The manufacturing industry is undergoing unprecedented change, fuelled by technological innovation, changes in consumers’ requirements and the evolution of business models, but also by transforming needs generated by international economic trends.

Whilst the fourth industrial revolution has opened the way for automation and digitisation of industrial processes, which continue to cover an increasingly central role, industrial manufacturing is facing challenges regarding increased risk management, evolution of the supply chain and of environmental stability.

Let’s take a look at the main trends which should be characterizing the future of the manufacturing industry.

1. Higher investment in advanced technology

Investing in advanced manufacturing technology is vital for businesses which wish to remain competitive in a continually changing landscape. It allows them to develop an agility to tackle marketplace challenges both now and in the future.

One of the main reasons that leads companies on to investments in advanced technology is the opportunity to improve operative efficiency. Automation and digitisation of production processes do indeed allow the optimisation of resource usage, a reduction in human error, and increasing precision and speed in production. For example, the implementation of collaborative robots in the shop floor can simplify operations, reducing cycle times and improving overall production performance.

The adoption of advanced technology also allows businesses to satisfy the demand of clients. Today’s consumers demand increasingly personalised and tailor-made products, and technologies such as 3D printing or additive manufacturing help companies meet those mass custom demands both efficiently and economically. Furthermore, they allow the businesses to be more reactive to market requests, decreasing time-to-market and enabling a rapid adaptation to changes in consumer preferences.

Another crucial aspect is business resilience. Companies which invest in advanced technology show an increased capacity to adapt in a crisis situation, as demonstrated during the Covid-19 global pandemic. Digitisation allows businesses to maintain operations even in periods of closure or heightened restrictions, facilitating remote working conditions, operations management at a distance and the general continuity of activities.

Furthermore, we should not underestimate the role of new technologies in their contribution to environmental sustainability in the manufacturing industry. A reduction in environmental impact has become a priority for many businesses and advanced technology offers advanced solutions to optimise resource usage, cut waste and improve energy efficiency. For example, IIOT (Industrial Internet of Things) enables the collection and analysis of environmental data, can allow a more informed management of resources, with a subsequential reduction in pollutant emissions.

Finally, investment in advanced technologies favours innovation and research and development. Those businesses which focus on the research and application of advanced technologies can gain significant competitive advantages. The adoption of emerging technologies can bring about new business models, new products and services, and even new market opportunities.

2. Attract, cultivate and keep talent in businesses

The manufacturing industry has witnessed an increase, over recent years, in turnover. This often means a loss of skills and talent which represents a challenge for businesses, who invest time in identifying new ways to attract, cultivate and keep new talent.

Clearly the objective lies in building an increasingly qualified and skilled workforce, which can translate in a leap forward in evolutionary terms: the introduction of new technologies and new production methods will most possibly mean higher skill sets will be needed.

In such a rapidly changing marketplace, the companies that manage to attract and keep the best available talent gain a significant competitive advantage.

Modern manufacturing processes require advanced technical skills and a deep knowledge of the technologies and tools adopted. Having a highly qualified and specialised workforce within the business enables businesses to tackle technical challenges efficiently and guarantees the quality and efficiency of productive processes.

In order to cultivate and keep talent, manufacturing companies adopt a range of strategies, such as:

• programmes for skill development;
• opportunities for professional growth;
• mentorship programmes;
• competitive salary packages;
• encouraging a stimulating and gratifying workplace environment.

Moreover, it is essential to create a company culture based on trust, appreciation and the recognition of workers’ worth, in order to establish a solid and lasting tie between the organisation and its employees.

3. Guarantee the supply chain

Over recent years, manufacturing companies have been undergoing unprecedented difficulties in procuring raw materials and in guaranteeing the correct functioning of the supply chain.

To mitigate these risks, companies are implementing a series of actions, including the following:

• Supplier diversification: reduce dependence on a single supplier or a specific region, seeking to identify and develop relations with alternative suppliers. Geographical supplier diversification can assist in reducing the impact of interruptions to the supply chain caused by specific events in a certain region.
• Supply chain risk evaluation: conduct a thorough supply chain risk evaluation, identifying critical points and developing contingency plans to cope with possible interruptions. This includes vulnerability identification, evaluation of the potential impact, and the activation of risk mitigation strategies.
• Creation of a resilient supply chain: build a resilient supply chain, which is based on a combination of both efficiency and flexibility. That means having robust planning set-up, a continuous monitoring of the supply chain, and the ability to adapt to fluctuations in both demand and supply.
• Collaboration with suppliers: establish open and tight communication with suppliers, key for increased transparency within the supply chain, allows companies to better forecast potential risks and to adopt preventive solutions.
• Use of technology: the adoption of advanced technological solutions, such as supply chain management systems, data analysis and traceability, can assist in improving the visibility and traceability of the supply chain. Technology can also help in identifying potential risks in advance, and in giving real time data in order to make informed decisions.
• Stock management: optimise stock management to minimise the risk of supply chain interruption. That includes demand forecast analysis, stock monitoring, back-up stock management and investigating strategies such as “just-in-case” instead of “just-in-time”.
• Continual monitoring and adaptation: conduct continual monitoring of the supply chain and adapting quickly to new challenges and to marketplace dynamics. This requires constant focus on trends and emerging situations, as well as the capacity to adapt quickly to new circumstances.
• Client relations management: keep communication with clients clear and open, informing them promptly regarding possible delays or supply chain difficulties. This helps maintain trust with clients and manage expectations in the instance of interruptions.
• Business continuity planning: have an active business continuity plan to cope with any unexpected crises or interruptions to the supply chain. These plans should contain specific actions to take, including clear roles, responsibilities and procedures to restore operations efficiently.
• International scenario monitoring: keeping an eye on political, economic and environmental developments on an international scale which could affect the supply chain. This allows businesses to anticipate potential risks and adopt preventive measures to contain risks.

Adopting these strategies will assist manufacturing businesses to reduce uncertainty and guarantee operative continuity despite external challenges.

4. Decentralisation of production

Production decentralisation is emerging as a significant new trend for the future of the manufacturing industry. Traditionally, many manufacturing companies have concentrated their production at a single site, or within a specific country, concentrating all their logistical efforts on the transport of goods from the production site towards their reference markets.

Decentralisation, on the other hand, implies the distribution of production operations across several geographical locations or in a range of regions.

Why would the sector move in this direction? What are the advantages of production decentralisation?

• Risk reduction: decentralisation reduces the risk of production activities blocks due to unforeseen events or crisis situations, and contributes to guaranteeing continual operations and supply to clients even during unstable times.
• Increased flexibility: decentralisation permits companies to adapt rapidly to market demand and need fluctuations. If a certain region requests increased production or if new market opportunities develop in another region, decentralisation allows agile shifting of resources and production.
• Access to local talent and resources: production decentralisation creates opportunities to exploit local talent and local resources across various regions. That can mean making use of specialised skills and qualified labour available in certain areas. Furthermore, it can ease access to raw materials or specific components which may be more easily available in some regions.
• Cost reduction: decentralisation can contribute to reducing production costs in various ways. For example, it may be possible to take advantage of more favourable work conditions or employment laws in other regions, or to benefit from lower transport costs to reach destination markets. Additionally, diversifying production across more sites can reduce exposure to fluctuations in exchange rates and logistics costs.
• Innovation and collaboration: decentralisation can encourage innovation via the creation of production hubs in varying regions. That favours collaboration with local suppliers, universities and specialised research centres, facilitating the flow of ideas and knowledge which serve to stimulate innovation and improve the business competitiveness.
• Sustainability: decentralisation can contribute to improving the sustainability of the manufacturing industry. For example, local production can reduce carbon emissions associated with goods transport across long distances. Furthermore, the use of local resources can favour more sustainable supply chains, such as the use of recycled or innovative materials.

Production decentralisation, however, can bring up challenges that need to be overcome, such as the management of the supply chain across multiple sites and the need to coordinate activities efficiently. It is important to develop management and monitoring systems that are adequate to guarantee coherent and high-quality production across all the sites.

5. Environmental sustainability

Environmental sustainability has become pivotal to the future of the manufacturing industry. Manufacturing businesses have a vital role regarding environmental impact due to their manufacturing nature, consumption of natural resources and generation of waste. Thus, it is vital that they too adopt sustainable practices to take on the environmental challenges and promote a greener future.

Here is why the environmental topic is so important to the future of the manufacturing industry:

• Reduction in environmental impact: the manufacturing industry can have a significant impact on the environment; the adoption of sustainable practices helps reduce this environmental impact, contributing to mitigate climatic changes, protecting air and water quality, and maintaining biodiversity.
• Satisfy consumer expectations: consumers are increasingly knowledgeable regarding the environmental impact of the products they purchase and the operational style of the companies which produce them. Manufacturing companies which are committed to environmental sustainability can satisfy consumer expectations and gain a competitive advantage on the market. Consumers are more likely to select products produced sustainably, thus reducing the demand for less sustainably-made products.
• Compliance with environmental legislation: governments and regulatory bodies are increasingly introducing stricter environmental legislation. Manufacturing companies must comply with this legislation in order to avoid fines and operative restrictions. Adopting sustainable practices can help businesses to respect environmental laws and reduce the legal and financial risks associated with non-conformity.
• Operative efficiency: environmental sustainability and efficiency are closely linked. The adoption of sustainable practices often brings about a more efficient use of resources such as energy and water. By reducing waste and improving efficiency, manufacturing businesses can also gain economic benefits.
• Innovation and technological development: environmental sustainability promotes innovation and the development of new technologies and production processes which are more eco-compatible. In turn, that creates opportunities for manufacturing businesses to develop innovative products or adopt more sustainable solutions. Technological innovation can also contribute to improving operative efficiency and reducing overall environmental impact.
• Social reputation and responsibility: businesses which adopt sustainable practices show increased social responsibility and develop a positive reputation with their consumers, investors and the communities in which they operate. This reputation may positively influence relations with clients, attract investments and qualified talent, in addition to trust in the brand.

To sum up, the adoption of sustainable practices doesn’t just help to reduce the negative environmental impact, but also opens up opportunities for growth, competitive advantages and adherence to governing laws.