In the manufacturing industry, ongoing skilled labor shortages, global supply chain delays, volatile raw material prices, and mounting pressure to meet sustainability goals will continue to pose significant challenges to manufacturers in their fight to stay competitive in 2024.
In other words, manufacturers have a lot on their plate this year. What are the 2024 manufacturing trends and predictions they should take into consideration? And what are the lessons to take away from the previous year?
At Pricefx, we support discrete manufacturers in streamlining and optimizing their pricing strategies with our cloud-native pricing software solutions, tailor-made to effectively address the most urgent issues faced by the industry.
This article lays out a few of the most decisive manufacturing trends of 2023, followed by a discussion of the trends and predictions we expect to see in 2024 and how manufacturers can best prepare for those changes.
So, let’s dive in.
Notable Manufacturing Trends From 2023
1. Ongoing Labor Challenges and the Role of Unions
In 2023, labor shortages remained a pressing issue in manufacturing, fueled by the sector’s loss of an estimated 1.4 million jobs during the COVID-19 pandemic, an aging workforce close to retirement, and an ongoing skills gap among newer joiners (attributed in part to the US’s low global ranking in STEM education).
However, manufacturers have explored several avenues to help plug that gap, including prioritizing Diversity, Equity, and Inclusion (DEI) initiatives in the talent search, expanding offers to include flexible working options, and investing in AI-driven innovation to boost productivity.
And these efforts haven’t been in vain: many businesses are resolving to respond quickly with more agreeable terms for employees, with the UAW strike resulting in improved wages and the abolishment of a tiered payment system.
2. The Rise of AI and Automation in Business and the Workforce Response
Last year, we weren’t surprised to see manufacturers implementing artificial intelligence and automation in greater numbers. With the manufacturing industry forecasted to materially benefit the most from AI adoption, it’s easy to see why.
As AI and automation become more permanent fixtures in the manufacturing industry, cases like these demonstrate the merits of a more mindful integration of AI in manufacturing, one which prioritizes employee wellbeing and enhances, not replaces, worker capabilities.
3. Safeguarding Public Image in Response to Social Pressure
Last year, online consumer backlash in response to a controversial Bud Light marketing campaign, resulting in significant reputational damage for the company, reminded us that manufacturing companies, like public figures, are increasingly vulnerable to scrutiny.
Social media platforms like X (Twitter) amplify brands, but can also leave their choices exposed to the critical eye of millions of online users. Faced with this heightened visibility, manufacturers have had to tread carefully to avoid inadvertently causing long-term or even irrevocable damage – and we don’t see this trend going away in the coming years.
Our Top Predictions and Trends for Manufacturers in 2024
1. Increased Adoption of AI and Automation for Productivity, Quality, and Safety
AI adoption won’t just be a passing trend in manufacturing; it’ll be a financial imperative in the coming years, projected to bring in an estimated $3.8 trillion to the industry by 2035.
One technology we’ll see much more of in the industry is digital twins, software models that replicate physical structures. In this context, this technology also refers to the digitalization of production lines to test better configurations by addressing bottlenecks before they happen in the real world and conducting better forecast maintenance of production equipment to minimize the risk of unexpected equipment breakdown.
Digital twins provide manufacturers with a risk-free environment to simulate the impact of diverse conditions (e.g., natural disasters) on building projects and continually test for and address weaknesses over time.
Manufacturers can use digital twins to test how their products will perform in the real world, from building a dam to engine components in an aircraft, and ensure they meet quality and safety standards from the beginning.
Additionally, the smart factory, a product of the Fourth Industrial Revolution which integrates technology like AI, analytics, and cloud computing into the manufacturing process, will continue to make significant headway in the sector. For many manufacturers, it already has; Siemens recently invested $150 million into building a smart factory in Dallas, a move which is expected to create 700 new jobs.
And as manufacturers grapple with ongoing labor shortages, AI and automation technologies can also help to reduce that pressure. A recent Deloitte survey finds that manufacturers expect the Industrial Metaverse (the concept of fusing physical and digital technologies) to increase labor productivity by 12%.
2. Sustainability Increasingly a Global Imperative in Manufacturing
Global legislation and consumer buying preferences will continue to exert pressure on manufacturers to make more sustainable decisions in production.
As a result, we should increasingly see a shift away from single-use plastics towards alternatives like aluminum or biodegradable materials for product packaging.
We also expect to see more manufacturers adding electric vehicles (EVs) to their product portfolios and offering electric batteries as alternatives to combustion engines. Likewise, there will be increased investments in clean energy facilities that are expected to create new jobs, offering more options to an increasingly eco-conscious emerging workforce.
3. Ongoing Global Disruptions in the Semiconductor Industry
Nvidia, AMD, and Intel, leading producers of semiconductors for the AI industry, are among those who may be materially affected in the future.
So far, China has responded by buying slower semiconductors or dismantling its existing chips (e.g. graphics cards) and repurposing them to be used for artificial intelligence. In the upcoming year, only time will tell how China will navigate the export freeze and to what extent those decisions will impact global manufacturers.
However, what we do know is that the race to corner the AI market already has and will continue to play a decisive role in global trade in the next few years, potentially placing affected manufacturers in a challenging position.
Tips for Manufacturers to Prepare for 2024
1. Look to the Past for Future Action
Stepping into a politically uncertain year, manufacturers can start by viewing past election years as instructive.
Consider the domestic and global events resulting from political shifts that required quick adjustments in your business processes to stay competitive. For example, for many pricing managers, the 2016 presidential election made understanding the impact of tariffs on pricing part of their job, in turn enabling a quicker response when new tariffs pop up in the next election.
Politics aside, examine your company’s past track record for answers. Where were the holes in your operational processes, whether in safety, quality, or any other aspect, and which among them need to be prioritized now?
In light of the rise of AI and automation technologies in manufacturing – and how much we still have left to discover here – there should be plenty of holes at this stage. For example, while a laser scan can detect imperfections on a Ford F150, a final quality check still requires human judgment. Find out what yours are, and how you would leverage AI and your workforce in combination to address them.
2. Embrace Sustainable Practices
This year, a proactive response to growing consumer and regulatory calls for sustainability should be at the top of the agenda. Luckily, in manufacturing, there are multiple avenues to do that which don’t require a complete overhaul of legacy products.
These efforts can include integrating electrical vehicles or components into product portfolios, using recycled and other low-emissions materials in production, or streamlining supply chains to reduce environmental impact.
Manufacturing companies don’t need to ditch old models to make a difference. Instead, making a few creative adjustments – to production processes, product components, or even packaging designs – already makes a significant impact by providing customers with more opportunities to live sustainably and even save money in the long term.
3. Integrate Advanced Technologies in Production and Operations
Integrating artificial intelligence and automation capabilities into manufacturing processes, such as digital twins or algorithm-driven talent acquisition, should take precedence this year to stay competitive.
But beyond production and hiring, other frameworks may need a digital makeover, too – including how manufacturers price their products.
The adoption of pricing software solutions, which offer capabilities like quick price recalculations, streamlined agreements and promotions, and price forecasting, will be decisive in determining how quickly manufacturers can adapt to evolving market demands and safeguard their competitiveness.
Take Advantage of Pricefx Pricing Features for Manufacturers in 2024
Stepping into 2024, manufacturers have a lot to consider. Ongoing supply chain disruptions, labor shortages, and volatile raw material costs will continue to pose obstacles to profitability in the upcoming year.
The good news? AI and automation technologies have immense potential to boost productivity and efficiency, reducing costs in the long term – with many of their most impactful capabilities yet to be realized.
In this article, we briefly touched on some of the ways manufacturers can use pricing software for more accurate and streamlined pricing. Want a closer look? Consider checking out our article on how Pricefx pricing software helps manufacturers:
Jose is the Director of Solution Strategy at Pricefx, with more than 15 years of experience as a pricing practitioner. In his career, he has led in every aspect of pricing from analysis and optimization to pricing strategy definition and execution. His experience in driving and implementing initiatives in digital transformation has given him insight into the typical roadblocks organizations face and the best paths to release the untapped potential of pricing organizations.