The last eighteen months have created a perfect storm of volatility for manufacturers. With sector-specific challenges exacerbated by the shockwaves from momentous global health, climate, and geopolitical events, even the most resilient brands have found themselves struggling to navigate unchartered waters.
And yet, there are emerging opportunities, too, for those enterprising enough to capture them. How can leaders take the initiative in an evolving landscape?
Manufacturing has been in decline across Europe for decades. World Bank figures show that once-pre-eminent manufacturing nations like France and the UK have seen manufacturing’s share of GDP fall to single figures in the last 30 years. Even manufacturing leviathan Germany has experienced a 20 percent dip in the sector’s GDP contribution since the early 1990s. And challenging times lie ahead – partly as a result of tech-fuelled evolutionary changes and partly from extraordinary external forces that have dealt a series of critical blows to the global economy.
Rapid advancements in technology are turning the world of work on its head – in no sector more fundamentally than manufacturing.
Developments like Industry 5.0, AI/ML, AR/VR and IoT continue to spur digital transformation, accelerating an already fast-moving, on-demand economy and enabling companies to operate more competitively and with greater agility in a global market. Finely tuned supply chains deliver customised solutions to exacting requirements, efficiently and cost-effectively anywhere in the world.
However, any operational gains are balanced by elevated consumer expectations at the other end of the manufacturing equation. As trends for better, faster, cheaper and – perhaps antithetically – more ethical products emerge, the proliferation of online marketplaces creates a highly competitive commercial environment that favours the most agile.
This precarious equilibrium is further imperilled by the uncertainty and risk caused by external forces such as Brexit, climate change and the COVID-19 pandemic, which are creating exceptional volatility, throttling supply chains and disrupting carefully calculated, just-in-time manufacturing processes.
While posing significant challenges, however, these forces also offer opportunities for manufacturers who are able to leverage innovation, deploying intelligent manufacturing to propel operational performance to new levels.
The reskilling and upskilling challenge
Jason Chester is Global Channel Manager at software solutions provider InfinityQS.
‘A new breed of smart factories – highly flexible plants driven by data and innovation rather than by sweat and labour – will emerge,’ he says. ‘But this shift will have a profound impact on the manufacturing workforce of the future. The stereotypical shop-floor worker of old is rapidly giving way to a new breed of highly skilled knowledge worker who will augment digital technology in a transformative way.’
There’s little doubt that this digital shift will prompt increased demand for highly skilled workers; whether there will be sufficient talent to enable businesses to progress their plans is another thing. Organisations may want to embrace digital transformation but fear they won’t have the workforce to implement the new systems.
‘It’s a Catch-22,’ says Chester. ‘Companies want to innovate but don’t, due to the lack of talent. At the same time, the talent won’t come because the technology isn’t in place.’
Ashwini Bakshi, MD of the Project Management Institute’s (PMI) Europe and Sub-Saharan Africa regions, believes upskilling to be the sector’s biggest priority – as well as its toughest challenge.
‘Much has been written about the need for manufacturing organisations to go digital and adopt agile operating models,’ comments Bakshi. ‘Yet one enduring problem is that enterprise structures and ways of working remain rigid amid change. I see a future in which an ever-higher premium will be placed on those with the ability to lead themselves, lead their teams and think critically, as well as creatively.’
The demand for new skills reflects a broader need for manufacturing companies to adopt an organisation-wide mindset that is focused on driving innovation rather than operating machinery.
The innovation challenge
Bilal Gokpinar is Head of Operations and Technology, Marketing and Analytics at UCL. His recently published study, undertaken in partnership with Rotterdam School of Management, demonstrates the importance of companies deploying an innovation mindset – one that stimulates, evaluates and swiftly implements frontline ideas – to boost performance.
The report’s findings – based on a large-scale study of a multinational car parts manufacturer – illustrates the importance of knowledge-sharing to drive innovation:
‘Adapting an innovation mindset is critical – whatever the level of automation or digitisation – because it converts these processes into actual operational improvements, increased productivity, quality and bottom-line performance’, says Gokpinar.
That some businesses are falling behind isn’t surprising – given the scale and speed of change. One study by InfinityQS showed that three-quarters of manufacturers still collect data manually, with nearly half using paper checklists to record information.
Interestingly, around the same proportion – 75 percent – of manufacturers understand the benefits of digitalisation, according to a recent report from Make UK and E.on, possibly due to the accelerated rise of automation during the pandemic. Most agree that digital transformation is essential if manufacturers want to build resilience in the months and years ahead. To achieve this, however, the culture, structure and processes within an organisation need to evolve in parallel with management progress.
The purpose challenge
Andrew Kingston, Manufacturing Partner at executive search and consultancy firm Granger Reis, believes that by incrementally introducing new ways of working, companies will start to see a permanent shift in culture towards a more value-driven business which will enable them to effect real change. It also means championing creative solutions and offering up learning opportunities for team members to build the knowledge base and to create an environment where change improvement is not only encouraged but celebrated.
‘For leaders,’ says Kingston, ‘this means accepting responsibility for the sustainability and diversity of a company, showing humility, vulnerability and transparency and giving space to those that know better or who inspire others.’
Leaders will need to hone their own skills to answer the challenges of Industry 5.0, supply-chain disruption and chronic skills shortages not to mention the overarching challenges of climate change. They should be prepared to gather and motivate multi-disciplinary teams and foster innovation at every level, recruiting, promoting and nurturing talent from within – and without.
As we adapt to a ‘new normal’, we have the opportunity to embrace the change forced by the global disruption we’re experiencing to evolve to a new modus operandi – and to leverage the talents of a new generation in its service.
Andrew Kingston: ‘The pace of change happening not just in the manufacturing sector, but in everywhere, suggests that today’s trends will be different tomorrow. Companies should be focusing on their approach to talent – shifting the lens from qualifications to qualities. In a future driven by stakeholder value, these qualities are resilience, adaptability and a challenger mindset.’