Manufacturing trends and challenges in 2023: Co-innovation is the key to success | The Financial Express

Manufacturing trends and challenges in 2023: Co-innovation is the key to success

Despite the disruptions of the pandemic, supply issues, a tight labour market, and economic volatility, 2022 proved to be a year of growth for the manufacturing sector

Manufacturing, GDP, Demand, Supply, Labour, Economy, cybersecurity, Industry
Manufacturers are increasingly using cutting-edge technology for more intelligent automation and to improve business connections.

By Dilip Sawhney

As per government reports of June 2022, the gross value added (GVA) contribution by the manufacturing sector to the Indian gross domestic product (GDP) was estimated at US$ 77.5 billion in Q3FY2022, and India is expected to add more than US$ 500 billion annually to the global economy. It also states that the sector has a great potential to reach US$ 1 trillion by CY2025. An S&P Global finding also notes that sentiment has improved to its highest level in nearly eight years as firms are confident of strong demand through CY2023.

A key to this growth has been the shift towards what has been called ‘Industry 4.0’. Manufacturers are increasingly using cutting-edge technology for more intelligent automation and to improve business connections and insights, while driving simplification and gaining agility. This transformation is driving gains in productivity and making manufacturing more sustainable than ever before. 

Enabled by digital technologies, manufacturing has come a long way in the past few years, and much of the progress is set to continue through 2023 and beyond. Here are a few trends set to dominate the industry in the new year:

Complex operating environment

With access to raw materials, energy prices, and other supply chain constraints continuing to keep manufacturers on the edge of their seats, the operating environment will remain complex. According to a Deloitte survey on the 2023 outlook for manufacturing, 72 percent of executives believe that the persistent shortage of critical materials and the ongoing supply chain disruptions will remain the biggest uncertainty for the industry. 

Sustainability agendas

What it means to be a responsible industrial company is rapidly changing. The spotlight on sustainability will continue to intensify – and we expect data-driven sustainability to be key.  We will see an increase in investment in infrastructure that’s going to provide the data and context needed to improve sustainability. Improving sustainability is an increasingly important aspect of digital transformation.

More manufacturers are turning to the cloud

The unending list of challenges that manufacturers need to address, and the speed required to do so will continue to drive cloud-based solutions. Software in the cloud allows scalable, flexible, secure systems with contextualized data at the center. The cloud allows more collaboration and accessibility to the data and the answers that the data provide from anywhere. It will also level the playing field by giving MSMEs access to technology that only large companies have access to.

Adoption of contemporary digital technologies to accelerate

Contemporary digital technologies are revolutionizing the production/shop floors enabling manufacturers to gain unprecedented visibility across their value chains. Capabilities like digital thread and digital twins help manufacturers to visualize their processes with precision and make better decisions faster.

Talent war 

The skills required to operate and maintain advanced manufacturing equipment are in short supply globally. This shortage of skilled workers could delay the adoption of new technologies and constrain growth in the sector. Access to skilled talent and the loss of expertise from retiring workers is a major concern for the industry. To develop the next generation of workers, manufacturers will need to increase their investment in training and education programs.

Evolving consumer preferences

The rapid evolution of new business models, such as e-commerce and q-commerce, is upending the conventional go-to-market approach. To survive and indeed thrive in this environment of rapidly evolving consumer preferences, enterprises will need to radically alter their approach: drive simplification and hyper-personalization to gain the next level of speed and agility across their value chain, including manufacturing and warehouses.

Need for cybersecurity

The rise of Industry 4.0 and a digitized and connected factory has led to a new era of cybersecurity threats. To stay ahead of the curve, manufacturers must adopt a new approach to cybersecurity that considers the unique risks posed by industrial control systems (ICS). Adopting a proactive approach toward cybersecurity is mission-critical for 2023. If manufacturers fail to act on their own accord, we expect to see regulators step in to mandate action. Additionally, disruptions caused by cybersecurity breaches indeed have a profound impact from a sustainability perspective.

The common thread among all these trends and challenges is that partnering and co-innovation will be the key to success. The issues that the industry faces, such as cybersecurity, sustainability, and workforce development, are so complex and important that no single entity can do it alone. 

(The author is the managing director of Rockwell Automation India. Views expressed are personal.)

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First published on: 09-02-2023 at 10:19 IST