Predictions for Manufacturing in 2023 – Part II

Industry leaders offer their thoughts on what to expect in 2023.

2023

You can also check out previous thoughts on the New Year here.

Karim-Franck Khinouche, Founder and CEO of Novolyze, a leading digital solutions provider focused on food safety and quality processes:

  • Consumers will crave more traceability. Today, people care about their food more than ever before and want to know where it’s coming from – something the industry took for granted in the past. In the coming year, the industry can expect to see even more interest and emphasis on traceability.
  • Sustainability as a priority. In the coming year. I believe that sustainability’s real business value will come to light. Not only is it a good look in general, but it also has real value for shareholders. As the industry continues to accept sustainability targets, data will be used to measure how brands are doing when it comes to sustainability.
  • Be prepared for audits. Now that there is a sense of normalcy in regards to the COVID-19 pandemic, food plant audits are increasingly taking place in-person, which will continue in the coming year. As a result, we can expect to see a higher number of recalls as auditors catch things that might have slipped by over the past several years of conducting audits virtually.
  • Technology will bridge the labor shortage gap. The average age of today’s Quality Assurance manager is higher than ever, and it has become difficult to find qualified people who want to work in this industry.
  • Keep your crisis manager near. Social media will continue to play a big role in food-related crises. It will be critical to have a crisis manager who knows how to handle the ins and outs of social media in the coming year.
  • More digitization. As a whole, the food safety industry is taking its time to adopt AI and digitize. Today, roughly half of the food safety industry utilizes AI in some way. Many industry folks fantasize about a massive digitization product that results in a full overhaul of the industry, when, in fact, it’s better practice to use AI and machine learning to solve specific problems bit by bit. 

CoBank released their 2023 Year Ahead Report with a number of key economic prognostications:

  • “As financial conditions continue to tighten, we expect the U.S. economy will steadily soften through the first half of 2023, ushering in a brief, modest recession,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange.
  • He continues, “The unemployment rate could rise as high as five percent, indirectly leading to a decline in consumer spending. Without this softening in the labor market and the associated slowing of wage gains and spending, it will be difficult to stabilize prices.”
  • The global economy will sputter in 2023. A persistent energy crisis in Europe, China’s messy exit from zero-COVID and higher interest rates globally will reduce world economic growth to a crawl. China, much less impacted by Russia’s invasion of Ukraine, will continue to struggle with the impacts of COVID. Greater Asia will be negatively impacted by sliding global demand for goods. Emerging markets will keep the global economy growing in 2023 as advanced economies will be collectively stagnant, and could even shrink.
  • Despite the global pandemic and a steady barrage of disruptive challenges, the U.S. agricultural economy has fared quite well for the last three years. However, in 2023 producers and related industries will begin to show financial strains. A relentless series of adversities, including skyrocketing production costs, steeply higher interest rates, and weakening demand will increasingly pressure farm income and margins. The ongoing drought and increasing political tensions with China — the U.S.’s largest agricultural export market — present additional risk.
  • After a year of stronger profits that allowed for paying down debt, dairy producer margins will come under pressure in 2023. Despite record-high milk prices earlier in 2022, herd expansion has been minimal among the major exporting countries and this trend is expected to continue in 2023. Dairy product prices will eventually moderate in response to the gradual growth in global milk supplies. 

Henry Canitz, vice president of Industry & Market Strategy at Nulogy:

  • We can expect that we will continue to see an increased focus on building multi-enterprise data visibility and process collaboration to enable efficient, effective, and resilient supply chains with end-to-end visibility and collaboration.
  • Focus on Sustainability. As opposed to 10 years ago, customers are actually willing to spend more on eco-friendly products. Investors are investing in companies that have sustainability programs and goals, and governments are strengthening carbon emissions regulations and establishing tighter multilateral environmental agreements.
  • Create a Digital Foundation. Since the scarcity of labor isn’t a problem that can be solved in the short-term, supply chain operations need to invest in laying a digital foundation upon which advanced automation and augmentation capabilities can be built. This digital foundation is also needed to build multi-enterprise data visibility and process collaboration.
  • Prepare for Risk. Over the last couple of years, disruptions like pandemics, natural disasters, trade and physical wars, inflation, cyberattacks, and labor and political unrest have become the new normal. To respond and recover quickly requires the ability to quickly sense the disruption wherever it occurs in the end-to-end supply chain, analyze its impact, develop scenarios and simulations to evaluate options, and collaborate with multiple tiers of supply chain partners.
  • Improve Cybersecurity. Cybersecurity continues to be a primary concern. Utilizing a SaaS-based multi-enterprise collaboration platform can eliminate many avenues a cyber-criminal can use to penetrate a company's enterprise system architecture. A SaaS platform for collaboration provides a high-security method to exchange data and collaborate. 

Henrik Reif Andersen, chief strategy officer, Configit:

  • Employee digital experience will become an integral component in manufacturers’ business processes. If you’re an employee of a manufacturing company who is responsible for part of the value chain and bringing products to market, then you are most effective if you also have a solid digital experience. Having digital access to the next version of products, what the next features are and what options you can offer to the market creates a better experience for customers. Manufacturers will put more emphasis on the digital employee experience and make greater strides toward this.
  • The digital employee experience will help address present supply chain problems. In the face of disruption, you want to be able to react quickly, and if you don't have good connected systems where you can see the effects of adapting to the changes in the supply chain, then you will have issues. Manufacturers who implement configuration tools will see benefit from a greater customer experience due to being able to react very quickly and confidently because they know that when they make a change, they will know what the effect is going to be on downstream systems. The digital employee experience will gain popularity as supply chain issues persist.
  • Modular architectures will become more common as manufacturers seek to maximize the advantages of new technologies. How do you rip off the benefit of new technologies coming out like 3D visualization, augmented reality and so on, without having to repeatedly reinvest in your IT?  You need a platform, a solid backbone where you'll have product data and customer data available. You need your data in a spot where you can have a shared view on the product data and utilize it from different channels and access points— getting to this platform thinking will be necessitous going forward. 
  • The acceptance of servitization will grow within the manufacturing sector. We are seeing a trend in more and more products being sold as a service. Most of the software we buy, and probably what you use in your company these days, is bought as a subscription. This is also happening for physical products.  

Mike Devereux, a partner and leader in Wipfli’s manufacturing group:

  • Buy for growth. Tax changes (like the deduction in bonus depreciation) will impact capital improvement decisions. Manufacturers that have access to capital will invest threefold: in new plants, in new machinery and in automation.
  • Expand industry 4.0. Manufacturers have to drive costs out of processes and ease their reliance on human labor. Technologies that improve performance and increase long-run automation can help manufacturers stay nimble and efficient.
  • Reprioritize key performance indicators (KPIs). “Growth at all costs” will kill you right now. Revisit the scorecard and reshuffle priorities to focus on metrics that are meaningful and informative in the current conditions. A different focus on KPIs may lead to alternate strategies. 

Hooi Tan, President of Global Operations and Supply Chain at Flex:

  • Automation gets broad and wide. In 2023, I predict the industry will double down on its investment in automation. It won't be mass adoption across the board, however. Instead, smart manufacturers will look for solutions that deliver the biggest ROI, drive the highest throughput, and show the most productivity gains while also having the ability to be repurposed across production lines.
  • Data scientists flock to the factory. The factory of the future is digitized, connected, automated, and powered by next-gen sensors and tech. The next industrial revolution won't happen overnight, and it requires thoughtful planning and expertise. In 2023, data scientists, engineers and architects will be the most critical factory workers around. These employees will be instrumental in laying the infrastructure to digitally transform the factory and connect it to other aspects of the business, such as the supply chain, so leaders can draw actionable insights from machinery and make impactful business decisions.
  • North and South America's manufacturing revolution gets real. While re-and near-shoring initiatives were top of mind for almost every global organization in 2022, implementing the end-to-end supply and manufacturing change was often easier said than done. In 2023, we'll see this trend become a reality as more organizations increase manufacturing production in North and South America.

Leigh Segall, Chief Strategy Officer at Smart Communications, a leading technology company customer communications:

  • Ever-changing customer behaviors will require enterprises to reimagine existing business models. Analysts and experts agree that businesses must focus on customer-centricity — particularly industries that have lagged in moving to digital. And they can show that they care by focusing less on one-way transactions and more on two-way customer conversations that drive trust and loyalty, and provide value.
  • Continuing cyberthreats are creating an increased need for business leaders to focus on compliance and regulatory requirements, which are constantly evolving — particularly for highly-regulated industries. Adopting a cloud-first approach will enable highly-regulated organizations to greatly reduce risks and keep up with ever-changing regulatory requirements — which will continue to evolve in 2023 and beyond.
  • Technological innovation will remain a top priority as enterprises recognize the increased need for agility and scalability. Business leaders know that speed and scale are mission critical. As global markets become more interconnected and waves of change continue to rise, enterprises must be able to adapt on the fly — and at massive scale. This calls for replacing legacy systems and processes with sophisticated, cloud-first solutions that enable data interconnectivity, operational efficiency and enterprise-wide flexibility. As customer expectations continue to evolve, businesses need to be able to access and act on customer data and deliver personalized, unique customer interactions at every touchpoint. 
More in Business Intelligence