* Per Rodney Repullo
The last few years have brought a huge range of challenges to the manufacturing industry, making it stronger because of its ability to overcome obstacles. In 2022, a year in which large-scale supply chain shortages and fears of a recession made headlines around the world, the US manufacturing industry has hired more workers than in any year since 1994. Technology has helped to fuel this growth.
Here in Brazil, the industry registered a positive balance of 251,868 jobs. The result is the difference between the number of hires and dismissals between January and December, according to the General Register of Employees and Unemployed (Caged). The expectation for 2023 is that the manufacturing industry in general – mainly small and medium-sized ones – faces new and old challenges. Companies in the sector capable of incorporating 4.0 technologies in their plants will be more agile and will come out on top in the end.
But, to ensure the best results and increase your resilience, we can list here five things that industries should look for in 2023:
1 – More digitized processes and move towards Industry 4.0
Despite economic headwinds, many industries in key sectors of the economy are better prepared to maintain momentum and continue to grow in 2023. In fact, as they seek to refine supply chains to avoid disruptions, reshoring (restarting industrial processes on a national basis) will continue to be top of mind. Companies that are moving their operations to more developed countries are looking for innovative ways to rethink how they work and adjust their operations to a new reality and will not be able to simply copy practices from companies in other countries. Instead, they should look for better ways to digitize their operations with 4.0 technologies to reduce costs and improve efficiency.
For years, small and medium-sized companies in the sector have been excluded from Industry 4.0 solutions. Now the tides are turning as prices drop. In 2023, we will see old factories transformed into smart companies, and new operations will begin to function with advanced technology.
2 – Cybersecurity from defense to design
In 2021, 55% from manufacturing and production companies suffered ransomware attacks, an increase of 36% in 12 months. Unfortunately, cybersecurity attacks will continue to increase. In the past, cybersecurity was often considered a defensive measure applied to existing systems. Furthermore, companies have taken a piecemeal approach, resulting in different protocols and standards for IT and OT (Operational Technology).
This no longer works and there is a need to incorporate cybersecurity into the design of systems at all levels to protect themselves from attacks and comply with increasing government regulations on cybersecurity.
However, most smaller industries do not have in-house cybersecurity experts, so as they move data from production to the cloud, they must partner with companies that understand cloud security. In addition, they must invest in the implementation of more modern management and factory floor systems, capable of protecting data against unauthorized or criminal access. Ensuring role-based access is mandatory, where users can only access the data they have permission to, limiting the risk of data leakage through phishing attacks.
3 – Learn to overcome the unexpected
From the pandemic to the war in Ukraine, supply chain volatility has been a hallmark of recent years. Many industries – as well as the whole world – were caught by surprise and had to struggle to face the established crisis situation. While it is not possible to change the past or predict the future exactly as it will be, it is possible to prepare for critical situations to come by creating and driving agility in your operations. Then, when the unexpected happens, the company is less vulnerable and can better adjust to the situation.
However, that agility doesn't come easily. Adapting to an ever-changing business environment requires companies to find flexible tools. Look for Industry 4.0 solutions that strike a balance between being easy to configure with pre-configured options and also customizable so you can make changes in the future.
4 – Double the bet on digital transformation so as not to be left behind
Several surveys that monitor the sector reveal that industries plan to invest heavily in technology. A forrester reports what technology spending is expected to exceed US＄4.8 trillion in 2023 – . And it's not just big companies that are investing in technology. A HFS Research reports what 88% from US Industries increased their technology budgets in 2022 . In Brazil, the IBM Research points out that 78% of Brazilian business leaders project investment in technologies, with an emphasis on AI, automation and hybrid cloud solutions. As digital transformation continues to become more accessible through lower costs and innovative implementation strategies, smart manufacturing will move from cutting-edge technology to a requirement to be competitive.
However, just because industries of all sizes are investing in technology doesn't mean they should. For small and medium-sized companies in the industry, it is critical to see ROI (return on investment) as quickly as possible. This requires two things: a strategic implementation plan and the maximization of legacy systems, which requires integration between management and shop floor systems.
The adoption of systems capable of covering all phases of the production and business processes is essential, in addition to allowing the adoption of strategies that divide their journey to intelligent manufacturing into short sprints, most of which are less than 60 to 90 days. This allows manufacturers to fund their Industry 4.0 initiatives with the ROI of each sprint. In this way, midsize companies reap the benefits of digital transformation without having to go into massive debt, and can see a proof of concept without disrupting processes overnight.
Part of what makes this strategy work is leveraging existing machines. While the big manufacturers can buy all the new machines to meet their smart manufacturing goals, most smaller industries cannot afford it. Fortunately, they don't have to, because they can upgrade many legacy machines with affordable IIoT (Industrial Internet of Things) devices and turn those machines into valuable data sources.
5 – Accelerate data management with AI
For decades, analysts have heralded Artificial Intelligence (AI) as “the next big thing,” but it has always been a little out of reach. 2023 is the year that AI comes of age for many companies, particularly those that are investing in smart manufacturing and turning data into insights faster than ever before and will benefit from AI-powered machine learning to accelerate continuous improvement.
As AI matures it becomes more valuable, so it's no wonder that AI AI software market is projected to grow 50% faster than the overall software market or that AI software spending doubles from 2021 to 2025 to reach US＄64 billion. Data is the fuel that powers AI, and a lot of it is needed. If small and medium-sized industries want to take advantage of the opportunities that AI presents, they need to collect more and more accurate data. For this, they must turn to cloud-based solutions, but that can combine with the power of data lakes.
Data lakes, which are at the heart of cutting-edge solutions, can ingest data in all formats while preserving the original data – something that data warehouses and other alternatives cannot.
If talking about AI and data lakes sounds complicated, that's because it is – at least in part. The technology that powers smart manufacturing must be highly advanced, but the complexity remains behind the scenes for external partners to manage.
As a result, they have more sophisticated technology than ever, while worrying less about IT.
* Rodney Repullo, CEO of Magic Software Brazil
Notice: The opinion presented in this article is the responsibility of its author and not of ABES - Brazilian Association of Software Companies
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