Industrial trends

Trends will show the way and often dictate what direction businesses should make their next move. Industrial trends are no different. Based on responses from vendors, consultants and buyers, new research has provided insights into manufacturing and supply chain developments that are expected for 2009. While many experts say that the coming year will be challenging to say the least however, many manufacturing companies are viewing this pause that is coming after six years of fairly steady profitable growth, as an opportunity to recalibrate their business models and invest for the inevitable recession.

Industrial experts feel that overlooking new opportunities to reassess and "recalibrate" the business-as-usual approach to the supply chain is one of the biggest ways to waste this downturn. Recent reports show that many industrial trends will base their success on a company's ability to re-market during this uncertain economic time. Other industrial trends that will follow are:

• In an attempt to be come more profitable modern supply chain organizations will be scrutinizing expenditure budgets even more, and new investments will focus on cost savings, requiring shorter payback periods. Expenditures will also be made through the lens of cost/value. Employers will consider each expenditure as to how it relates to the overall financial picture of the company.
• Economic uncertainty that is present particularly for smaller suppliers in emerging economies, will lead manufacturer "brand owners" to consider strategic investments at critical supply points and financial support for their key suppliers. Many experts predict that in order to serve the value imperative, manufacturing companies will revisit past product investments and look to reuse existing designs, technology and knowledge. Companies that have placed themselves in a position to make a quick turn around will see the highest rate of success.
• Due to the high year-end inventory levels in 2008, manufacturers will be considering re-balancing supply and demand with a focus on strategic network optimization and multi-echelon inventory optimization tools and, where industry-relevant, price and trade promotion management will play a part as well. This will force key decision to made at the marketing level that balance cost versus value.
• Companies will realize that, given the challenging economic environment, effectively managing manufacturing assets can be a significant competitive weapon to help achieve better cost management. Manufacturers will put a renewed premium on production knowledge with the overall effect being higher utilization of manufacturing assets worldwide, greater flexibility in responding to demand and notable new challenges in managing the execution of production.
• Investments in digital manufacturing (preparation), modern execution platforms, product performance and manufacturing intelligence will all come together to begin supporting the factory network of the future. The need for tighter integration, data standards and better intelligence will become highly apparent. The application set begins with digital manufacturing and is tightly linked to engineering tools.
• Increasingly complex global supply networks will be combined with mounting economic pressures making risk management a more significant capability and a key differentiator for the supply chain.

No longer about PR or even regulatory compliance mandates, sustainability will discover metrics. Emerging standard measures and a desire to benchmark will affect sustainability initiatives significantly.

"While there is no shortage of bad news and indicators, the large manufacturing firms we speak with realize that with a downturn comes an inevitable recovery," Simon Ellis of Manufacturing Insights writes in the analyst firm's newsletter Theory & Practice. "It is practically certain that there will be more pain before we see evidence of a recovery."

"History shows that companies who stayed the course in improving important core capabilities enjoyed higher success when the good times came back," Ellis writes.

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