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Manufacturers are reporting tough operating conditions with inflationary pressures, high energy prices and ongoing skills shortages. But according to the recently released Rockwell Automation State of Smart Manufacturing report, glimmers of optimism have started to appear after years of disruption and critical supply chain issues.
The report says increased adoption of advanced industrial operations technology is now delivering results in the face of evolving economic conditions, labor shortages, skills gaps and cybersecurity concerns.
The ninth annual edition of the State of Manufacturing Report is Rockwell’s largest to date, surveying 1,567 decision-makers from 17 of the top manufacturing countries, two-thirds of whom work for firms with more than $1 billion in revenues.
“I think what I see in our data set as the thing that separates leaders is they understand that you have to get your people in place. You have to get a process and get them on board with that process, and have a change management culture—not just a change management project that you’re going to introduce and then drop,” says Gerry Abbey, market research and competitive intelligence manager for Rockwell Automation. “When you can do that and have the process in mind, then you can bring any technology in and have your people guide it to amplify the impact and be a leader in the industry.”
The key takeaways from the report include:
- 94% of respondents expect to maintain or grow their workforce as a result of smart manufacturing technology adoption.
- 95% are currently using or evaluating smart manufacturing technology, up from 84% in 2023.
- 98% have a sustainability or ESG policy in place, with almost half of those being formal, company-wide policies.
Abbey says the emphasis on supply chain has reduced slightly in this report compared to previous years, with the workforce leading the conversation.
“What's changed is the technology around it and how employers are thinking about how they can empower their workforce. It's thinking about automation and bringing technology in to amplify the impact of the workforce.”
Indeed, the report shows workforce issues are expected to continue to hinder growth in 2024, jumping up in ranking for both external (4th) and internal (1st) business obstacles. Deploying and integrating new technology remains a top concern in 2024, highlighting the importance of the relationship between people and technology to drive positive outcomes. Respondents signalled that adoption of technology is the best way to mitigate against both external and internal obstacles, and planned technology investments have increased 30% year-over-year. This means it’s even more critical for manufacturers to get the balance right between people and technology—94% of the respondents are looking to maintain or grow their workforce as a result of technology adoption.
“It seems like everywhere is still extremely competitive for any talent that is out there, skilled or not skilled,” quips Abbey.
You want detractors in the room
Abbey says manufacturers have changed their mindset over the last few years, understanding the importance of keeping a focus on people, resulting in more transparency in the technology that a company plans to invest in.
“It’s about getting the right people to the table—the people that are going to use the technology—as you're going forward with the adoption,” he says. “You want detractors in the room so they can poke holes in it and say, ‘That's well and good at a C-suite level, but on the production line, the people won't understand how that specific technology works and no amount of training is going to fix that.’’’
Abbey says listening to these detractors can help a company land on the right technology for their operation, based on how it will be used instead of how the technology is marketed. It’s not about buying the newest AI and machine learning (ML) solution simply because it has AI and ML, it’s about finding the best possible fit.
“That will amplify the impact of your programmer, where you’re already short because that’s a skilled labor position that you’re having trouble recruiting for. That’s a technology that can take someone’s impact from what they would do in a day down to an hour and amplify that out exponentially, and that gets people more on board,” says Abbey.
AI, ML and effective data use
Survey results show that AI has quickly become a critical part of technology strategies and roadmaps throughout manufacturing, with adopters seeing tangible results only eclipsed by the outcomes and ROI delivered by cloud and software-as-a-service (SaaS) technology.
The survey has included questions about AI and ML in previous years—last year about 53% of respondents planned to use AI and ML in their operations by the end of 2023. But the explosion of AI in the second half of 2023 forced this year’s survey to ask more specific questions covering GenAI, ML, causal AI and applied AI. And in the responses, 85% said they're going to be using AI and ML in operations this year, and 83% said they're going to be using genAI.
It was an overwhelming jump in interest, not just because of the popularity of AI/ML-powered solutions, but because the respondents also had an understanding that data was the key to success in these implementations, with respondents saying their own organizations use less than half of collected data effectively.
“If you're going to use these tools, you need to be able to access the right data. You need to make sure that you're creating models to guide these very advanced tools in the right direction,” says Abbey, who added that organizations will likely need at least one AI expert on staff to catch model drift and ensure the output is correct.
Energy and sustainability
The report shows that virtually every company (98%) has some form of sustainability or environmental, social and governance policy and 86% have a formal policy in place, up from 78% in 2023. These policies have been enacted to reduce costs, with four reasons for implanting these policies ranking higher than a commitment to eco-friendly activities. Those reasons are energy management, product quality and safety, health and safety and reducing waste.
“We're seeing sustainability rise to the top for business reasons, with the top 10 motivations now being to improve efficiencies and as a competitive differentiator. And, critically, when you look at this question, across different countries, some have competitive differentiation ranked as number one by far. So, I think a lot of it is businesses understanding that this is the future and if they want to succeed in the future, they need to have their sustainability and ESG posture aligned, clear and understood,” says Abbey.
“The next generation of workers has signalled they need purpose. They will take thousands, sometimes tens of thousands of dollars less, if they're working for an organization that's clear about what its purpose is and how they're contributing to the world,” he says.
Cybersecurity is all-encompassing
2024 marks the first time in the history of Rockwell’s report that cyber security has ranked in the top five external obstacles for manufacturers, and it’s a big deal. Manufacturers are seeing increasing risks to their operational and information technologies due to the interconnected nature of physical and digital infrastructures.
“I think the number one takeaway is [manufacturers] admitting and understanding that cybersecurity is a thing,” says Abbey, adding that for a very long time manufacturers considered cybersecurity to be someone else’s problem. “We've had more and more published reports over the last couple of years and they're starting to see it. And this report reflected that change, that mental awareness, that cybersecurity is a serious external risk,” he says.
The report shows manufacturers are looking at a combination of human skills and emerging technologies to strengthen their cybersecurity regimes. Indeed, the survey found cybersecurity is the top-ranked skill employers are seeking in 2024. It is the second-rated use case for implementing AI/ML technology and is ranked third for delivering the biggest outcomes from smart manufacturing technology.
“There's lots of solutions out there, but this report shows this is what the community is thinking and the areas that need to be addressed,” says Abbey. “We don't have specific recommendations within this report—it's more to raise that awareness that there's been a change—but there is lots of technology already available and there's more technology coming in to help get your cybersecurity house in order.”
Visit Rockwell to download the full report.