6 challenges facing the global manufacturing sector in 2015
The manufacturing sector is an ever changing beast and each year the industry faces new challenges. With 2015 fast approaching, Manufacturing Global takes a look at the key concerns manufacturers will have to overcome in the year ahead.
1. Regulation and traceability
The manufacturing sector, like so many sectors, is facing increasing regulation and compliance measures. Everything from health and safety to waste management is surrounded in red tape. While it is undeniable some regulations are essential, other can be a massive burden to manufacturing companies – particularly when they vary from country to country.
Now more than ever, manufacturers must ensure they have complete visibility throughout their supply chain for their own compliance and that of their suppliers. Regulations often require the ability to track items and materials used during the manufacturing process.
Companies in highly regulated industries, such as medical devices, are facing new regulations including UDI (Universal Device Identification) and ePedigree requirements, while chemical and electronics manufacturers deal with REAC (Registration, Evaluation, Authorization, and Restrictions of Chemicals) and similar laws.
Keeping abreast of regulations and managing compliance reporting is an ongoing challenge faced by the sector, and more and more companies are choosing to dedicate whole teams to stay ahead of new rules.
2. Product development and innovation
We live in a consumer driven world and as such product development and innovation moving at a lightning pace – to stay relevant, manufacturers need to be able to keep up with the pace. As companies vie to be first to market with a new concept, the temptation to compromise on quality can be huge, however manufacturers need to be stringent and avoid cutting corners.
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Fast times to market mean that companies need to become more structured in their approach to managing innovation – great product ideas cannot be left to chance. Implementing procedures that keep a steady stream of new product ideas and innovations in the pipeline is essential to manufacturing success.
3. The manufacturing skills gap
The baby boomer generation is reaching retirement age and leaving a considerable skills gap in the workforce. While manufacturing firms are doing what they can to inspire a new generation of manufacturing employees and experts, there is still a considerable void when it comes to skills and experience.
Manufacturers need to work with schools and universities in their communities to ensure that manufacturing focused subjects are being well promoted and taught. In addition, manufacturers need to bridge the gap by encouraging their older employees to gradually slow down to retirement, passing on valuable skills to younger employees during a transition phase.
4. Healthcare costs
The manufacturing sector is certainly not the only one to be hit, but rising healthcare costs for workers is putting a considerable strain on already fragile manufacturing cost structures. Manufacturers in the U.S. in particular face the burden of providing healthcare while their competitors in other countries are not required to. Manufacturers need to be aware of this rising cost, and managed budgets accordingly, to ensure healthcare doesn’t push up the price of products beyond commercial viability – it can be a balancing act.
5. Environmental concerns and considerations
While it is undeniably good news for the local environment and employee wellbeing, sustainability and environmental regulations can be expensive for manufacturing firms. Manufacturers need to be aware of these costs when outlining their quarterly budgets.
6. Balancing maintenance with throughput
Keeping equipment functioning is an essential part of running a manufacturing facility. Regular preventive maintenance can help increase throughput and ensure customer satisfaction with delivery lead times.
Sometimes manufacturers are tempted to postpone or delay preventive maintenance or they replace factory components with lower-quality items. This practice may create unsafe conditions in harsh manufacturing environments if these lesser components can’t stand up to operating conditions. Poor maintenance can cause health and safety issues, as well as cause unplanned or excessive downtime. Manufacturers need to perform preventive maintenance on recommended schedules to keep operating costs low and throughput high while helping to ensure worker safety.
Gartner: Leaders Lack Skilled Smart Manufacturing Workers
With organisations rapidly adopting industry 4.0 capabilities to increase productivity, efficiency, transparency, and quality as well as reduce cost, manufacturers “are under pressure to bring their workforce into the 21st century,” says Gartner.
While more connected factory workers are leveraging digital tools and data management techniques to improve decision accuracy, increase knowledge and lessen variability, 57% of manufacturing leaders feel that their organisations lack the skilled workers needed to support their smart manufacturing digitalisation plans.
“Our survey revealed that manufacturers are currently going through a difficult phase in their digitisation journey toward smart manufacturing,” said Simon Jacobson, Vice President analyst, Gartner Supply Chain practice.
“They accept that changing from a break-fix mentality and culture to a data-driven workforce is a must. However, intuition, efficiency and engagement cannot be sacrificed. New workers might be tech-savvy but lack access to best practices and know-how — and tenured workers might have the knowledge, but not the digital skills. A truly connected factory worker in a smart manufacturing environment needs both.”
Surveying 439 respondents from North America, Western Europe and APAC, Gartner found that “organisational complexity, integration and process reengineering are the most prevalent challenges for executing smart manufacturing initiatives.” Combined they represent “the largest change management obstacle [for manufacturers],” adds Gartner.
“It’s interesting to see that leadership commitment is frequently cited as not being a challenge. Across all respondents, 83% agree that their leadership understands and accepts the need to invest in smart manufacturing. However, it does not reflect whether or not the majority of leaders understand the magnitude of change in front of them – regarding technology, as well as talent,” added Jacobson.
Technology and People
While the value and opportunities smart manufacturing can provide an organisation is being recognised, introducing technology alone isn’t enough. Gartner emphasises the importance of evolving factory workers alongside the technology, ensuring that they are on board in order for the change to be successful.
“The most immediate action is for organisations to realize that this is more than digitisation. It requires synchronising activities for capability building, capability enablement and empowering people. Taking a ‘how to improve a day in the life’ approach will increase engagement, continuous learning and ultimately foster a pull-based approach that will attract tenured workers. They are the best points of contact to identify the best starting points for automation and the required data and digital tools for better decision-making,” said Jacobson.
Long term, “it is important to establish a data-driven culture in manufacturing operations that is rooted in governance and training - without stifling employee creativity and ingenuity,” concluded Gartner.