The manufacturing industry has been the driving force of poverty alleviation and wealth creation in most of the world’s upper middle and high income countries. That said, manufacturing like any other industry is dynamic. Techniques and models that worked a decade ago may no longer apply today.
The manufacturers who will succeed are those that have an eye for details i.e. can quickly recognize market trends and looming changes then adopt their business models accordingly. Modern manufacturing is facing a number of challenges. We consider the following six to be among the most important.
The United States and other high income countries have seen a dramatic reduction in factories over the last three decades. The primary reason many of the world’s largest manufacturers have moved production to developing countries such as India and China is the cost of labor.
You can’t really blame them though when the company can employ a highly skilled engineer in China at a fraction of the cost they would in the US. Labor costs will continue to be a major challenge facing manufacturers as they grapple with what options are available for them to remain competitive.
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As indicated above, plenty of manufacturing has moved from developed to developing countries in recent years. However, the 2016 election of Donald J. Trump as president of the US could see a policy shift that will reverberate throughout the world.
Of course, the push toward a protectionist and more inward-looking economic policy is not only happening in America but in other countries around the world desperate to keep manufacturing jobs within their borders. Such protectionism is going to narrow the options businesses have.
Every so often over the last few years, international news headlines have been dominated by a major car brand recalling thousands of motor vehicles. One of the best known such incidents was the sudden unintended acceleration saga in the US involving Toyota. Such recalls come at an enormous cost to the manufacturer but they have little option other than comply.
Being compliant with relevant laws from the get go as well as adhering to best practice will continue to be the way to go for the modern factory.
In its early days, manufacturing was driven by the need to produce a large volume of goods faster and at a lower cost than handmade items. Consumers were attracted to the low prices. Over time, consumers started to demand higher quality of goods. Whereas price was still important, the quality of the item mattered just as much if not more.
Today, customers want both high quality and low price, a challenge that is leaving manufacturers scrambling for the ideal combination of inputs to achieve this demanding goal.
Plenty of data is produced over the entire lifecycle of a product starting from the raw materials and ending with the final goods in the hands of the consumer. Thanks to industrial automation and the infusion of information technology in the whole process, a lot of data is collected automatically.
Unfortunately, a significant proportion of this data won’t be particularly useful. The challenge for the modern manufacturer therefore is to take this huge volume of information, organize and analyze it in order to identify opportunities for improvement.
Source: Pixabay.com
Pictures of Chinese cities blanketed by smog have been one of the most defining image of the effects of industrial pollution. Yet this is not the only way industrialization can have a negative impact on the environment.
Manufacturers have to also contend with the fact that some of the materials they use or the byproducts of their manufacturing processes may be hazardous to their workers or the environment. They must thus be keenly aware of the right measures required to ensure worker safety, proper disposal of waste products and optimal recycling.
To best confront these modern challenges, manufacturers must stay up to date on changes in technology, legislation, best practice and consumer preferences.