical. Yet, the skilled worker shortage continues to be a major hurdle to overcome. Concerns about the potential impact tariffs will have on the industry and lower-priced competitors rounded out the top three challenges. Technology use topped both the list of challenges to growth as well as what respondents believed their company lacks to respond to competition, which highlights the critical role technology plays in how and how much companies grow, as well as how well the business manages challenges.
Solving the Industry’s Biggest Challenges with Technology—Today
When asked what aspects of their overall operations have improved as a result of using a manufacturing system of record, 73 percent said improved inventory traceability, 67 percent cited greater data accuracy, 58 percent reported improved quality controls, 45 percent noted improved mobile access to data and information, and 40 percent said more accurate projections/planning. We see that cloud technology helps manufacturers connect their enterprises, enabling employees to have more information do their jobs more effectively. This connectivity also delivers supply chain visibility for anticipating changes in customer demand.
One-third of manufacturers say they are using management dashboards and 67 percent are using sales analytics for management insight—and the use of analytics is expected to grow 20 percent. The huge opportunity is to leverage operational data for more control and visibility across the organization. As more manufacturers see that “big data” isn’t as much about building a massive predictive analytics system but more about tapping into machine, sensor, and tool data to make decisions about optimizing production, we expect the cloud to play a pivotal role in building the necessary connectivity to accomplish this.
As the pressure to fill open jobs to meet customer demand intensifies, manufacturers are seeing an opportunity to look inside the organization to make changes to business processes and free workers from repetitive tasks. Tasks like manual cycle counting, inventory management, software/server maintenance, or running business and production reports can be managed in a more effective and efficient way. Technology like the cloud enables employees to take on higher-value work, as well as give them access to information that helps them do their jobs better.
Future Technology Use Focused on Operational Excellence
Manufacturers typically don’t invest in technology simply because it’s new or part of a big trend. Technology must have a direct impact on the company’s ability to keep production moving efficiently. Future technologies not yet proven in smaller to mid-sized production environments are likely to not be adopted as fast. The top three technology initiatives manufacturers said they’ll undertake over the next five years are operational efficiency (67 percent), enhanced plant floor automation and integration (60 percent), and enhanced quality program (49 percent).
With the massive amount of emerging technology hitting the manufacturing space, adoption rates are fairly low. Top emerging technologies in use today include Bluetooth devices (27 percent), 3D printing/additive manufacturing (24 percent), and the Industrial Internet of Things (14 percent). Smart wearables (12 percent), artificial intelligence (11 percent), big data (6 percent), and blockchain (five percent) round out the top five.
The Industrial Internet of Things (IIoT) Becomes Real
For manufacturers to realize the full potential of Industry 4.0 and tap into the wealth of data generated across the business and outside the four walls to customers and suppliers, they must begin the process of “digitizing” which lays the foundation for IIoT. We see that process beginning to take hold. Compared to previous SoMT surveys, there has been a leap in the adoption of IIoT: 12 percent said it was the most-hyped technology (2017) and this year it was only five percent. Adoption rates are only going to grow. Thirty-four percent of manufacturers say they plan on using IIoT in the next five years compared to 14 percent who are using it today.
Manufacturers who have started on the path to IIoT have done so to achieve realistic, incremental enhancements in line with their business strategies. Since 35 percent of manufacturers plan to implement IIoT projects within the next five years, we believe the more examples of practical IIoT use cases that improve operations and quality, the more other manufacturers will start their own journey.
Next-Generation Manufacturing Technology Separates Leaders from the Rest
It’s clear that manufacturers see technology as an effective way to manage and overcome industry challenges. When next-generation technology is focused on enabling the core functions of a manufacturing business, manufacturers believe it separates the leaders from the followers (76 percent agree). The technologies that make the biggest impact for manufacturing leaders today are those that contribute to and leverage connectivity. The cloud provides the foundation that results in increased end-to-end visibility across plants and from the shop floor to the top floor.
For more insights, read the full report. Download the 4th Annual State of Manufacturing Technology Report.
1 Source: Logistics Management. ISM Monthly Report, December 2018.
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