When you think of the word ‘manufacturing,’ images of heavy machinery and long assembly lines probably come to mind. But manufacturing can involve a variety of processes and technologies. It’s no longer just about making things. In the 21st century, manufacturers must think beyond making products and focus on making processes more efficient and more productive. The manufacturing industry has experienced a huge transformation over the past few decades, and manufacturers will need to keep adapting to survive in the future.
This article will highlight the importance of understanding the challenges and opportunities facing manufacturers in the digital economy. It will also discuss the various types of manufacturing and their subsectors, and provide a high-level overview of the industry’s challenges and its future outlook.
The Importance of Understanding Manufacturing’s Challenges
Manufacturing has changed dramatically over the past few decades, and manufacturers must change with it. The industry has gone from making products to making processes more efficient and more productive. As the process industry has evolved, manufacturers have increasingly needed to adopt software and digital technologies to remain competitive.
With the advent of the internet and computers, manufacturing has become something more — it has become a process. The old model of manufacturing, in which a product was made, marked “made in Japan” and then shipped to the United States or Europe, has become a thing of the past. Rather than being made in one country and then shipped to another, products are made and then virtually “shipped” to customers, who may be located anywhere in the world.
As manufacturing has become more process-oriented, organizations have begun to recognize the importance of understanding the challenges and opportunities facing manufacturers in the digital economy. New research has shown that manufacturers that successfully navigate the challenges and seize the opportunities facing them now will be the ones that thrive in the future.
The Variety of Manufacturing
Manufacturing can involve a variety of processes, but broadly speaking, there are two types: value-added and process.
Value-added manufacturing (VAM) applies techniques such as injection molding, machining, or use of other machines to add value to products. It often requires purchasing or controlling the equipment used in these processes, and it is often associated with the production of high-value, high-purity products.
Process manufacturing involves the use of processes to make products but does not add value to them. For example, pulp and paper are made using process manufacturing, but a newspaper is not considered to be a value-added product. Process manufacturing is often associated with the production of low-value, low-purity products.
Manufacturing’s Subsectors
Manufacturers can be organized into industry segments based on product type, location of production, or other characteristics. Below are the various types of manufacturing and their subsectors.
Automotive: Motor vehicles, including motor cycles, are manufactured here.
Computer and electronic: Computers and electronic devices are made in this subsector, which includes smartphones as well as personal computers, servers, and other devices that rely on electronics for their operation.
Pharmaceutical: Pharmaceuticals are made in this subsector, which also includes medical and biological devices.
Electrical and optical: Electrical and optical devices are produced here, including lighting, sensors, and other appliances that consume energy or emit light.
Furniture and fixtures: Fixtures and other decorative items are produced in this subsector, which also includes large furniture.
Others: Other manufacturing subsectors include transportation equipment, building materials and supplies, and scientific and technical services.
Key Challenges Facing Manufacturers
As the process industry has evolved, manufacturers have increasingly needed to adopt software and digital technologies to remain competitive. This has led to an ever-increasing number of manufacturing organizations investing in digital transformation. But while the investment in digital transformation is widespread, it is important to note that not all manufacturers are experiencing the same levels of success. In fact, the majority of manufacturers are still operating in a “low-fidelity” digital context, operating at less than 50% digital maturity.
Opportunities for Manufacturers in the Future
Given the widespread adoption of digital technologies and the significant investments being made in this area, it’s perhaps not surprising that manufacturers are finding numerous opportunities to disrupt their respective industries. The future of manufacturing will likely increasingly see an emphasis on the need for seamless connectivity, the growing importance of artificial intelligence, and the need for manufacturers to adopt blockchain technology.
Bottom line
Manufacturers must understand the challenges and opportunities facing them in the digital economy if they want to thrive in the future. In particular, manufacturers must focus on operating in a process context and must adopt a high-level digital strategy to remain competitive.
The manufacturing industry has experienced a huge transformation over the past few decades, and manufacturers will need to keep adapting to survive in the future. This article will highlight the importance of understanding the challenges and opportunities facing manufacturers in the digital economy. It will also discuss the various types of manufacturing and their subsectors, and provide a high-level overview of the industry’s challenges and its future outlook.