4 Surprising Trends Driving Change in Manufacturing Supply Chains

Industrial Manufacturing, Supply Chain
December 2, 2015

Manufacturing in MexicoFast moving transformation in the nation’s industrial manufacturing sector is driving change in how companies manage their supply chains. In our series on the trends to watch, we explore what they are and how companies are adjusting.

From our research, one thing is clear: Manufacturers that strengthen their supply chains are best positioned to profit through the constant change that is the new ‘normal’ for the sector. It’s also clear that businesses who partner with top quality 3PL companies will have the edge in a competitive global marketplace.

 

Part One: The Industrial Manufacturing Renaissance and Why We Care That It’s Happening

A recovering U.S. economy has worked wonders for the manufacturing sector and its supply chains that get goods to market. The recovery has driven product demand, which helped fuel growth in the U.S. gross domestic product (GDP), among other key economic indicators.

This spurred a renaissance in the U.S. manufacturing sector that likely has surprised many. Manufacturing contributed more than $2 trillion to the U.S. economy in 2014, up from $1.73 trillion in 2009. That equates to 12 percent of U.S. GDP, according to the National Manufacturing Association (NMA).

For every $1 spent in manufacturing, another $1.37 is added to the economy, according to the NMA. Manufacturing supports 17.6 million jobs in the U.S., the association says, and is helping drive continued recovery across the U.S. economy.

While the resurgent economy is driving job growth in the sector, the recovery has also revealed manufacturing’s shortcomings surrounding workforce, logistics, supply chain, and sourcing. Some successful companies have recognized these and launched initiatives designed to mitigate their threat to revenue and growth.

Moving to Fill the Talent Gap – Fast

A huge challenge for manufacturing and supportive industries, like trucking and logistics, is that the talent gap – which is the difference between the number of available jobs and the number of skilled workers to fill them – is growing. Manufacturing will have upwards of 600,000 open jobs in the next 10 to 15 years, the NMA says. The American Trucking Associations (ATA) also estimate trucking will suffer a shortage approaching 330,000 drivers by 2020, while the heavy duty maintenance sector will be short 32,000 technicians.

Couple workforce shortages with the retirement of baby boomers over the next decade – plus the sector’s failure to attract young talent to fill those vacancies – and you have industry havoc: These shortages will force labor costs to rise, and challenge the industry’s ability to sustain growth.

Many companies realize that closing the talent gap now is crucial, especially as U.S. manufacturing is poised to regain its leadership position by leveraging technological innovations. This means more engineering and operations professionals will be needed to create efficient supply chain networks.

To combat the issue, savvy manufacturers are stepping up recruitment, development, and retention practices by:

  • Dispelling stereotypes – making the “modern-day industrial revolution” attractive to young people. Their long-held impression is that manufacturing is a low-skilled, blue-collar, male-dominated workforce.
  • Encouraging young people to pursue STEM (Science, Technology, Engineering, and Mathematics) education, with the promise of rewarding careers.
  • Partnering with technical schools and organizations that promote workforce diversity to lure more women and veterans into the workforce.

Investing in Technology for Performance and Profit

Technological advancements and constant innovation are helping improve performance and manage risk across the supply chain. Recent innovations reshaping the manufacturing and broader sectors include the use of:

  • Radio frequency identification tracking and tracing to improve visibility and reduce theft and loss
  • Embedded monitoring sensors to measure and control temperature, humidity, flow and conductivity, and improve manufacturing operations
  • Unmanned aerial systems, or drones, for such commercial applications as conducting aerial surveys, monitoring construction sites, inspecting manufacturing stacks, or deliveries to consumers’ homes
  • Self-driving vehicles, some of which already are in use, invite the prospect of increased transportation network efficiency

With manufacturing driving three quarters of all private sector research and development, unlocking the benefits of new technology will change the way manufacturers conduct business, create new applications, and holistically change processes.

Next week’s blog: Part Two: Is Mexico the new China? We’ll tell you why that matters to manufacturing – and more.

 

Authored by Darcee Scavone

Darcee Scavone is Vice President and General Manager of Automotive, Aerospace and Industrial Supply Chain Operations for Ryder System, Inc. Ms. Scavone joined Ryder in 2005 and most recently served as VP and Chief Financial Officer for the Supply Chain Solutions segment.  She has over 25 years of corporate and divisional finance experience with special emphasis on operations analysis, business development, and commercial strategy. In addition to chairing the Michigan hub of Ryder’s Women’s Leadership Forum, Ms. Scavone is an active mentor and women’s advocate, as well as a past member of Ryder’s Diversity and Inclusion Council. In 2012, she was named to the Profiles in Diversity Journal’s “Women Worth Watching” list.

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