Top 2024 manufacturing trends to watch

Change is constant in the manufacturing industry, and the supply disruptions and global shifts of the past few years have highlighted how critical it is for industrial companies to focus on resiliency. Here are the top six manufacturing trends RSM has identified for the manufacturing industry:

1. Data and smart manufacturing

Machines, assembly lines, smart sensors, robots and other devices generate enormous amounts of industrial data that, historically, manufacturers have not taken advantage of. As more companies implement advanced technologies and more ‘factories of the future’ take shape, a robust data strategy becomes paramount. Shifting to a data-driven decision model will provide businesses with predictive insights that can optimise processes, strengthen risk assessment procedures and ultimately help them maintain a competitive edge.

To have a successful data-driven manufacturing operation, companies also need the information technology infrastructure to support advanced Industry 4.0 technologies; this area is where many middle market manufacturers are further behind their larger counterparts. Organisations need a flexible, scalable and interconnected IT architecture to support the shift to more data-driven operations and meet future challenges.

2. The continuing urgency of cyber security

While advanced technologies are streamlining many aspects of traditional manufacturing operations and breaking down longtime barriers that can impede innovation and collaboration across the entire value chain, they are also creating more opportunities for cyber criminals to compromise manufacturers.

According to data from the 2023 RSM US Middle Market Business Index survey special report on cyber security, 20% of middle market executives claimed their company experienced a data breach within the last year. Also in this year’s data, 35% of middle market executives disclosed that they experienced a ransomware attack or demand, up from 23% last year.

Manufacturers – and any third parties they work with – need to raise the bar on protecting themselves in an environment where workers, machines, supply chains and organisations are becoming ever more digitally connected. Understanding which critical information and intellectual property assets need protection from potential cyber attacks—and taking action to put those protections in place – will increasingly become a source of competitive advantage.

3. Reimagining global supply chains

While manufacturers historically have focused on making their supply chains more cost-efficient, few have considered addressing vulnerability to trade risks or global pandemics. The past few years have shown that companies that have invested in technology and focused on supply chain agility have an edge against their competition, and that will continue to be true as we look to the future.

Manufacturers need to take advantage of technology to create more connected supply chains, providing an opportunity to link various pieces of the supply chain together to receive more data. Companies prioritising digitising their supply chains will be more resilient and better positioned to respond to future supply and demand disruptions (for instance, the manufacturing construction boom in 2023). Digitisation will be essential in the new era of globalisation as companies diversify where they source and make their goods.

4. The battle for manufacturing talent

As manufacturers grapple with technology’s increasing role throughout their organisations, the impact on their workforce will be significant. The dynamic and fast-paced environment created by today’s advanced technologies – from intelligent robotics to big data and the industrial Internet of Things – will require the current workforce to adapt. It will also require companies to be more intentional and creative in attracting and retaining talent.

We expect this will bring a renewed emphasis on cultivating new skills for an environment where analytics increasingly drive business decisions and humans more commonly coexist with robots. Manufacturers will need to reassess and update their training and workforce development strategies to keep pace with this industry shift. Companies will also need to have a clear understanding of which core offerings to focus on and which might make sense to outsource.

5. Economic pressures and market shifts

The era of low inflation, rapid growth and inexpensive capital is transitioning to a new state. Globalisation is not dead, but the makeup of its participants has shifted as businesses diversify where they source and make their goods. The impact of these structural changes is profound, and amid margin pressures in a higher-cost environment, manufacturers will need to focus on optimising operations.

In the US, legislation in recent years – including the Inflation Reduction Act and the CHIPS and Science Act of 2022 – has also shaped a new era of industrial policy that is driving increased construction investment for US-based semiconductor manufacturing and green technologies that support the energy transition.

Manufacturers need to understand how to take advantage of opportunities in these policy changes to capitalise on this wave of opportunity. The fact that clean energy incentives are a significant component of recent legislation underscores the importance of environmental, sustainability and governance (ESG) issues for manufacturers, too. As ESG gains more traction among various stakeholders, decarbonisation will likely need to become a bigger priority for manufacturing, automotive and energy companies.

6. The rise of artificial intelligence

Manufacturing is one of many sectors across the economy adopting generative artificial intelligence (AI) and exploring its potential to revolutionise processes and unlock new human capabilities.

For manufacturing companies, the potential of AI-generative or otherwise – to enhance predictive maintenance, optimise the supply chain and improve quality control is only the beginning. Increased productivity, enhanced decision making and improved cost savings will continue to drive broader adoption of the technology across the middle market. While challenges exist, if companies plan carefully, invest in infrastructure and focus on ethics, AI will continue to revolutionise the industry.

Jason Alexander, Industrials Leader, Principal, RSM US LLP

Jason is the enterprise leader for the industrial practice at RSM US LLP. In this role, he is focused on setting and executing the firm’s industrial strategy.