How our resilient manufacturing sector is bouncing back

New research from Make UK signalled that 78% of manufacturers saw at least a moderate increase in productivity this year – while the West Midlands emerged as the frontrunner in the UK post pandemic manufacturing boom. However, to say that the pandemic and resulting challenges are now a thing of the past would be demonstrably false. Waning productivity brought about through COVID-19 induced shutdowns was just the start.

Confronting external tremors

Now, the International Monetary Fund (IMF) is sending out warnings that inflation and the global supply crunch will have serious ramifications for the UK economy. Meanwhile, as several important climate pledges were made globally, manufacturers have found themselves under more pressure than ever to cut waste and emissions – from the suppliers they use, through to the shop floor.

While many manufacturers have been trying to quantify the value of digital technologies for years, these systematic challenges have been impossible to ignore of late, and as a result, investment in and experimentation with advanced digital technologies is coming thick and fast. To unpick manufacturers’ innovation and Industry 4.0 priorities, Digital Catapult polled some of the UK’s manufacturing leaders* on their hopes, fears and ambitions for digital transformation this year. What are the biggest tech priorities for manufacturers, and where do they perceive they will add value? Most importantly – are they right?

Investing to compete

Manufacturers are looking to technology to help them reduce operational costs, grow their businesses and become more competitive in a global market. As the dust began to settle, we’ve seen manufacturers shift their objective from ‘survive’ back to ‘thrive’ as they keep an eye firmly on the competition. And, rather than causing digital transformation to fall by the wayside, recent challenges have in fact meant that digitising operations is taking centre stage for manufacturers. That said, a proportion are still struggling to get underway on their journeys – with one third of those polled saying that ‘risk of business disruption’ is still a barrier to digital transformation.

With external tremors showing no promise of easing off, the research exposes how risk-averse manufacturers could miss out on key opportunities to innovate, using technology as a means to respond to these disruptions in the future. When it comes to top investments, technologies such as the Internet of Things (IoT), robotics and predictive analytics are all high on the list for manufacturers this year. From building construction, to warehouses, to waste management, we’ll continue to see organisations invest in sensors and autonomous technology to help monitor their assets and pinpoint logjams, waste and faults. Meanwhile, distributed ledger technologies – such as blockchain – are taking a more prominent place on the list. Meaningful use cases are fast emerging in industries such as food and drink for how organisations can improve traceability across their products and processes.

Admiring start-up culture and innovation

With so many advanced digital technologies to consider, all evolving at a superfast pace, accessing and developing the right skills continues to be a challenge. Labour shortages are a major concern for many manufacturers, yet access to the right talent is key if they are to get the most out of new technologies. While it’s not a problem that can be solved overnight, collaborations between start-ups and larger corporations – allowing them to share knowledge, insights and best practice – can be a powerful answer to this challenge. Manufacturing bosses told us that start-ups give them the opportunity to access the creativity and skills they don’t have inhouse.

Looking ahead, these collaborations will start to factor into industrial business strategies more and more – 73% said working with start-ups is part of long-term business strategy, with 82% saying it will help accelerate digital transformation. And clearly, it’s a success – 92% who have worked with start-ups would do so again. And recently, our Made Smarter Technology Accelerator saw start-ups successfully develop cutting-edge solutions for industrial giants such as Sainsbury’s, Babcock and BAE Systems. These accelerator programmes will prove to be invaluable to ensure synthesis across research, start-up innovation and corporate growth.

Ironing bumpy supply chains

This cross-organisational synergy should be happening on a global scale right across manufacturers’ supply chains – with companies capitalising on opportunities to jointly innovate and address supply chain kinks. Advanced digital technologies are allowing manufacturers to track, share and act upon data, move towards predictive models and respond to shocks before they even happen. Our research supports this, with two thirds of manufacturing leaders focused on making their supply chains more resilient in 2022, while over half said building data-driven supply chains would make them more resilient. In fact, our survey revealed that supply crises were the main reason for manufacturers to innovate business models this year. Manufacturers are increasingly moving from risky, ‘just in time’ inventory management, to ‘just in case’ models, and innovation will be a huge enabler here. Digital twins, for example, will help elevate supply chain transparency – by feeding real-time data from IoT sensors into digital models of their supply chains, they will allow organisations to predict shocks and test out hypothetical responses.

Going for growth

While things are starting to look up for our manufacturing industries, we must not get complacent. If the pandemic has taught us anything, it’s that you can’t be sure what is round the corner to throw your business off course. As organisations go for growth, targeted investment in advanced digital technologies will be key to building resilience. As we look ahead to tackle issues of sustainability and rocky supply chains, improving data traceability will be vital, and accessing the innovative minds within the start-up world could be a great place to start. Wherever your digital journey takes you this year, make sure you have the right support in place – whether that’s the right talent, partners or counsel – to make it happen successfully.

2022: What do manufacturers want to invest in?

Cloud – 67%

IoT – 61%

Predictive Analytics – 61%

Robotics – 56%

AI – 54%

5G – 54%

Blockchain – 51%

Digital Twins – 48%

Additive Manufacturing – 46%

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