Manufacturers are entering a new era of opportunity — but success will go to the companies prepared to scale quickly, respond to disruption, and execute with precision. As geopolitical shifts, tariffs, AI expansion, data center growth, and domestic manufacturing investments reshape the landscape, forward-thinking companies are strengthening their supply chains, modernizing their technologies, and building the agility required to support profitable growth. The manufacturers gaining momentum are not waiting for uncertainty to pass; they are proactively investing in ERP, advanced planning, AI-enabled capabilities, and operational scalability to position themselves for long-term success.
Manufacturing Momentum
According to the Institute of Supply Management (ISM), manufacturing is gaining strong momentum with the fourth month in a row in expansionary territory. Even fighting off the negative headwinds associated with the war in Iran and the closure of the Strait of Hormuz, manufacturing momentum continues to gain ground with the expansion of artificial intelligence and data centers, growth in the defense sector, increased domestic production to mitigate geopolitical risks and/or tariff impacts, and companies looking to take advantage of tax benefits.
In addition, since the Strait of Hormuz has been closed, it is causing widespread shortages in countries dependent on the Middle East for oil such as Japan, Australia, China, Europe and others. For example, Australia has struggled with over 500 service stations facing fuel shortages and record high fuel prices. Thus, there are reports of record numbers of empty tankers heading to the U.S. to purchase oil and liquified natural gas, thereby increasing exports. In addition, the tariffs spurred trade deals with increased exports of airplanes, food, and other items. We expect the ISM to continue to expand. Smart manufacturers are taking control of their supply chain and planning for rapid growth.
Plans to Ramp Up Manufacturing & Supporting Technologies
Forward-looking executives are not waiting for clarity. Instead, they are leading the way so that they can jump on the opportunities as they arise. Our best clients are focused on a few goals:
- Rapidly scaling of production
- Creating agility so that they can adjust with changing conditions
- Utilizing AI-enabled technologies and backed with modern ERP and advanced planning (APS) and business intelligence (BI) systems
- Ensuring efficiency, profitability, and resiliency
For example, an industrial equipment supplier to the power industry prepared for rapid growth prior to its arrival. They knew that if manufacturing and distribution increased, there would be a greater need for their equipment. In addition, as data centers expanded, they’d have significant opportunities for growth. Thus, they prepared to scale.
Since they had recently gone live on a new ERP system, they struggled to utilize key functionality to service customers efficiently. Their planner did most of her work in spreadsheets and by walking the floor; however, that process wouldn’t scale. Thus, they brought in supply chain consultants to upgrade the process with the better utilization of ERP and related technologies. SInce they produced a custom product, the CRM (customer relationship management) system, CPQ (configure, price quote) system, order entry system, manufacturing data (BOMs, routings, and related setups), and MRP (material requirements planning) systems had to be connected and better utilized to automate the work processes successfully.
They accompanied these upgrades with the rollout of lean manufacturing principles and smart manufacturing practices. For example, they could produce subassemblies to a base level to automate and standardize as much as possible and focus attention on rapid customization to complete the unit. We accompanied these improvements with the upgrade of SIOP (Sales Inventory Operations Planning) to gain predictive insight to customer orders prior to being designed in Engineering. AI-enabled capacity planning provided a proactive view of labor and resource requirements by work center and for key skill sets. In addition, they redistributed work between their production facilities to specialize by type of work to enable the rapid scaling of production on demand. In essence, they utilized MRP, APS, SIOP, and supply chain visibility functionality to ensure execution success.
One of the critical roadblocks was getting their supply base in gear. Since you are only as strong as your weakest link in your supply chain, you must pay attention. Larger companies are vertically integrating and/or reallocating production. Small and mid-size companies are pursuing strategic partnerships with companies to vertically integrate with partners they can count on. After the manufacturer resolved its ERP system setup issues so that MRP and APS provided the correct information, they jumped on their supply chain partner relationships and created a strong end-to-end supply chain. As opportunities arrived, they broke revenue records!
The Bottom Line
The best companies are proactive, innovative and resilient. They are looking into the future, planning for what’s coming down the pike, and preparing for success. They are utilizing AI-enabled technologies such as robotics, 3D printing, and modular production systems. Modern ERP systems and advanced technologies are supporting these improvements and creating predictive insights and dynamically optimized plans. To learn more about AI for manufacturers and how to achieve smart supply chains, download our eBook. Companies that are prepared to scale profitably will thrive in the next decade.
If you are interested in reading more on this topic:
Resilience in Supply Chain of Paramount Importance