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Manufacturing Trends to Watch in 2015

Posted By Jeff Moad, January 06, 2015 at 10:08 AM, in Category: The Adaptive Organization

As the new year begins, the editorial team at the Manufacturing Leadership Council offers its predictions for the year ahead:

  • U.S. Manufacturing Growth to Continue Strongly. Last year, industrial production grew at a healthy 3.3%, according to published estimates, driven in part by a robust automotive sector. As 2015 begins to unfold, look for a continuation of the growth trend, perhaps at a rate even higher than what was recorded in 2014.  Lower energy costs, spurred by the drop in oil prices, will provide an additional advantage to manufacturers. Clouds on the horizon: the country’s ballooning trade deficit, continued economic weakness and uncertainty in Europe, the slowdown in China.
  • Auto Sector to Wrestle with Quality Issue. Stung by a huge number of vehicle recalls in 2014 – some estimates place that number at more than 62 million in the U.S. – the major auto makers will double-down on their quality processes and systems in 2015 with an eye toward substantially reducing defects earlier in their product cycles. Look for the auto makers to develop new product quality management techniques and to invest more in quality systems and tools.
  • Cyber Security Rises on Management Radar. With the Sony Entertainment hacking scandal fresh in their minds, manufacturing executives will place a greater emphasis on how to protect corporate networks and data from attack. Leaders will begin to direct more resources and management focus to protecting critical customer, product, and supply chain data and systems. This, of course, means implementing technology. But, more importantly, it means creating an integrated set of policies, procedures, and training to insure that information-based resources are protected.
  • Industry 4.0 and Smart Manufacturing Initiatives Go Global …: More smart manufacturing and Industry 4.0-style initiatives will emerge as ambitious governments around the world, perhaps most notably in Asia, recognise the need to drive transformation faster to maintain and improve global manufacturing competitiveness and sustain economic growth. Manufacturing will feature more than ever in the public spotlight in 2015, supported by new forward-looking public/private programs aimed at education, innovation and adoption.
  • But May Be Constrained by a Lack of Standards. New Internet of Things (IoT), Intelligent plant floor systems, and Big Data technologies demand the development of complex new standards to drive adoption. From common plant floor data models, to compatible sensor networks, device-specific guidelines, Wi Fi protocols, wearable tech, or the architecture of big data repositories, there are a host of urgent new technology areas that need standards attention. These new technology markets will stall without them. The pressure will be on both competitive equipment suppliers, and industry bodies to deliver. Traditional “time-to-standard” approaches have to change if the Manufacturing 4.0 transformation is going to happen quickly.
  • Reshoring Will Be Reconsidered.  The pace of reshoring will fluctuate depending on how potential economic crisis in the Euro-zone and China are resolved and what impact they have on demand, risk, and costs in those geographies. As a result, the “reshoring” terminology will begin to be replaced by “right-shoring”, a shift which places the emphasis where it belongs: On designing global production and supply networks that can sense and respond quickly to rapidly-shifting global economic trends and customer requirements. 
  • Pressure to Update Legacy Plant Equipment Will Intensify. Call it the Internet of Things. Call it Smart Factories. Call it Industry 4.0. Whatever you call it, the manufacturers will continue to invest in sensors, plant networks, data management tools, and advanced analytics technologies that will allow them to monitor and respond to plant performance—down to the individual machine level—in real time. Standing in the way is billions of dollars’ worth of legacy production machines that were never intended to be connected. So, unable to afford to rip and replace these assets, manufacturers will need to find creative and cost-effective ways to retrofit legacy equipment and to understand the return on these investments.
  • Employee Engagement Becomes a Competitive Imperative. Stretched thin as they attempt to access global markets and satisfy increasingly unpredictable customer demand while keeping costs under control, manufacturers will place new emphasis building a wide range of collaborative partnerships and on creating and sustaining the internal culture that supports them. This means employees up and down the manufacturing enterprise must be empowered and engaged to innovate as never before, not just along for the ride.
  • From Big Data to Smart Data Teams. As an increasing number of companies embark on so-called Big Data projects, many will realise that it’s not the “Big” part that really matters, it’s the smart “Data” within it that makes all the difference. Identifying this Smart Data for specific companies will need professional focus and experience. While the demand for dedicated data scientists will increase, many companies will also develop and train creative internal teams to combine analytical skills with real-life depth of knowledge and experience about the business to help lead more focused, Smart Data analytics projects.
  • The Rise of Cloud-based Supply Chains. As the manufacturing landscape becomes more interconnected and interdependent, requiring close cooperative links with multiple supply chain partners in multiple locations for materials, parts production and the support of new multi-channel services, companies will increasingly adopt cloud and more predictive web-based supply chain software to help manage and swiftly reconfigure their networks to gain real-time visibility, cut time-to-market, and respond faster to customer changes and potentially disruptive political and natural risks.

--Written by David Brousell, Jeff Moad, Paul Tate


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Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit



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Comments

Posted on
Jeff, I appreciate your thoughtful article on Manufacturing trends for 2015. I was particularly pleased that you highlighted employee engagement as a competitive imperative. Of course the key is how to accomplish this. I think the article we collaborated on last year would be of some help. http://www.gilcommunity.com/blog/want-engaged-employees-try-opening-books/
There are also several Harvard Business Review articles that provide more background:
http://blogs.hbr.org/2013/12/a-winning-culture-keeps-score/
http://blogs.hbr.org/2014/06/share-your-financials-to-engage-employees/
http://blogs.hbr.org/2014/10/track-customer-experience-but-dont-forget-the-financials/
The third HBR article discusses Customer-Centric Open-Book©, engaging both customers and employees. More information and case studies are available at www.openbookcoaching.com. I hope this input is helpful. Happy New Year.
Posted on
Jeff, thank you for your predictions for the year ahead.

I believe that reshoring has always been about "right-shoring". We recommend doing a total cost of ownership analysis and formulate a detailed plan when reshoring makes economic sense for the company. Many companies failed to do the math when they offshored so the Reshoring Initiative urges companies to do the math when considering reshoring so that the decision is a long-term good solution for the company.

Here is the latest data from the Reshoring Initiative:
According to the Reshoring Initiative reshoring and FDI yielded between 2010 and 2014:
- About 170,000 manufacturing jobs
- 25% of manufacturing job growth
- 400,000 total jobs including the manufacturing multiplier effect

In order to help companies decide objectively to reshore or offshore, the not-for-profit Reshoring Initiative’s free Total Cost of Ownership Estimator can help corporations calculate the real P&L impact of reshoring or offshoring.

http://www.reshorenow.org/TCO_Estimator.cfm
Posted on
Thanks for the numbers, Sandy. Agree about the need to do the math. Does the Initiative expect reshoring to slow or accelerate in 2015?
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