A year ago, who would have predicted that the Arab Spring movement would eventually take out a string of Middle East potentates and inspire other mass uprisings in the US and Russia? Or the devastating and lasting effects that an earthquake/tsunami would have on global supply networks? Or the financial crises that would replace governments and threaten a double-dip recession in Europe? Or that Prince William would actually go through with his threat to marry Kate Singleton?
I know I didn’t anticipate all of these events. And that’s what makes it a bit daunting to forecast major trends that will impact manufacturers in 2012. But predict I must, because that’s what the last week in December is for. (That and cleaning out your e-mail inbox.)
So here are a few trends I think we can all expect in 2012:
-- Soaring Customer Expectations Lead to Increased Complexity
Blame it on the Internet which has taught customers in all industries to expect practically unlimited product variety and near immediate availability. Throw in the need to satisfy the sometimes unique requirements of customers in developing economies around the world, and you end up with substantially increasing complexity facing just about every manufacturing process, from new product innovation to production planning, through to post-sales support. As one of the recent winners of the Manufacturing Executive MegaTrends contest noted, this means more SKUs to manage and more complex networks of suppliers. And this will only increase in 2012 as concepts such as mass customization take hold in more manufacturing verticals.
-- The Focus Shifts from Planning to Real-Time Visibility and Quick Response
Even as complexity increases, customers are demanding shorter lead times. (Hey, they’ve got their own complexity issues to contend with.) The only way for manufacturers to cope is to build more agility into the system. Don’t get me wrong. Forecasts and planning won’t go away. But manufacturers in 2012 will be placing more emphasis on spotting things like shifts in demand, quality problems, and supply shortages as soon as or even before they actually occur. Monitoring and analyzing such events in near real time will become a big deal, as will the need to build agility into production networks so that, when demand suddenly spikes in Mumbai, you can quickly and profitably adjust by boosting production in South Carolina. Global process standards also will become a major focus as manufacturers seek to gain global visibility and agility.
-- Re-Shoring Gets Real
Offshoring in the pursuit of low-cost labor grew into an unsustainable bubble in the early 2000s. In much the same way, all the talk of mass re-shoring of production in response to rising costs in China is an overreaction. The fact is, deciding where in the world and how to source production is an increasingly complex calculation that must factor in not just labor costs but issues such as fuel and transportation costs, access to engineering talent, intellectual property protection, currency valuations, tax policy, and even political stability. In 2012, more manufacturers will get more sophisticated about the off-shoring/re-shoring decision as they realize that this is a complex and continuous calculation, not a discrete, one-time event.
-- Politicians Love Manufacturing
As the economy lagged and unemployment remained stubbornly high in much of the developed world in 2011, politicians, the popular media, and much of the public rediscovered the potential of manufacturing as an engine of economic growth. That was particularly true in the US, where politicians claiming to possess secret job-growth formulae descended on plants for photo opportunities. Look for more of the same in 2012. But, this being an election year, don’t expect much in the way of pro-manufacturing legislation. Even no-brainer steps such as immigration reform and a permanent extension of the R&D tax credit will take a back seat to campaigning. (OK, I realize that, by predicting continuing political gridlock I’m plucking the lowest-possible hanging fruit prediction-wise. But I’ve got to make sure that I get at least one right.)
-- Engineering School Surge
Having received the now widely-reported news that there’s shortage of people with appropriate manufacturing engineering skills, employment-obsessed students (and their parents) will generate a mini-boom in enrollment at engineering schools. This spells some potential relief for skills-starved manufacturers, assuming schools can reengineer their programs to produce engineers who are better prepared to contribute soon after they are hired.
-- Manufacturers Get Serious About Security
Compared to their IT counterparts, manufacturing executives have been fairly clueless about the potential security threats facing increasingly networked and globally distributed manufacturing assets. But that will begin to change in 2012, particularly as the threat posed by state-sponsored cyber crime becomes more clear. In 2011, energy utilities awakened to the threat, taking more steps to beef up security and even acknowledging their exposure in required financial statements. Manufacturers, particularly those in highly regulated and defense-related sectors, will follow suite in 2012.
What’s on your list of major trends that will affect manufacturers in 2012? What is your company doing to take advantage of these trends?
