All industries have been vastly impacted by the tsunami of global issues which have plagued 2022. Supply chain issues continued to disrupt the manufacturing sector, the UK and Europe have plunged into an era of economic fragility that shows no signs of abating in 2023, and despite all this, consumer expectations are only rising.

Against this backdrop, the manufacturing industry needs to find ways to continue improving back-end and customer-facing operations – and somehow do this while spending less money. But rather than looking at this situation as a nightmare, it has actually forced the sector to think outside of the box – to look for solutions beyond the norm and reconsider how we traditionally orchestrate the ecosystem, from factories to the supply chain, and its relationship to engineering.

So, what trends should the industry be looking at when devising their strategies for the New Year? Check out our top predictions for the manufacturing sector in 2023 to find out.

Doubling down on digital

Data is going to be an organisation’s best friend when attempting to navigate the current unstable market. Businesses will need complex decisions to be made quickly, which will mean relying on as much accurate and reliable data as they have available to them.

To help unlock this data, the digital transformation of legacy systems is going to be a priority for businesses in 2023, but many will find themselves approaching their network limits when it comes to trying to implement all the necessary connected devices. An evolution of infrastructure is going to be vital for businesses to ensure they can function at a truly smart level, using digital technologies to improve or create new business processes, culture, and customer experiences. The key enablers of enterprise platforms, cloud, cybersecurity, 5G/EDGE/IoT connectivity, insight, leanness and repeatability through AI/ML and RPA are readily available but not yet seamlessly connected.

While this sounds like a simple answer, ripping out legacy infrastructure and installing new systems while continuing to run the business will prove a massive undertaking for many businesses. How do business leaders disrupt their business with new technological infrastructure while maintaining business continuity? Over the course of 2023, we’re likely to see business leaders contemplating short and long-term digital transformation plans with a need to embed this drive into the culture of their business.

The cost-of-living crisis impacting customer demand

It isn’t just businesses feeling the squeeze from global issues such as the ongoing conflict in Ukraine. The cost-of-living has increased across multiple areas for consumers, forcing them to think much more carefully about what they spend money on, where they source their purchases and how these connect with their belief systems. As a result, consumers are becoming increasingly discerning, demanding higher levels of quality and transparency – something that’s going to continue well into 2023.

To handle these rising demands, the manufacturing industry needs to build greater efficiencies into its operations. The individualisation of products, for example, made bespoke for consumers, will continue on a luxury level in 2023, but there will also be more pressure put on low-margin, high-volume consumer packaged goods (CPG), which require investment in achieving greater efficiency through automation. Organisations will need to keep challenging themselves to take the base cost out of engineering, manufacturing, and operations from the idea stage right through to market as quickly, cheaply and pragmatically possible.

This will force organisations to become more efficient with resources, and create more cost-effective selling methods. To do that, however, they’ll have to drive competitiveness through a focus on portfolio growth, or by finding new markets.

Sustainability will come under the microscope

Sustainability has been a growing focus for the industry for some time, but in 2023 it will become a top priority for business leaders. Consumers are becoming more discerning with purchases and are scrutinising businesses more aggressively than before. While many manufacturing organisations have already shared their commitments to net-zero, consumers are now demanding the proof. Carbon reduction targets will need to be seen to be making progress, so firms will need to not only assess how to reduce resources within factory walls but also beyond. As a result, manufacturers will be keen to demonstrate how the factories they utilise are more efficient, for example, with fewer diesel-powered forklift trucks and an increased use of autonomous, electric-powered vehicles that have much lower emissions.

Automation in general will be influential in driving down carbon emissions, with AI and ML being employed within company databases to help them become more intelligent. One way is through being proactive as opposed to reactive when it comes to the capital acquisition, energy and emissions trading versus the repair or rebuild of legacy machines in the manufacturing process. Networks of IoT devices and smart sensors will be needed to keep legacy systems running at optimal efficiency, alerting engineers to faults automatically and allowing them to fix small issues before they develop into bigger, expensive problems.

Workforce upskilling and labour retention is paramount

Labour retention and upskilling is going to be another driving issue in 2023 as businesses are pressured to be more efficient and sustainable in a more costly environment, all while still turning a profit. Companies are going to have to ensure their workforces are diverse and skilled enough to meet the demands of a connected business and more efficient in an ever-competitive market.

In 2023, manufacturing businesses will need to be smarter about how they leverage their workforce and how they best make use of their knowledge base in order to derive new revenue opportunities. Investment in people will be paramount to ensure the next generation of workers have the necessary skills to unlock new, creative problem-solving capabilities. The only way this will happen is through a change of mindset within the sector, with the C-Suite leading the charge. Employees need to be given more freedom by leadership to explore alternative technologies or solutions that might help accelerate the business in the long run.

We expect to see a real drive towards a more fluent and native digital culture in many companies’ workforce throughout 2023, enabling quick and more complex decisions based on reliable data sources.