4 things manufacturers should prioritize as they prepare for what’s next

Early in the pandemic, as store shelves were picked clean and healthcare supply shortages stalled the response to those in need, many consumers realized they took for granted how vital goods make it into their hands. The digital readiness of the manufacturing industry, producers of the world’s necessities, has implications well beyond their own factories. Research from the Economist Intelligence Unit, commissioned by Microsoft, underscores how the pandemic has put the focus of digital transformation back on empowering people and society. Here are four things manufacturers should keep in mind for what’s next:

1.     Smart manufacturing unlocks new opportunities and business models.

During the height of the pandemic, manufacturing played a critical role in nimble responses to shifting demands for goods such as PPE and delivering supplies to industries downstream. With our partners, Microsoft has helped customers double down on smart manufacturing, digitizing processes by infusing advanced capabilities such as autonomous supply chains, lights-out factories, digital twins, control towers, and more.

For example, multinational networking and telecommunications company Ericsson opened a true 5G smart factory with data integration through all layers of the architecture to enable agile operations and flexible production. Innovations like these open up opportunities for organizations to completely reimagine the manufacturing model, empowering the ability to remotely operate everywhere, simulate everything, and automate anywhere.

2.     Hybrid work capabilities extend the reach of skilled workers.

The pandemic demonstrated the need for the manufacturing industry to more quickly invest in supporting frontline workers on the factory floor. It became imperative to connect these employees with the expertise of engineers and technicians working remotely—and, more importantly, with relevant data for business continuity. Even after the pandemic, these highly skilled experts will be in great demand.

Extending their reach to more factory locations using mixed reality and collaboration tools will allow organizations to keep operations running smoothly and employees engaged—the leading reason for increased tech use among the EIU’s manufacturing respondents. An excellent example here is ASML. At the height of the pandemic, the company kept its multimillion-dollar, state-of-the-art chipmaking equipment up and running by using Microsoft HoloLens and Remote Assist. This gave subject-matter experts remote access to cleanrooms in customers’ factories so they could complete service actions and troubleshoot other issues.

3.     Manufacturing can take proactive steps to address the growing skills gap.

Manufacturers have faced a significant skills gap for many years now. In addition, many of our skilled workers are either retiring or plan to do so very soon. The pandemic has only exacerbated these growing challenges. As digital innovation continues to skyrocket, re-skilling workers with cutting-edge technology will be a critical way to bridge this gap. For example, AI can empower everyone to operate at a higher order and add more value, moving workers from repetitive tasks to more innovative and creative ones, and opening up new kinds of jobs and expertise.

Autonomous systems and capabilities like deep learning can enable domain experts to use their knowledge to teach AI, combining the power of human and machine intelligence. Look at the work petrochemical company SCG is doing with Microsoft Project Bonsai, a low-code AI platform designed to help speed the creation of AI-powered automation to improve production efficiencies and reduce downtime. SCG’s engineers are building the AI, training it from their own expertise, and then deciding how it gets deployed—either to give SCG operators advice on what to do or have the AI work on its own. This is an effective approach because it bridges AI science and software to the traditional engineering world, enabling companies to build smarter, more capable, and more efficient systems by augmenting their own expertise with AI capabilities.

4.     Smart manufacturing contributes to a more resilient and sustainable future.

Industrial manufacturing accounts for more than half of the world’s total energy consumption and one-fifth of global greenhouse gas emissions. Sustainability investments are key to driving value—not just in terms of strategic, operational, and financial performance, but also in demonstrating corporate values that align with customers’ values. Addressing climate change is a key area where EIU study’s manufacturing respondents say digital transformation in their industry could have a positive impact. And for many companies, sustainability is already a core part of their business.

As manufacturers execute their crisis recovery, they realize the opportunity to build greater sustainability—and resilience—into their supply chains through reconfiguring suppliers and logistics providers, determining their next factory location and other levers. We can all learn from steel manufacturer Outokumpu, which is using the power of AI, IoT, and data to digitize its biggest factory in Finland, driving incredible sustainability gains that enable it to operate 30 percent greener than the industrial average in Europe. 

If the pandemic has taught us anything, it is that transformation is happening now. It is happening quickly. Those taking swift action are creating dramatic gains in terms of productivity, agility, sustainability, and speed-to-market. They are resetting benchmarks. They are realizing the Art of Possible, thinking bigger and bolder to solve today’s big challenges while building resiliency for the future.

There has never been a more exciting time.

I invite you to read more insights from The Economist manufacturing report.