Recently I’ve been reflecting on how far manufacturing has come in 2023. Despite continued supply chain disruptions, geopolitical uncertainty and other challenges, manufacturing continues to make significant strides in embracing AI technology, as well as expanding production to new and exciting regions for additional nearshoring and offshoring options. I’ve identified four key predictions for 2024 that you can use as you head into the new year. Keep reading for insights about AI, managing risk, optimizing costs, and strengthening supplier sourcing.
AI in Manufacturing Will Increasingly Improve Customer Experience
As manufacturing continues to embrace the potential of AI, it’s clearly no longer a buzz word. Though it’s increasingly used for predictive maintenance, digital twin, and resource planning, even more uses are now possible. The application of rich natural language processing (NLP) made possible by solutions like ChatGPT opens up new pathways to innovation. In 2024, AI will become a cornerstone of manufacturing operations, changing the way manufacturers interact with customers. Advancements in NLP also opens up the possibility to build application-specific technology to streamline communications (aka requirements) between supplier and OEM. I believe we’ll also continue to see collaborative robots become integral to our factory floors, working seamlessly alongside human operators, optimizing workflows, and enhancing overall productivity.
But the most important aspect of AI is its ability to elevate and radically improve the customer experience. AI’s rich language models can leverage large databases and allow you to create better customer interactions with your business—via chatbot or account exec. Whether we realize the potential of smart factories remains to be seen. But on the customer front, the time is now to leverage AI for your business.
Risk Mitigation Will Be a Top Priority for Manufacturing Leaders
Given the increasingly critical security concerns facing global manufacturing and supply chains, IP protections are another important consideration in 2024. After all, your design IP is the lifeblood of your company. Keeping critical information confidential and secure is a challenge for every organization, but certifications like SOC 2 Type II and ISO 9001 can protect your intellectual property and data.
In addition to ensuring data and security protections, distributing supply chain risks across regions helps mitigate potential disruptions, shipping delays, and more. As more companies are embracing new regions for production, this diversification is another way to de-risk your business.
Macroeconomic Pressures Will Require More Costing Down and Margin Improvements
Another challenge is the global economy, which is being buffeted by inflation, recession, war, and regional instability. Even though signs are pointing to inflation decreasing in 2024, it remains higher than pre-pandemic levels. This macroeconomic climate will put pressure on manufacturers to stay competitive by lowering costs and expanding their customer’s margins. Setting those goals can involve everything from lowering parts pricing to finding new markets to diversifying supply chain options. Among these, several stand out as excellent 2024 strategies. They include:
- Reducing the direct cost of materials
- Evaluating production processes to find inefficiencies
- Restructuring or retooling your product
- Eliminating unnecessary part numbers
Regardless of your tactics, working toward a more lean, agile operation is always wise, especially in today’s economic landscape. And if you want to take a deeper dive into decreasing costs and increasing margins, consider an NPI readiness review or assessment. It’s one way to ensure there’s a workable path to achieving your goals.
Investment in Emerging Manufacturing Regions Will Continue
In 2024, we’ll also continue to see a shift in supplier sourcing strategies, with the pendulum swinging towards regional diversification. Bloomberg reports that companies like iPhone maker Hon Hai Precision Industry Co. are doubling down on investments in India, whereas Apple and Tesla are expanding into Thailand and Malaysia. Manufacturers will increasingly explore regional partnerships, reducing dependence on single-sourcing supplier strategies and mitigating the risks associated with regionally unstable supply chains.
Whereas others are investing in North American manufacturing regions including Mexico, which is consistent with higher demand for nearshoring. The advantages of spreading risk across suppliers and regions on top of a more diversified supply chain will continue to be realized in 2024.
Key Takeaways
2024 is sure to be an exciting year for manufacturing, as companies move beyond single-sourced supply chains and continue to invest in exciting new regions to achieve their goals. Reducing risk and cost, as well as embracing AI will help solve some of manufacturing’s biggest challenges.
Let’s hit the ground running in 2024!