Manufacturing industry in 2020: an overview

06 January 2020

Written by René Hol

A year ago, analysts were quite pessimistic due to the economic slowdown in Germany and the approaching Brexit. One year later, it seems that German ‘Wirtschaft’ may not fall so dramatically as was originally expected. The slow economic developments in Southern Europe keeps the Euro weak, so Northern European economies can strongly profit from their export strengths. Germany, the Netherland and Nordic countries also found a way to deal with global protectionism combined with a high level of being alert like purchase indexes show. With a clear political landscape in the UK now, we may expect a smooth Brexit. Therefore, we can conclude that the top management should be cautious with spending their money but can continue investing in funds to make their company fit for the future. History shows that a pro-active attitude is rewarding.

Attention areas

What should be the focus of the top management? In many industries there will be disruptive changes, e.g., in the supply chain. They should be met with comprehensive initiatives. There seem to be three important attention areas for the top management: (smart) manufacturing technology, IT developments and HR.

(Smart) manufacturing technology

Two developments keep challenging managers while setting priorities and defining investments: digitalization and the opportunities within Industry 4.0. There is a wide variety of technology offerings from robotics, VR, additive manufacturing up to Internet-of-Things. Due to the rising number of technical standards between Industry 4.0 components it becomes easier to invest in single components. However, integration between the smart manufacturing elements and connecting them to the business information layers is not a sinecure. Many suppliers of smart manufacturing technology – like robots and computer-controlled machinery – keep their legacy locked and blocked for integrations. The creation of an integrated digitized manufacturing system is almost impossible without spending inevitable amount of money on vendors of the legacy technology.

IT developments

On the business information system side, we see several major developments. There is a strong ongoing wave to invest in PDM/PLM systems. Maintaining product data in ERP-systems has become a nightmare for many companies and obstruct their urgent need to create a product life cycle: from innovation, through market portfolio management and manufacturing, and up to services and recycling. PDM can potentially fill this gap. Regarding ERP, companies are taking initiatives to create a core – vanilla – ERP that matches with their business typology. This is a pre-condition to move to the cloud. Several low code apps can be implemented on top of the core ERP. A big attention area in 2020, but with an acceleration in 2021 will be MES (Manufacturing Execution Systems). Here the money will be gained from investments in Industry 4.0 components and a powerful ERP/PLM system landscape.

HR: attention area for top management which cannot be delegated

In 2020, the lack of qualified workers remains an important topic on the agenda. Participation in attractive recruitment and training programs is demanded. In general, companies will strive to become an attractive employer and to offer all ingredients modern employees are searching for.

Additionally, the upcoming pressure to create sustainability driven mindset and drive workplace diversity challenges the traditional culture of manufacturing industry. Especially the prominence of women in leading and technical positions challenges HR-policies and enforces disruptive new models in people management. Political climate still throws roadblocks to integrate professionals from outside the EU in your wanted diverse work teams. A practical attempt to deploy human-centric approaches is to have a continuous focus and an action agenda to eliminate inefficiencies in company’s processes. Techniques from lean manufacturing can show low hanging fruits and make the manufacturing company as such healthier.

Pressure from power players in the value chain

There is one more interesting development for 2020 and succeeding years. Manufacturing companies will experience pressure to innovate radically in their products and manufacturing techniques. Those developments are strongly triggered by the enormous attention of big corporates to become more sustainable. But these main players will not only re-invent their own operations but will disrupt the complete value chain, in strong cooperation with start-up companies with out-of-the-box approaches. For example, in the building industry, the providers of raw materials – cement, wood – will shake up the total chain. Manufacturers who are suppliers to the construction companies will notice this in all capillaries of the company. Another example is in automotive. The leaders in e-mobility will create newly structured supply chains impacting many manufacturing firms.

Getting ready to lead your company in 2020

This blog describes interesting developments and opportunities. But leading your company to these transitions is not an easy task. The biggest dilemma for top management is where to start, with what, with whom and when. In our next blog, published on January 21st, we will elaborate on this topic.

Want to know already more on how you can make such transition successful? Our team can give you some non-binding advice. Please contact us or send an e-mail to info@mobina-it.com.

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