{"id":53271,"date":"2022-12-01T08:05:30","date_gmt":"2022-12-01T13:05:30","guid":{"rendered":"https:\/\/www.apriori.com\/?p=53271"},"modified":"2024-10-16T17:01:50","modified_gmt":"2024-10-16T21:01:50","slug":"top-7-manufacturing-challenges-for-2023","status":"publish","type":"post","link":"https:\/\/www.apriori.com\/blog\/top-7-manufacturing-challenges-for-2023\/","title":{"rendered":"Top-7 Manufacturing Challenges for 2023"},"content":{"rendered":"

What are the biggest challenges facing manufacturers and suppliers in 2023? Navigating economic headwinds, supply chain instability, sustainable manufacturing outlook<\/a>, and the workforce skills gap are poised to top the list. These are just some of the business issues that are making headlines and affecting the bottom line for the manufacturing industry.<\/p>\n

Our 2023 outlook spotlights the key challenges \u2013 and associated opportunities \u2013 for the coming year. Learn more about the top manufacturing challenges<\/a> today, along with strategies to address each of the following:<\/p>\n

    \n
  1. Tackle Inflation and Margin Pressure<\/a><\/li>\n
  2. Mitigate Supply Chain Disruption<\/a><\/li>\n
  3. Make Sustainability a Pillar of your Business<\/a><\/li>\n
  4. Calibrate your Talent Management Strategy<\/a><\/li>\n
  5. Streamline Procurement and Sourcing<\/a><\/li>\n
  6. Strengthen your Digital Thread (Digitalization)<\/a><\/li>\n
  7. Prioritize Innovation Initiatives<\/a><\/li>\n<\/ol>\n
    \n

    1) Tackle Inflation and Margin Pressure<\/strong><\/h2>\n

    Business leaders and economists tend to agree that inflation will continue<\/a> but have vastly different projections regarding the duration and impact of higher prices for goods and services. Here’s how some manufacturing industry executives are responding to maintain competitiveness.<\/p>\n

    Address Cost During Design<\/h3>\n

    Leading manufacturing companies are increasingly adopting a design-to-cost (DTC)<\/a>\u00a0methodology to address cost throughout the new product development process. A recent report finds that the successful application of DTC can save\u00a015%-40%<\/a> in product development time and material costs. This includes costly late-stage redesigns and engineering change orders (ECOs).<\/p>\n

    DTC requires seamless collaboration among all functional areas of the product development team. For instance, cost and design engineering alignment is critical to meet NPI cost targets. And sourcing teams involved early in the design process can provide important input regarding material availability or other considerations.<\/p>\n

    Increase Margins for Existing Products<\/h3>\n

    To address growing costs (and material scarcity), consider making non-invasive design modifications to control sourcing expenses. Engineering teams can evaluate a range of product designs with different materials and manufacturing processes. Design for manufacturing (DFM)<\/a> guidance could identify risks \u2013such as wall sections that are too thin or thick to be manufactured economically or inaccessible areas that require specialized tooling or additional steps to produce. Teams can then compare all options and determine the next steps.<\/p>\n

    And use regional cost data \u2013 including labor, overhead, and tool-shop rates \u2013 as a foundation to\u00a0model costs<\/a>\u00a0and evaluate\u00a0country-specific manufacturing costs<\/a>\u00a0accurately.<\/p>\n

    Assess Design and Manufacturability Alternatives<\/h3>\n

    A\u00a0digital factory<\/a>\u00a0is a digital representation of a physical factory. It has the key elements you would find if you walked into any production facility including thousands of different machines and types of materials as well as labor and overhead costs \u2013 all that you\u2019d find with a physical factory.<\/p>\n

    Digital factories provide manufacturing feasibility analysis, process optimization, and costing feedback to help product development stakeholders improve DFM, reduce change orders (ECOs), and get products to market faster. Sourcing teams also use digital factories to compare production environments across extensive manufacturing criteria to inform site or supplier selection and production costs. Digital factories can help to identify cheaper manufacturing processes that offer faster cycle times and compare different materials for cost and manufacturability.<\/p>\n

    2) Mitigate Supply Chain Disruption<\/strong><\/h2>\n

    The energy shortage across the EU and ongoing COVID-19 outbreaks in China are keeping factories idle and companies scrambling to find suitable alternatives. To that end, The Harvard Business Review <\/em>recently proclaimed that the era of \u201cfar-flung global supply chains is probably over<\/a>\u201d and that manufacturers are shifting to a regional sourcing and production model. Here\u2019s how manufacturers can respond.<\/p>\n

    Extend Supply Chain Visibility<\/h3>\n

    Cost and production capacity insights only tell part of the story. By analyzing your supplier base, you may identify an overreliance on material sourcing or production in a specific geography. To reduce risk, production teams may select a supplier in an alternative region with different manufacturing methods. (This could require a hole to be machined instead of punched.) Manufacturing companies may need to optimize some designs for a new factory site.<\/p>\n

    Additionally, provide\u00a0suppliers and distributors<\/a>\u00a0with material requirements based on annual production volume \u2013 not just orders for the next quarter. Sharing this level of manufacturing detail can help to mitigate risk.<\/p>\n

    Reshore Manufacturing to Mitigate Risk<\/h3>\n

    Reshoring manufacturing<\/a> is becoming central to supply chain resiliency strategies. Deloitte projects that American manufacturers will reshore nearly 350,000 jobs in 2022<\/a> \u2013 a 25% increase compared to the previous year.<\/p>\n

    But how do you\u00a0evaluate offshore vs. reshore decisions<\/a>? The effective analysis includes determining material availability in a reshored region. And to gauge production capacity, manufacturing teams simulate production runs in targeted reshored geographies \u2013 including their factories and suppliers’ production facilities. Teams then review these results to compare factories and regions based on costs, capacity, and production speed (based on machine cycle times).<\/p>\n

    Manufacturing companies can implement technological advances such as automation, robotics, the Internet of Things (IoT), and artificial intelligence (AI) to accelerate production. Smart manufacturing initiatives can offset the impact of labor shortages and higher wages often associated with reshoring.<\/p>\n

    Listen to how sustainable architecture affects global business strategies, particularly offshoring, nearshoring, and reshoring decisions<\/a>.<\/div>\n

    Strengthen Supplier Collaboration<\/h3>\n

    Manufacturers are increasingly drawing on suppliers\u2019 expertise and resources to help reach their goals. A\u00a0successful manufacturing brand\/buyer-supplier partnership<\/a>\u00a0model requires high transparency regarding new capabilities in development, resources (and limitations), and costs. Execution depends on each party\u2019s ability to collaborate on product specifications and related data. It also requires data collaboration to streamline processes and a partnership framework that eliminates costly delays that can be inherent in buyer-supplier relationships.<\/p>\n

    To mitigate risks \u2013 such as a steep increase in material costs or a component shortage \u2013 manufacturing brands and suppliers need an intuitive way to communicate changes and feedback and manage collaboration and tasks in a secure environment. And to increase responsiveness while reducing administrative overhead, consider automating tasks and providing time-saving features such as self-service capabilities.<\/p>\n

    3) Make Sustainability a Pillar of your Business<\/strong><\/h2>\n

    Forward-thinking companies are already making sustainability a core business focus. A true business shift requires corporate leadership to tie their environmental, social, and governance (ESG) pledges to measurable goals across procurement, IT, manufacturing, and other operations.<\/p>\n

    Measurable sustainability improvements can be good for business and the environment. The largest U.S. firms (S&P 500 \u00a0companies) see a multi-trillion-dollar opportunity in the shift to products and services for the low-carbon economy, according to survey results from CDP<\/a>. American firms surveyed project the financial benefits to be 15 times higher than the risks associated with not transitioning business practices to decarbonization.<\/p>\n

    Those risks include losing customers to environmentally focused competitors. Three-quarters of the G20<\/a> nations have instituted some mandatory corporate reporting for climate-related risks and opportunities. And the U.S. is finalizing its environmental reporting mandates. For large, publicly traded companies, the question is when \u2013 not if \u2013 they will be required to provide environmental disclosure.<\/p>\n

    Move from Intent to Impact<\/h3>\n

    Despite commitments at the board level to cut CO2<\/sub>e emissions, many companies struggle with execution. According to IBM, nearly half of the CEOs surveyed<\/a> say that increasing sustainability is a top priority. Notably, 44% of respondents also said they lack sustainability data to take meaningful action. And only 23% of executives are implementing sustainability strategies across their entire organization.<\/p>\n

    Consulting firm McKinsey found\u00a0that the majority of product managers surveyed don\u2019t have the tools or framework to define a sustainable product \u2013 or\u00a0meet regulatory reporting mandates<\/a>. And none of the McKinsey survey participants are using\u00a0Greenhouse Gas Protocol Scope 3<\/a>\u00a0emissions to monitor carbon output. This is a critical gap because Scope 3 includes all indirect emissions throughout the reporting company\u2019s value chain. (Scope 3 includes upstream and downstream emissions.) Scope 2 includes indirect emissions from purchased energy generated. And Scope 1 addresses direct emissions from owned or controlled sources.<\/p>\n

    Successful manufacturers are incorporating sustainability into their overarching DFM\/design for excellence (DFX) benchmarks and processes. This enables manufacturers to understand a product\u2019s CO2<\/sub> impact during early design phases and then evaluate opportunities to reduce a product\u2019s carbon footprint. Importantly, teams can\u00a0evaluate design alternatives<\/a>\u00a0using different materials and manufacturing processes to meet CO2\u00a0<\/sub>emissions, cost, and performance targets.<\/p>\n

    A sustainable future can be achievable, successful, profitable, and quantifiable. But it requires collaboration across all departments and the ability to evaluate product cost, sustainability, and profitability holistically. And the ability to conduct “what-if” simulations to understand how trade-offs in materials or manufacturing location can impact the overall design.<\/p>\n

    4) Calibrate your Talent Management Strategy <\/strong><\/h2>\n

    The shortage of knowledge workers can impede manufacturing sector growth. Here\u2019s how some companies are taking a fresh approach to build their workforce.<\/p>\n

    Attract and Retain your Skilled Workforce<\/h3>\n

    Nearly half of CEOs surveyed agree that it is \u201cvery difficult to find and hire the right kind of people for our business,\u201d according to Gartner<\/a>. This skills gap could result in more than two million unfilled manufacturing jobs<\/a> in the U.S. by 2030, according to the Manufacturing Institute. And the\u00a0U.S. Bureau of Labor Statistics\u00a0<\/a>estimates that there will be more than 125,000 software engineering openings on average annually through 2030. Similarly, the European Union (EU) reports \u201cshortages of high magnitude<\/a>\u201d for software and IT positions.<\/p>\n

    And keeping employees engaged and productive once they are onboarded is an ongoing priority for product manufacturers. \u201cQuiet quitting\u201d is a new term for an age-old problem of disengaged workers doing the bare minimum at their current job while looking for more fulfilling opportunities. This follows the \u201cgreat resignation\u201d of employees leaving the workforce due to burnout, early retirement, or a reassessment of work-life priorities.<\/p>\n

    How can manufacturers mitigate labor shortages, provide upskilling opportunities, and improve attraction and retention rates?<\/p>\n

    Use New Technologies to Boost Productivity & Engagement<\/h3>\n

    Technology investments can have a dual impact on operations and employee satisfaction. Manufacturing employees feel that the technology they use is central to a positive work experience, according to a Deloitte survey<\/a>. More skilled workers expect training opportunities to expand their skills, particularly by using new technologies.<\/p>\n

    Manufacturers that invest in their employees and nurture their career growth tend to attract and retain workers. Specifically, manufacturers are using technology to reach beyond traditional upskilling and retraining programs. This includes embedding tasks and workflows within automated processes, using applications that provide real-time guidance, and connecting teams through collaboration.<\/p>\n

    One example is automated product design analysis for DFX (cost, manufacturability, and sustainability). DFX applications from aPriori and others can provide design feedback to reduce cost and accelerate manufacturing that might not be obvious.<\/p>\n

    This actionable guidance can empower junior staff to work on more critical and complex projects. Providing junior design engineers with clear design recommendations can free senior product development team members to focus on other tasks or evolve their roles to direct less experienced colleagues.<\/p>\n

    5) Streamline Procurement and Sourcing <\/strong><\/h2>\n

    Manufacturing brands and suppliers want to accelerate sourcing and procurement. But they are held back because relevant data is spread across disconnected system silos \u2014 such as email and spreadsheets \u2014 or in the hands of a few internal experts. That\u2019s according to aPriori\u2019s \u201cState of Manufacturing Procurement<\/a>\u201d report conducted by IndustryWeek<\/em>.<\/p>\n

    IndustryWeek<\/em> surveyed 345 manufacturing brands and suppliers in North America, Europe, and Asia for the report. Only 4% of organizations can complete sourcing for a typical component within one week (from initial specifications delivery to quote acceptance). Twenty percent of respondents complete this task within two weeks, while the majority place the timeframe at a month or more. By contrast, 79% of survey participants say it would be ideal to complete the process between 24 hours to two weeks.<\/p>\n

    Remove Procurement Barriers<\/h3>\n

    What will it take for manufacturing organizations to speed up sourcing and procurement? Survey participants say that a standardized approach to information sharing during the quoting and design processes and self-service quoting capabilities are the top ways to improve collaboration. For example, complex bid packages that include multiple requirements are the primary reason for delayed supplier responses to a request for quote (RFQ). Both suppliers and OEMs agree that the inability to collect information rapidly \u2014 and a lack of transparency \u2014 are key hurdles to accelerating the RFQ responses.<\/p>\n

    Although OEMs and suppliers show a shared interest in increased collaboration, there are divergent views on how to achieve this goal. Notably, suppliers are less interested in regular should cost analysis and standardizing data than their customers. This is likely due to supplier concerns that OEMs may try to erode their margins. And to underscore this point, nearly one-quarter of suppliers want visibility into evaluation criteria to ensure that cost isn\u2019t the only factor in OEM decision-making.<\/p>\n

    These issues delay the RFQ process, especially for complex design specifications. They also limit transparency and the ability to adjust to extenuating factors. This slow, opaque process often fosters mistrust around costing and margins, which hurts collaboration and causes further delays.<\/p>\n

    The good news is that manufacturers and suppliers both want to expedite sourcing and procurement, increase visibility into the process, and ultimately improve trusted partnerships. Survey respondents said the best ways to achieve these goals are through greater visibility, collaboration during the quoting and design processes, and self-service quoting capabilities. Learn more about the Zero RFQ process.<\/p>\n

    Read the full ‘State of Manufacturing Procurement’ report<\/a>.<\/div>\n

    6) Strengthen your Digital Thread (Digitalization)<\/strong><\/h2>\n

    Manufacturers are adopting digital transformation (DX) to develop new capabilities and integrate critical information previously locked in separate systems. The digital thread<\/a> ties together product design (digital twin) and manufacturing operations so that teams can make more informed decisions throughout the product development lifecycle.<\/p>\n

    Collaborate and Automate<\/h3>\n

    A typical 3D CAD (digital twin) development process provides a limited amount of information needed for a product launch. But it is easily augmented with data from the physical world. It\u2019s common for manufacturers to simulate product performance during the design phase using the digital twin to conduct finite element analysis (FEA) or computational fluid dynamics (CFD).<\/p>\n

    But simulating product performance doesn\u2019t address cost, manufacturing speed, or a product\u2019s carbon footprint. To save time and increase efficiency, simulate real-world conditions of the manufacturing process first. All stakeholders across the product lifecycle can view digital twin simulation results based on the actual manufacturing operation options available. Manufacturing insights enable teams to pinpoint potential problems and recommend optimal design improvements.<\/p>\n

    Centralize and Streamline<\/h3>\n

    The digital thread establishes a \u201csingle source of truth\u201d for all product design information. And this information is typically stored in a product lifecycle management (PLM) system. Establishing a single point for product information \u2014 combined with automation and collaboration capabilities \u2014 can eliminate costly late-stage design changes.<\/p>\n

    The digital thread breaks down siloes and ensures that all players in the product lifecycle \u2013 from design engineers and cost experts to sourcing and executive teams \u2013 can work more effectively, share data quickly and accurately, and optimize costs, product design, and manufacturability.<\/p>\n

    7) Prioritize Innovation Initiatives<\/strong><\/h2>\n

    Only nine percent of organizations create enough capacity to support the growth and innovation opportunities they pursue, according to Gartner<\/a>. Ongoing economic tremors have many executives focused on cutting cost and addressing short-term needs at the expense of investing in new opportunities.<\/p>\n

    However, companies that commit to innovation during an economic downturn tend to outperform their peers when the economy shifts into growth mode. According to research, businesses that maintained their innovation focus during the 2009 financial crisis outperformed the market average by more than 30%<\/a> during the subsequent three to five years.<\/p>\n

    Correlate Real-Time Decision-making and Profit<\/h3>\n

    Profitable innovation requires companies to operate quickly and efficiently to achieve first-mover status. Speed is a critical element of business success. To remain competitive, companies are eliminating siloed information, enabling real-time collaboration across departments, and re-imagining partnerships without traditional hurdles.<\/p>\n

    In addition to reducing the product development lifecycle, Accenture<\/a>\u00a0reports that fast-moving companies (\u201cspeedsters\u201d) that it analyzed gain a distinct advantage by adopting technologies including cloud collaboration, digital twins\/digitalization, and agile engineering.<\/p>\n

    Successful teams use DX solutions to gain actionable insights throughout the product development lifecycle. Businesses, for example, can improve planning accuracy by simulating production based on detailed product specifications, sourcing information, and manufacturing parameters. Manufacturers and their suppliers can then use this insight to identify the best path to market with confidence.<\/p>\n

    How to Increase Competitiveness in the New Year<\/h2>\n

    Manufacturing brands face unyielding pressure to meet customers\u2019 shifting requirements. And they operate in an environment of increasing complexity, ongoing supply chain instability, and pronounced inflation.<\/p>\n

    Manufacturing brands that focus on collaboration and acceleration are poised to anticipate, adjust, and execute quickly and confidently. \u201cBorn digital\u201d upstarts and established multinational companies apply aggregated expertise to innovate and excel in one or more critical operations, such as design, sourcing, or manufacturing. But companies with siloed operations and departments limit their strengths due to limited engagement with other business units.<\/p>\n

    Digitalization, when deployed effectively, can centralize disparate product data for effective analysis and rapid decision-making. Similarly, manufacturers that can align goals for cost, carbon emissions, and manufacturability are well-positioned to address market opportunities or sidestep potential roadblocks during the coming year.<\/p>\n","protected":false},"excerpt":{"rendered":"

    What are the biggest challenges facing manufacturers and suppliers in 2023? Navigating economic headwinds, supply chain instability, sustainable manufacturing outlook, and the workforce skills gap are poised to top the list. These are just some of the business issues that are making headlines and affecting the bottom line for the manufacturing industry. Our 2023 outlook spotlights the key challenges \u2013 … <\/p>\n

    Read More<\/a><\/div>\n","protected":false},"author":12,"featured_media":53292,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[17],"pillars":[44],"post_folder":[],"class_list":["post-53271","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized","tag-manufacturing-innovation"],"acf":[],"yoast_head":"\n2023 Manufacturing Challenges | Outlook | Digitalization | Sustainability<\/title>\n<meta name=\"description\" content=\"aPriori's 2023 manufacturing outlook spotlights challenges and opportunities for manufacturing brands, suppliers, and the global supply chain.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.apriori.com\/blog\/top-7-manufacturing-challenges-for-2023\/\" \/>\n<meta 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