Four Manufacturing Predictions for the post COVID World

COVID-19 has given us a paradigm shift that many people knew was coming, but none expected to come this quickly.

This transformation has built new foundations of work, shopping, and living. Many of the changes will convert back, but most will be adopted for the long term. Through these adoptions, I am optimistic for the manufacturing community. Here are my 4 post-COVID predictions for manufacturers:

Disruption among sub-tier suppliers will continue

As vendors and distributors continue to evolve to support automated sales, accounting, and operations processes, they are going to force their vendors to adapt to new needs. They will want transparency over the entire process and will use their data analytics and AI to find manufacturers willing to meet their requests. We’ll see investments in this arena as large opportunities for market defragmentation can happen through today’s technology and shipping standards.

Businesses will move back onshore, but not in their traditional models

COVID exposed the frailty of our supply chains. They are not dynamic enough to ramp up and down production with efficient delivery of products to the customers. This inflexibility has helped make a big push for the fourth industrial revolution, where most sales and operations processes become automated. This automation plus the appeal of reducing international shipment lead times and shipping costs, will drive executive interest in locating manufacturing facilities in the US.

Spending will shift

P&Ls will not look the same, but will likely have greater margins. There will be much more capital expenses as companies invest in automation, especially on the factory floor. There will be less employees on payroll, but those employed will likely have higher salaries because they will be overseeing more tasks. There will be less office workers which will be counterbalanced by more software maintenance fees.

Power to the People

It’s no longer shareholder value, it’s stakeholder value. More and more customers want to know that they are buying from ethical companies that share their values. This will be pushed down onto smaller suppliers forcing more transparency, around employee treatment and pay, and environmental trade-offs.

Currently, federal minimum wage is in discussion in congress. With the shortage of manufacturing workers (another argument for the fourth industrial revolution), I suspect the hazard pay extended during COVID will become permanent.

These are my predictions, take them or leave them. But either way, always make sure you are preparing for tomorrow.

Do you agree? What are your predictions? Feel free to email me at dusty@bitcadet.com.