Supply Chain Briefing

A Manufacturing Resurgence Is On Its Way

Manufacturing appears to be turning the corner. According to the ISM, the Purchasing Managers Index (PMI) recorded a contraction but at the slowest pace of the recent cycle. In fact, this is the third straight month of improvement. The expansion of the PMI is indicating a recovery on the horizon for manufacturing.

S&P Global also surveys the economy, and their statistic shows that manufacturing is near stabilization. Their Purchasing Managers’ Index came in at 49.8 with production increasing at a marginal pace. Thus, the most respected surveys align and are trending positive for manufacturing.

Manufacturing Expansion Beyond the Statistics

Beyond the economy’s signals, manufacturing has the potential to surge. Whether reading surveys, talking with clients or collaborating with colleagues, it is clear that smart executives are expanding manufacturing footprints, reshoring from Asia, and finding regional partners to increase manufacturing. According to a poll conducted by Forbes, Xometry, and John Zogby Strategies, 82% of CEOs have already implemented — or are actively pursuing — reshoring strategies.

These expansion and reshoring activities will accelerate the manufacturing resurgence. The bottom line is that manufacturers are realizing that the risks associated with China, manufacturing long distances from key customers, and other geopolitical conflicts and wars such as the Russia-Ukraine war are simply too high. Forward-thinking executives are taking control of their ability to serve customers. To read more on this topic, read our article “Take Control of Manufacturing to Wrestle Volatility to the Ground.”

Where Should Manufacturers Focus?

There will be more opportunities than ever before as prepared, innovative, and resilient manufacturers will have the opportunity to take market share as they can service customers with ever increasing expectations in a scalable, profitable manner. Unfortunately, the rest that rest on their laurels, reacting as events unfold will not be able to keep up with key customer needs and gain traction quick enough to succeed in today’s volatile environment where customers expect customized products, personalized service, with rapid execution and innovative solutions.

Thus, during manufacturing month, we should be thinking five steps ahead of the competition. Don’t just bring manufacturing back; instead, think about expanding manufacturing in a new way. Automate where it makes sense (starting with repetitive tasks), digitize so that there is supply chain visibility and resiliency, utilize 3D printing and additive manufacturing to slash product development lead times and produce custom products on demand, analyze what if scenarios with digital twins, leap forward with AI and predictive analytics, and ensure your foundational processes, ERP system and related technologies are on solid footing.

Become passionate about talent and leadership. Our most successful clients retain top talent. There are no exceptions. Without your #1 asset, there will be no business. With the rate of retirement and the future of the workforce, there is a large gap to sustain business, let alone thrive in the next decade. Fundamental topics are arising at clients at a quick pace. Inventory accuracy, order fulfillment, and other bedrock topics can be much more challenging than they appear.

Only those who invest in proactive processes such as SIOP (Sales Inventory Operations Planning), dedicate the time to training, education, and development, and prioritize proactive organizational development and supply chain partner relationship building efforts will succeed. Yet this is still not enough. Innovation and resilience will be required to succeed during these turbulent times.

The Bottom Line

A manufacturing resurgence is underway. The only question is whether you will jump in and take control of your destiny or observe from the sidelines.

If you are interested in reading more on this topic:
Taking Control: Reshoring, Nearshoring, Friendly Shoring & Manufacturing Expansion