7 Trends Set to Dominate the Manufacturing Industry in 2018

A new year brings new expectations and concerns—changing government policies, trade deals, tax structures and other risks, as well as the unrelenting pressure to reduce costs. For manufacturing CEOs, this means investing in technology to compete and win in the global marketplace. Being competitive with low-cost countries also makes reshoring a reality—for example, reshoring and FDI (foreign direct investment) job announcements through the first three quarters of 2017 were 250 percent higher than the previous year-to-date.

A big driver for this trend is Industry 4.0—incorporating new technologies to increase quality, efficiency and throughput, maximize production speed and reduce overall operational costs. “Technologies that will have the greatest impact include cloud, mobile, big data and analytics, and Internet of Things,” a recent IndustryWeek article pointed out. “Manufacturers also have high expectations for technologies that are in earlier stages of adoption, such as robotics, cognitive computing/artificial intelligence, 3D printing, augmented reality/virtual reality and even blockchain.”

IDC recently released “IDC FutureScape: Worldwide Manufacturing Predictions 2018,” which surveyed the global manufacturing landscape. “Manufacturers of every size and shape are changing rapidly because of new digital technologies, new competitors, new ecosystems and new ways of doing business,” said Kimberly Knickle, research vice president for IDC Manufacturing Insights. “Manufacturers that can speed their adoption of digital capabilities in order to create business value will be the leaders of their industry.”

Research and trends indicate the following seven factors will have a tremendous impact on U.S. manufacturing in 2018.

1. Smart manufacturing

Transformation to “smart” manufacturing continues at an aggressive pace. “Almost every manufacturer has now introduced smart manufacturing concepts and technologies to a plant, or even a single production zone,” wrote Sean Riley, global industry director for manufacturing and transportation at Software AG, on Beyond B2B, A Digital Reality Check. “While predictive maintenance and energy management are typically the first initiatives pursued, there will be increased focus on more complicated initiatives, such as in-line predictive production quality, that require complex algorithms and generate even greater benefits.”

2. Digital platforms

This smart transformation increasingly depends on digital platforms that expand customer experience and value chain efficiencies. According to IDC, 60 percent of the top manufacturers will rely on digital platforms that enhance their investments in ecosystems and experiences as well as support nearly 30 percent of their overall revenue by 2020. “These digital platforms will be leveraged for both the enterprise value chain and the extended supply chain and will be critical hubs for the incorporation of key emerging technologies,” added Riley.

3. Industry clouds

IDC also indicates that by 2020, 75 percent of all manufacturers will participate in industry clouds, although only one-third of those manufacturers will be monetizing their data contributions.

This trend is driven largely by the Internet of Things, which connects equipment and processes in real time and improves decision making and operational efficiencies. As a result, industry clouds are an appealing option for sharing and analyzing this information with suppliers and customers.

4. Convergence of IT and OT

Convergence of information technology (IT) and operational technology (OT) will continue to be “top-of-mind in 2018, as more manufacturers come around to the possibilities of an industrial IT network,” stated Jennifer Rideout on Manufacturing AUTOMATION magazine. “Convergence is also a significant component of Industry 4.0, and will also increase as companies move from planning to implementation of their Industry 4.0 projects.”

Due to the connection capabilities of the Internet of Things, IDC further predicts that, by 2019, 30 percent of all IT and OT technical staff will have direct project experience in both fields, which will additionally streamline production efficiency.

5. Tighter supply chains

By the end of 2020, one-third of all manufacturing supply chains are expected to be using analytics-driven cognitive capabilities, thus increasing cost efficiency by 10 percent and service performance by five percent. Such digitally enhanced supply chains would leverage Internet of Things-generated data to provide real-time insights into supply chain operations. This could even include using this data to construct virtual models and simulations to improve performance and operational efficiency.

6. More services

Smart technologies will also be used to increase revenue through new services. For example, manufacturing companies are interested in using Internet of Things technologies and infrastructures to provide new services for the sales and marketing lines of business to increase revenue generated from products and digital services. “This drives new revenue from data and data-related services, as well as for the aftermarket service lines of business,” said Dietmar Bohn, vice president of industry cloud for SAP. In addition, the German Machinery and Plant Manufacturing Association indicates that, in 2020, data-based business models will contribute at least 7 percent more revenue to German manufacturing companies than they currently provide. Other offerings will include pay-per-use for the use of machines and equipment.

7. Virtual reality (VR) and augmented reality (AR)

AR can be used for testing different manufacturing scenarios before a product goes into full production. “AR tools can simulate the production phase, drawing attention to potential problems which could halt production,” stated FreePoint Technologies, a company that provides monitoring technologies for manufacturing equipment, on its blog. “It will help to ensure that the manufacturing process produces precisely what you hoped to create. AR can also help with inventory tracking, worker training and provide insight into a company’s optimal operational standards.”

Some even believe manufacturers can use VR/AR in their daily operations, especially in field-service management, to guide repair in remote environments.

Rapid Transformation

These seven trends are just some of the ways Industry 4.0 will impact U.S. manufacturing in the future. To keep up with up evolving digital technology and increasingly complex logistics and partnerships, companies must be agile and have the technology they need to respond to rapidly changing markets and global conditions.

“Manufacturers are constantly seeking ways to increase operational efficiency by concentrating resources on primary production and marketing functions, their core business,” stated Caroline Gerenyi, director of marketing and communications for abas-USA, a provider of enterprise resource planning software for manufacturing companies.

“U.S. manufacturers can’t succeed without a digital platform that supports agility,” she added. “Whether it’s globalization or technology, U.S. manufacturers need to be ready to take advantage of the emerging trends of today and tomorrow.”