Amidst the swift evolution of technology and changing global dynamics, the manufacturing industry is undergoing significant transformations. Considering this, here are the top five manufacturing priorities to monitor in 2024.
Source: ISG Research
1. The emergence of the digital thread.
IoT devices, IIoT-automated plants, engineering simulations, and digitized customer experiences – the defining features of smart manufacturing – generate vast amounts of data, measured in petabytes. Leaders must seamlessly connect these data into "digital threads" to enhance operating efficiency and product quality, foster brand loyalty, and elevate the overall customer experience. This entails linking information about a product from its design phase, through the manufacturing process, and extending to its service lifecycle.
Manufacturers are tasked with developing meticulous digital threads to continually channel product performance data back to engineering, thereby enhancing the quality and performance of future designs. Consequently, prioritizing comprehensive data strategies becomes imperative for manufacturers in 2024. It is essential to emphasize that the cultivation of "digital threads" demands increased investment.
2. ESG hits the board agenda.
Sustainability has transcended the realm of mere buzzwords; it has evolved into a paramount consideration for manufacturing leaders. While environmental, social, and governance (ESG) factors have always been part of sourcing discussions, they are now crystallizing as board-level imperatives necessitating a comprehensive vision and roadmap. Nevertheless, numerous manufacturers express reservations about the capability of their partners and suppliers to align with their ESG and sustainability objectives. Manufacturers must foster collaboration throughout the value chain, pinpointing routine operations where ESG strategies can make a difference. Establishing frameworks that offer transparency into company activities, evaluate outcomes, measure carbon footprint, and implement ownership-based change management is imperative. These measures are essential to support ESG initiatives and meticulously track progress.
3. Monetization of IT-OT assets & resources.
Organizations adopting a unified IT-OT transformation approach are better positioned to surmount challenges and realize positive business outcomes. The convergence of IT and OT proves pivotal in elevating operational efficiency through a centralized platform for managing these assets. This integration streamlines asset management processes, enabling organizations to promptly address operational issues, minimize downtime, and optimize resource utilization. Consequently, this approach leads to faster responses and reduces operational costs, ultimately fortifying the organization's bottom line.
4. M&A drives focus and growth.
Technological progressions, notably in areas like artificial intelligence (AI), automation, and digital transformation, represent key strategic focal points for M&A opportunities. Businesses are actively seeking acquisitions of novel technologies or digital capabilities to fortify their competitive edge and extend their footprint in the market. In the realm of M&A, companies showcasing robust research and development (R&D) or innovative product portfolios are particularly attractive, as dealmakers aim to expedite their initiatives, reduce time to market, and outpace competitors.
The aerospace and defense (A&D) sector is poised to be fueled by the expanding tourism market and the rise in defense budgets amid global conflicts. The automotive market will witness ongoing impacts from electric vehicle transactions, and the engineering and construction (E&C) sector will experience growth driven by escalating investments in infrastructure.
5. Building tomorrow’s supply chain.
The supply chain has remained a paramount concern for manufacturing companies over the past several years. The Manufacturing Leadership Council (MLC) of the National Association of Manufacturers (NAM) cautions that supply chain disruptions may persist for at least another year. Heightened concerns regarding geopolitical disruptions to trade routes have prompted many manufacturers to strategically reconfigure their supply chains, emphasizing resilience through practices such as ally-shoring, near-shoring, and reshoring.
Despite the growing awareness of the importance of artificial intelligence (AI) in enhancing supply chain operations, a significant portion of manufacturing organizations, as per the MLC study (57%), are still in the early stages of AI adoption, engaged in piloting or experimenting with AI applications. Nonetheless, there is a widespread intention among manufacturers to leverage AI in the future. AI is poised to elevate supply chain resiliency to a new level, emphasizing interconnected data and collaborative efforts across the enterprise.
About the authors
John Lytle
John has 40+ years of providing global enterprises with practical, yet strategic vision to drive meaningful change through complex programs, which extend business value through the effective use of today’s exploding Digital capabilities. John is a senior leader for many multinational enterprises in Capital Goods manufacturing. John leads the North American Industrial Manufacturing segment for ISG and is regarded as a global thought leader, regularly advising on emerging technologies and operating model changes to drive innovation.
Anamika Sarkar
Anamika Sarkar works as an Assistant Manager in ISG. She has close to 11 years of experience in research across various industries and geographies. At ISG, Anamika helps Manufacturing enterprises understand the latest technology trends, strategy, and innovation.
