2024 Manufacturing Trends Focus is on Operational Efficiency

In 2024 manufacturing trends will be centered on strategies that drive operational efficiency. The high level of pandemic-era medical, home, and leisure product demand that fueled a produce-at-all-cost approach to manufacturing operations is ending. With consumption patterns returning to more normal profiles, many manufacturers now switching to strategies that emphasize efficiency, while maintaining delivery capacity.

Instead, as we head into 2024, manufacturers will turn to four strategies that drive efficiency: automation and workforce enablement, vertical integration and consolidation, artificial intelligence (AI) driven business planning and execution, and recognition of sustainability as an operational benefit.

Automation and Work Force Enablement

There’s an old adage that low volume is the enemy of automation. In 2024, this is becoming less true. Automation is being advanced by robotics and vision systems that are less expensive, can be trained remotely, and can be utilized in a greater variety of jobs. With lower barriers to adoption, manufacturers will increasingly embrace automation and workforce enablement as labor availability and cost continue to be industry-wide issues.

AI training systems running in the cloud, less expensive 3D printed end-of-arm tooling, and robotics as a service from companies like Rapid Robotics are pushing the return on investment (ROI) for pick-and-place and assembly automation to new levels of short-run practicality. It’s no longer uncommon for multiple automation projects to be underway at the same time using remote contractors along with sophisticated vision and learning systems to implement automation projects in weeks rather than months.

However, not every task can be automated, and the view that every reliable worker is a jewel will be a dominant mindset among many factories in 2024. To that end, we’ll see increased investment in manufacturing execution system (MES) systems that not only track production but enable workers to quickly learn to perform new tasks with work center-based training and guided operations. These MES systems will also enable workers to multi-task by alerting them to exceptions across multiple work centers, freeing them from the mundane watch-and-wait at each work center that too often has been the norm.

Another good example of workforce enablement is using enterprise resource planning (ERP) for warehousing operations. ERP-driven advanced warehouse management provides paperless, scan-based material identification and tracking, plus directed put-away and pick operations that keep warehouse personnel productively engaged. More investments of these types will be among the major 2024 manufacturing trends.

Vertical Integration and Consolidation

Merger and acquisition (M&A) trends will shift in 2024 to focus less on economically opportunistic transactions and more on advancing strategic goals. Two synergistic strategic factors are driving this. First is the desire of upstream customers to reduce the number of vendors they work with. Second is the ability of consolidators and integrators to eliminate redundant sales, marketing, front office, production, and distribution costs while also building the one-stop-shop supply chain businesses that original equipment and tier-one manufacturers prefer to do business with.

The OEM or ultimate brand producer often works with dozens or hundreds of vendors to produce a final product for the end customer. So, vendor consolidation becomes very enticing for these large companies. If they can deal with one vendor who can deliver an entire sub-assembly more cost-effectively, then so much the better. Similarly, mass merchants that require a full line of consumer pharmaceutical dosing devices will prefer to buy from a vendor that can produce a full line of plastic, glass, and organic devices.

In serving these different supply chains, manufacturers that become turn-key vendors—e.g., producing plastic parts, metal parts, electronic components, and finish and assemble products—will have a distinct competitive advantage. Companies will be vertically integrated through M&A to accomplish this exact goal.

ERP deployment and consolidation is clearly a major enabler of the integration and consolidation trend. Investors and ownership groups need clear visibility and control across larger and more complex operations. ERP not only offers that visibility; it also provides a tool to implement consistent business practices across multiple operating facilities.

2024 Manufacturing Trends Highlight AI-Driven Business Planning and Execution as a Strategic Priority 

Accurate planning and execution that create the foundation for operational excellence and efficiencies will be a strategic priority in 2024. AI and machine-intelligence-driven tools generate forward-looking guidance, plans, and actions far faster and with far greater accuracy than can be accomplished manually.

Generative AI tools like ChatGPT offer some tactical benefits to manufacturers, for example, helping to create better training guides or work instructions. Arguably, their greater impact in 2024 will be refocusing manufacturers on the value of the AI and machine learning-driven tools already available.

Today’s tools include forecasting, automated scheduling, MES, statistical process control, predictive maintenance, and active alerts and workflows. They accurately solve problems that are informed by large amounts of data with multiple constraints and often require iterative calculations to determine the best answer. Such problems require data processing capabilities and capacities well beyond those of human analysts.

Two factors are accelerating the move to AI and data-driven decision-making. First, a generational knowledge shift is underway as more seasoned analysts and planners retire. Their knowledge, gained over a lifetime of hands-on experience, is difficult to transfer. The existing AI-driven tools in most manufacturing environments are becoming essential to replace these retiring experts. Second, businesses that are vertically integrating and consolidating face new levels of complexity. Here, the ability to execute AI and data-driven planning and control over processes, such as forecasting and scheduling production, is essential for success.

Sustainability as an Operational Benefit

Over the last year, we’ve seen a significant increase in large manufacturers with published goals to be carbon neutral by 2050. Notably, a company’s carbon footprint is determined by both its own production and the production and operations of its supply chain. So, to meet their sustainability goals, large manufacturers need to start measuring and claiming reduced emissions from their contracts and supply chain manufacturers. This will make sustainability and carbon footprint tracking and reporting programs supply chain concerns a key manufacturing trend in 2024 and beyond.

Having a formal sustainability and carbon footprint management plan will become a priority for mid-market manufacturers seeking preferred vendor status from larger manufacturers who are increasingly requiring suppliers to have a program in place.

Additionally, reducing carbon footprint will improve the manufacturer’s bottom line since the top purchasing spend often includes raw materials and energy consumption, which are also the largest contributors to carbon emissions. Manufacturers can use their ERP systems to calculate their carbon footprint and related costs as we explained in this earlier blog post.

Reducing carbon footprint is a three-way win. It protects the environment, creates preferred vendor status, and increases operational efficiency.