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.
SAP Whitepaper: Advantages of Intelligent Assets
A core pillar in SAP’s Industry 4.0 strategy, Intelligent Assets equip organisations to reduce downtime, empower employees and increase efficiencies across industrial equipment and manufacturing units.
In a whitepaper produced in partnership between SAP and BizClik Media Group, Rachel Romanoski, Solutions Manager, Digital Assets, SAP, dispels some of the myths surrounding asset intelligent, and shares insight into how even small investment in asset intelligence can pay dividends in minimising cost leakage and realising an asset’s potential.
As with all innovations, the ceiling for Intelligent Assets is as high as an organisation can dream, afford and implement. But Romanoski says that just a little intelligence can go a long way: “Oftentimes people think Intelligent Assets need to be the latest and greatest cutting-edge technology. They can be super advanced, such as leveraging physics-based engineering simulations to forecast potential failures, and help mitigate them. But it could be as simple as a temperature reading. You can pull a lot of simple information from most equipment, and by enhancing that data through ancillary solutions and digital capabilities, you can create that Intelligent Asset.”
One of the most immediate benefits is reducing or, in some cases, eliminating unplanned downtime. Equipment failure is one of the most common causes of disruption and can cause chaos throughout the supply chain.
“The true power of the Intelligent Asset is in changing the basic, reactive emergency work or time-based, planned maintenance and being more prescriptive and tailored to that specific asset and use case,” Romanoski says. “Ultimately, you can reduce the unplanned events that often carry a big price tag.”
"Oftentimes people think Intelligent Assets need to be the latest and greatest cutting-edge technology... But it could be as simple as a temperature reading"
Other financial benefits include stemming cost leakage and “sweating assets” to the full potential. “Maybe you can consider the lifecycle of the asset and understand whether you can push it a little bit further,” Romanoski explains. “It might be that the best course of action for a low-cost item is to run it to failure. Having this information that we collect over time empowers those people to make those better decisions, but also has a trickle down effect to building resiliency and efficiency into the entire supply chain.”
To read the full report, including insight from Intelligent Assets, Intelligent Factories, Empowered People, and exclusive insight from Dominik Metzger, the lead on SAP’s Industry 4.0 programme, CLICK HERE.