If you are a manufacturing executive, you have probably had better years. Inflation is at its highest rate since the 1980s, making it a challenge to control costs. Borrowing is more expensive than many executives can ever remember. And the unprecedented demand for pandemic-driven products—from medical equipment to new golf carts—has waned, as pent-up demand for events, travel, and in-person services have eaten away at consumer spending. All of this has led to caution in the C-suite, with CFOs and COOs being asked to reduce costs and protect profit margins. But in times of unprecedented technological change, some investments are too critical to postpone. Research from McKinsey & Company has shown that companies that invest in innovation during the toughest times emerge from the storm stronger, ready to outperform the competition. Manufacturers who invest in tackling the following key challenges will find themselves in a stronger position to boost profits and growth, while lowering costs and increasing margins.
Quick response times are top of mind for chief supply chain officers, who continue to face supply shortages and disruptions. Today’s manufacturers need connected operations and insight to stay nimble, be resilient to change, and spot new revenue-generating opportunities.
With demand volatility expected to last well into next year, companies are looking for ways to boost automation and avoid unnecessary costs. But the best decisions need accurate insights. C-suites are looking for easy-to-use dashboards, real-time alerts, built-in AI, and consistent data across HR, finance, and the supply chain.
Manufacturers cannot realize the promise of Industry 4.0 with aging, disconnected, legacy technologies. They need to connect operational data—from the factory to the field—with IT systems that can process, analyse, and present the information via charts and graphics that are easy to understand.
Manufacturers are struggling to fill open positions as they compete for workers seeking flexible schedules, higher wages, and opportunities for career advancement. They are also competing with technology companies for tech-savvy workers as they automate manufacturing. HR teams must find a way to tap new talent pools to replace workers aging out of the industry.
Services have become an important growth engine, with companies using subscription-based models to offer services along with their products. The benefit to the customer is that they can make fewer capital investments and reduce their debt load. The benefit to the manufacturer is a stable, recurring revenue stream.
Customers, investors, and governments continue to look closely at corporate environmental practices. From minimizing carbon emissions and energy consumption to safe disposal and reuse of parts, manufacturers and their suppliers must revamp their value chains to be more sustainable.
Mergers and acquisitions will play a key role in driving growth for manufacturing companies. But growth via acquisition comes with integration headaches—whether it is integrating finance systems across subsidiaries or integrating employees into company operations.
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