The manufacturing sector is changing at a meteoric pace. Much of this change is due to innovation in technology. The entire supply chain ecosystem — encompassing manufacturers, distributors and suppliers — is undergoing a business transformation.
This is in response to swiftly changing dynamics involving shifting consumer expectations, time to market and intense global competition that is driven by the rising internet and mobile economies.
As 2015 approaches, it’s time to look ahead at emerging trends that will impact 21st century manufacturing around the globe. Here’s part II of our examination of top trends that will impact innovative product companies.
1) US to Match China in Manufacturing Attractiveness by 2015
New research shows that the US has now matched Mexico as an attractive location for manufacturing in terms of labor arbitrage and operational costs, and will match China in desirability by 2015, which will vastly accelerate re-shoring.
According to a recent survey from AlixPartners, the United States and Mexico are now considered equally attractive options for US-based companies to situate production meant for the North American market. Thirty-seven percent of the 137 respondents would choose the US as their preferred near-shoring location. An equal percentage would choose Mexico.
The rise of a more technical labor force to manage supply chain operations has led to more companies shifting their manufacturing strategies from outsourcing overseas to making products closer to where they will be sold. “Next-shoring” allows manufacturers to increase the swiftness to replenish products on store shelves. The faster inventory can be moved to the consumer, the sooner the costs to warehouse, ship and dock goods can be freed up.
The fact that manufacturing jobs are coming back to the United States does not mean that they are not continuing to develop in Asia. In a recent report for the San Jose Mercury News, Mike Cassidy describes a move by a number of US-based manufacturers to expand operations in both the United States and offshore: “In a global economy there really is no one-size-fits-all strategy. There is offshoring, onshoring, nearshoring and what you might call both-shoring.”
Take Away: Manufacturing strategies are more dynamic and complex than ever, which means there is no one-size-fits-all, suggesting that supply chain operations and supporting technologies need to be equally nimble. A cloud-based product lifecycle management (PLM) solution offers flexibility and scalability, enabling companies to manage their product mixes, customer markets, and partners . As Jack Welch once said, you need technology that can go where you go and support processes and practices as you need them to.
2. ‘SMAC Stack’ – Not Just for WWE Wrestling
A manufacturing comeback is being driven by SMAC — social, mobile, analytics and cloud. The SMAC stack is essentially the next wave in IT to manage massive amounts of data.
SMAC Stack is also becoming an essential technology tool kit for enterprises and represents the next wave for driving greater team connectivity across platforms, higher customer engagement and growth opportunities. The need to innovate is forcing cultural change within a historically conservative “if it’s not broke don’t fix it” industry, and SMAC is helping early adopters in the manufacturing market increase efficiencies and change.
Take away: Organizations who conceptualize these four technologies together as a “stack” will have access to exponential growth opportunities not unlike those seen by early adopters in the PC and internet revolutions. Recently, Arena has created a collaboration platform for all stakeholders across the supply chain, including suppliers and partners, to take part in documented problem solving and discussion in context of the product record.
3. 3D Printing
Worldwide shipments of 3D printers are expected to grow 98 percent in 2015, followed by a doubling of unit shipments in 2016. 3D printing will reach a tipping point over the next three years as the market for relatively low-cost 3D printing devices continues to grow rapidly and industrial use expands significantly. New industrial, biomedical and consumer applications will continue to demonstrate that 3D printing is a real, viable and cost-effective means to reduce costs through improved designs, streamlined prototyping and short-run manufacturing.
According to a recent McKinsey report, reducing time in product development was a key benefit of the first 3D printing machines, which were designed to speed the creation of product prototypes (and helped reduce turnaround times to a matter of hours, from days or weeks). Now many industries are poised for a second wave of acceleration as the line between additive and conventional manufacturing blurs.
Take Away: The ability to make new product introduction (NPI) prototypes without tooling lets companies quickly test iteratively multiple configurations to determine customer preferences. Companies could even go into production using 3D printed parts and start selling products while the traditional production tools were still being manufactured or before the decision to produce them had been made.
Companies are learning to leverage information to identify what the market wants and quickly adjust their output to maximize profits and keep the customers coming. As we head into 2015, supply chains and production processes will need to be designed anticipating multiple quick changes as a key priority, so they can adapt as fast as possible.