Manufacturers face AI, workforce productivity and innovation speed challenges – Supply Chain Management Review

Most manufacturing companies face barriers to new product innovation, yet 78% are actively evaluating tech solutions that will make product development more efficient.

That is one of the high-level takeaways from the 8th annual State of Manufacturing survey, conducted by Fictiv. Fictiv provides an operating system for custom manufacturing, allowing companies to improve speed to market for mechanical parts.

The 2023 data found an 11-point increase, from 38% in 2022 to 49% in the current survey, of leaders focused on accelerating the speed of new product innovation, indicating a strategic shift from “survive to thrive,” the company said. On the flip side, though, is that 94% of companies report barriers to new product innovation.

“The silver lining of the macro environment is that it’s pushing technology to the forefront in the manufacturing industry,” says Dave Evans, Fictiv CEO and co-founder. “Leaders are set on accelerated growth and product innovation, but recognize they need better digital tools to empower their workforce and protect against economic risk. The industry is ready to see hardware development accelerate to the speed of software development and AI is a major catalyst.”

Talent, or rather a concern about future talent, is on the minds of 93% of manufacturing leaders, who say they are preparing for a “serious shortage” of skilled engineering talent. To help mitigate that issue, 51% of companies are investing in technology solutions to drive productivity gains and 85% say they are already adopting artificial intelligence solutions. Sixty-two percent said they are increasing training of existing staff to enhance skills and improve productivity.

Almost all leaders (97%) expect AI to impact product development and manufacturing functions in the future, with 53% predicting that quality control and inspections will be the function most impacted.

Engineers are also being asked to do more, with 52% now being asked to spend six hours or more per week on procurement or other tasks outside their engineering role. That was a 22% jump from the 2022 survey.

The survey was conducted by research firm Dimensional Research for Fictiv.

Almost three-quarters of leaders (71%) said they plan to increase their U.S. manufacturing presence, a six-point increase from 2022.

Business priorities

When it comes to business priorities, improving manufacturing and supply chain visibility, increasing speed of new product innovation, improving customer satisfaction, and improving supply chain resilience and agility are top priorities for most. Overall, 55% of companies said improving manufacturing and supply chain visibility was a top priority.

Smaller companies (fewer than 2,500 employees) are most focused on improving customer experience and satisfaction (52%) and reducing operational inefficiencies (45%). Medium-sized companies (2,500 to 5,000 employees) are more focused on improving supply chain resilience and agility (55%).

“For the most part, leaders at medium-size (66%) and larger companies (63%) are in lockstep — they’re more than twice as likely to reduce research and development spending compared to smaller companies and are far more likely to increase pricing and invest in technology to drive operational efficiency,” the report said.

The report did find that large companies were more likely to conduct layoffs or implement hiring freezes in 2023. Conversely, smaller companies are least likely to reduce headcount or spending on research and development.

“it’s possible there’s little fat remaining for them to trim. Instead, they’re deferring or canceling new and existing product lines to focus on their existing strengths,” the report surmised. “Despite these differences, companies of every size are re-evaluating their supplier relationships and looking to technology to help drive innovation.”