It’s no secret that manufacturers have been one of the industries that have been the hardest hit over the past few years. For them, dealing with the pandemic was more difficult than a lot of businesses because they couldn’t just send home a 2500 lb. vertical knee mill with each employee during the lockdown. Then, if manufacturers were deemed an essential organization they had issues getting materials because of the multitude of businesses that had been shut down. Recently, it appeared that we were all figuring out how to live with the pandemic and begin to return to our pre-pandemic ways of living when a war breaks out in Europe that causes shortages of many essential items. I hate to say it but it’s like the stars have aligned to make life extremely difficult for certain manufacturers. That being said, manufacturers are some of the most resilient companies with some of the most forward-thinking individuals who always adapt. This reminds me of a quote from Maya Angelou that sums up manufacturing organizations, “I can be changed by what happens to me. But I refuse to be reduced by it.”
So, what do I think the biggest challenges being faced by Manufacturers are and how are manufacturers changing to keep moving forward? Let’s break it down in no particular order.
1. Software Inefficiencies
You’ve heard it before but using outdated software is like using a blacksmith to make 1,000,000 fasteners, a wooden racket to play tennis, a leather helmet to play football, pencil and paper to manage inventory, or true on-premise software during a pandemic. In fact, software plays such a key role in modern manufacturing that it can actually help improve most of the challenges faced by manufacturers on this list. For example, Ken Sebahar and myself sat down with Jim Gio on one of our podcasts and Jim talked about the ability to have a software that has manufacturing, services, and jobs functionality to help their organization not only adapt to changing conditions but thrive.
Solution: Microsoft offers all the software needed to help most, if not all manufacturers reach their potential.
2. Labor Shortages
During the pandemic years of 2020 through 2022 people started viewing their lives differently and began changing how they lived. From this, the great resignation was born. According to Pew Research Center, The COVID-19 pandemic set off nearly unprecedented churn in the U.S. labor market. Widespread job losses in the early months of the pandemic gave way to tight labor markets in 2021, driven in part by what’s come to be known as the Great Resignation. The nation’s “quit rate” reached a 20-year high last November and the manufacturing industry saw over 1 million jobs lost, which set back the manufacturing labor force by more than a decade.
Solution: Unfortunately, there is not a single solution that can solve this issue. I think the manufacturing industry needs to work with high schools and colleges to change the perception of the industry. The bad part, in an age of social media where young kids grow up believing that real life is having 5 private planes, 10 luxury cars, and 8 mansions while being an “influencer” is going to make changing the perception extremely.
3. Supply Chain Disruption
As I alluded to earlier, the pandemic played a part in disrupting the supply chain and now the war in Europe is having an impact. I think most manufacturers of products and consumers of products have encountered an issue where what they needed wasn’t available and I don’t see this issue going away in the near future.
Solution: Prevent Covid from infecting people, resolve the war in Europe and establish good trade relations with foreign adversaries. Unfortunately, it’s a lot easier said than done.
More so now than at any other time in the past Manufactures need to have the flexibility to not only scale up when needed but scale down when needed. With so many issues that are out of their control it’s nearly impossible to be able to predict when Covid may flare back up again, how long this war in Europe will continue for, or if there will be other wars that stem from this one. Therefore, you need the option to be able to add functionality and users during periods of growth and remove users during periods of distress.
Solution: Once again, Microsoft offers software that is fully scalable.
Cybersecurity could very well make a case as the number 1 challenge faced by not only manufactures but all businesses. A hacker attack occurs every 39 seconds and affects 1 in 3 Americans every year. You may have not been a victim of a cyber attack but I’d bet most of my Montblanc Elvis Presley pen collection that you know someone who has been a victim. The biggest mistake organizations make is believing that they are too small to be targeted. This is 100% incorrect. Every business is a target. Here are some facts:
Solution: Start preparing by reading The Definitive Guide to Cyber Security Protection for SMBs.