Much has changed in the last four years and that will have a far-reaching impact on manufacturing in 2024 and beyond. For today’s blog, perhaps it’s time to take a closer look at how far we have come, the state of manufacturing in 2024, and where we are headed in the future.
In last week’s blog, I kicked off this concept by diving into the evolution of the supply chain, highlighting how it cracked under the immense pressure and disruptions of COVID-19 in 2020—but those of us in the space knew it was fractured long before.
What followed in 2021 and 2022 was a confluence of legislation including the IIJA (Infrastructure Investment and Jobs Act), the CHIPS (Creating Helpful Incentives to Produce Semiconductors) and Science Act, and the IRA (Inflation Reduction Act). Here we see funding aimed at infusing new life into manufacturing across various areas including semiconductors, clean energy, EVs (electric vehicles), and more.
Still, with a waning economy and workforce, there are significant hurdles the industry must tackle. Deloitte’s analysis of PMI (Purchasing Managers’ Index) data reveals that the manufacturing sector was in contraction for most of 2023. With all this in mind, we must look to the year ahead. Now, a few new reports point to what comes next for manufacturing in 2024 and the road seems a bit like a rollercoaster ride at an amusement park.
A Look at Manufacturing in 2024
The POI (Promotion Optimization Institute) 2024 State of the Industry Report suggests 88% of CPG (consumer packaged goods) manufacturers are struggling to manage their enterprise trade spend. This is due to several factors, but the solution is it is essential to have trade management capabilities.
How can manufacturers achieve this in 2024? There are big considerations. For instance, evaluate opportunities, develop a balanced enterprise funding allocation, and evaluate execution results. This will be critical as spending continues to blur across internal departments and industry channels, according to the report.
As always, we must consider how people, processes, and technologies fit into this equation. As I have said many times before, we must leverage the people-centric component while also applying the right technologies and services in order to meet our core objectives.
Certainly, this is often easier said than done in the manufacturing industry. The POI 2024 State of the Industry Report also suggests:
- 44% of responders noted that proper data cleansing, harmonizing, and staging are holding them back from delivering trade promotion optimization and analytics.
- 60% of companies said they needed to improve data ownership and management.
- 61% percent of companies are held back from exceptional retail execution because data and insights are not fully leveraged.
- 68% of respondents agree their companies face difficulties in executing promotions as planned.
- 36% of respondents noted developing a digital practice starts with gaining the necessary digital budgets.
- 28% reported a need for a dedicated digital team, and 48% reflected a need for dedicated analysts.
- 52% said that to understand the potential, impact, and ROI (return on investment) of digital enablement, the team needs digital ROI evaluation capabilities.
Still, many see value in people, processes, and technologies if it is a concentrated effort in the right areas. Respondents cited the need for increased focus on integrated business planning to improve coordination of the expected demand and supply forecast. According to respondents, 48% increased net sales, 32% eliminated poor-performing promotions, and 28% had improved forecasting, process improvements, and greater visibility of the business, opportunities, and risks.
What’s Ahead in 2024
After painting a picture of what manufacturing looks like now, we must also consider the overall economic landscape. We know the labor shortage is still a huge consideration in manufacturing, as are supply chain disruptions and sustainability targets. Simply to address all of this, the solution must be myriad.
Overall, companies need to consider everything in tandem to be effective, which includes trade promotion management, trade and pricing optimization, revenue growth management, digital transformation, omnichannel visibility and analytics, and retail execution excellence, just to name a few.
Technology will most certainly be a central focus. In Deloitte’s 2024 Manufacturing Outlook Report, it suggests we must consider the smart factory and the journey toward the industrial metaverse, supply chain digitalization, aftermarket services as a potential differentiator, and product electrification and decarbonization.
In fact, its research shows manufacturers anticipate the industrial metaverse could lead to a 12% gain in labor productivity while 86% of executives believe the smart factory solutions will be the primary drivers of competitiveness in the next five years. Generative AI (artificial intelligence) certainly holds promise.
With all of this though, we need to keep people in front of mind. We need to upskill and reskill. We need to incentivize the workforce. We need to teach, train, and mentor. We need to consider how to work in a way that is beneficial for both man and machine. We need both if manufacturing is going to flourish in 2024 and beyond.
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