The most common challenges for U.S. B2B manufacturers are labor and skill shortage, adapting to new technology, cybersecurity, digital transformation, and attracting qualified leads.
1. Labor and Skill Shortage
- After years of hard work, baby boomers are retiring to give way to new generations. Due to that, the manufacturing industry is, and there is a labor shortage.
- Studies show that over the next ten years, there will be 4.6 million jobs available, of which 2.4 million is likely to go unfilled. Currently, there are six vacant positions per every ten skilled production jobs.
- Despite using artificial intelligence (AI), technology, and robots, it is not enough because they still need skilled workers that have problem-solving abilities as well as production management capabilities.
- Industry leaders estimate that in the next three years, very demanded positions like operational managers and skilled production workers are going to be three times harder to fill. The reason for that is related to the number of years a worker must spend developing the required skills to fill those positions.
- Companies are also aware that change is unavoidable, and they must adapt to today’s trends. Because of that, one of the abilities they are looking for that lacks in most of the skilled baby boomers is the interaction with technology that allows workers to manage machines, use AI, social media, and voice assistant. For that reason, digital skills, critical thinking, and creativity are essential abilities for new job seekers.
- Behlen Mfg. Co., a manufacturing company, is an example of this challenge. The CEO, Phil Raimondo, said that when he started in 1990, all he had to do to recruit new employees was to put an ad on a paper. Now he’s desperate because everything has changed and he could not find new workers with his old ways.
2. Adapting to New Technology
- The use of technology in everything has been increasing over the years quite rapidly. Robots, AI, cloud storage, the Internet of Things (IoT), and many more are some examples of the tools companies have been using to facilitate the operational process.
- However, keeping up with every new technology trend is one of the biggest and most common challenges the manufacturing industry is facing today.
- Implementing IoT will help manufacturers to stay on top of the industry because it helps them to reduce costs, improve efficiency, as well as meet customer demand and increase safety. Despite the benefits, many manufacturers do not implement IoT because, to use it, the company must create a strategy that guarantees success.
- As the population makes use of technology more and more frequently, the demand for products increases more every day. The solution to this is the use of robots and automation, though, not all companies can afford it, and the fact that they can’t respond to demand represents a challenge.
- Many companies can implement IoT, or have implemented IoT a long time ago. However, the majority are missing important features that come with the use of IoT because of misuse. The real struggle manufacturers face is not using IoT, but the creation of a smart strategy.
- In the same way that technology advances, hackers or cybercriminals advance too, which represents another big challenge for manufacturers. Most of them use outdated and weak software to protect the system, making it easy for hackers to penetrate the system.
- Manufacturing companies must invest in high-quality protecting systems that can deal with multiple ways of online threads. The challenge begins because many manufacturing companies do not understand the complexity of cyber attacks and reject the risks associated with it.
- It is difficult for manufacturing companies to map their attacks. That is because most of them have several locations, and they prefer to continue operating with the risk rather than spending a decent amount of money to secure every place.
- The manufacturing industry has always been at risk. For that reason, there is something called Executive Order 13636, which purpose is to improve cybersecurity in the manufacturing industry.
- The company Mondelez is an example because it faced this challenge in 2017.
4. The Digital Transformation
- Consumer’s shopping habits have changed throughout the years, and usually, companies notice that early. However, many companies that belong to the manufacturing industry do not want to adapt to their consumers’ new habits, in this case, having an online presence.
- Manufacturers are missing a lot of perks that come with the use of social media and digital marketing like new clients, free advertisement, and higher engagement with consumers. As if that is not enough, the digital world is the present and the future of marketing and sales.
- Only 15% of all manufacturing industries took action and implemented a digital marketing strategy to attract and engage new and old clients.
- When it comes to having an online presence, manufacturing companies have two common challenges. The first is to prove the ROI of the marketing activities, which will be low in the beginning. The second challenge is to create an effective online strategy, most of them have low-quality content, that does not attract customers or that do not rank high on search engines, which results in giving up.
- Some companies that faced this challenge are General Electric (GE), and Direct Energy.
5. Attracting Qualified Leads
- B2B buying habits already changed, so attracting qualified leads is a challenge that faces most manufacturers. As noted above, only 15% of manufacturing companies have an online presence, which essential to attract new leads.
- Cold calls, letters, paper ads, and trade shows are old strategies manufacturers used to attract new clients. However, today’s businesses want to work with manufacturers that are known to be leaders in the industry, that have their customers engaged and are recognized by people.
- The only way a company can achieve all of that is through a perfect digital marketing strategy, in which the company not only has social media accounts, but a website with lots of information, e-books, high raking articles, and domain authority.
- Microsoft Corp. is the example of a manufacturing company that has been able to adapt to new ways to be on top.
U.S B2B Manufacturer Solutions
The five most common challenges faced by the US B2B manufacturing industry are labor and skill shortage, adapting to new technology, cybersecurity, digital transformation, and attracting qualified leads. The solutions to each of these challenges are discussed below.
Solutions to the labor and skill shortage
- To address the shortage of labor and skilled workers due to the retirement of baby boomers, more manufacturers can urge potential retirees to remain at the company by offering them added incentives like flexible working hours, short work weeks, job sharing with the younger team members, and opportunities to work from home.
- An example of a US-based manufacturing company that has realized the value of their older and experienced employees is Alexandria Industries, an Aluminum manufacturing company in Minnesota, whose customers include solar power and defense companies. They have managed to persuade some of their older workers to stay on even after retirement by offering them incentives like flexible working hours, competitive wages, and healthcare benefits.
- By doing this, the younger workforce gets valuable training and knowledge from the experienced baby boomers. Similar incentives have been implemented at Aerospace Corporation, which won an award in 2011 for being “The Best Employer for Workers Over 50.”
- To solve the shortage of skills and technical and administrative knowledge among the newer workers, manufacturing companies can collaborate with vocational training programs and schools that offer internship and apprentice opportunities to these young recruits.
- Global manufacturing giant Cummins Inc. has launched its Technical Education for Communities Program to provide technical skills to its workers around the globe. They have partnered with industry leaders like Peterbilt Trucks and FedEx Freight and developed a standardized education program in which students receive practical knowledge of the various tools and systems in the manufacturing industry.
Solutions to the challenge of adapting to new technology
- Additive Manufacturing (AM) is a new technology that uses a 3D printer to build a full-scale model of the final product that will then be tested to identify any flaws or suggest improvements in the product. In 2017, several OEMs like Stryker, Caterpillar, and Airbnb began investing in AM.
- Boeing and General Electric have implemented AM in their manufacturing for several years now. Other manufacturing companies are expected to follow in the next few years. As per a report by Smithers Pira, the AM market is expected to grow to $55.8 billion by 2027.
- By combining AM with traditional manufacturing methods like subtractive manufacturing that uses CNC machines, manufacturing companies can cut manufacturing cost and save time. This method of combining the two techniques is called hybrid manufacturing. For example, automotive seat supplier TS Tech has managed to cut their production costs by 31% using hybrid manufacturing.
- General Electric’s ‘GE Additive’ division has acquired several AM companies, such as Arcam (electron beam melting technology leader) and Concept Laser (metal laser melting technology leader), among others, and invested in other AM companies like Xometry (marketplace connecting contract manufacturers with customers). This has led to increased production and decreased manufacturing costs.
- Digital twin is another new technology in which a digital simulation of an actual product is created by the combination of data with AI, robotics, software analytics, and machine learning. The digital twins change and update along with the products they mirror. This allows manufacturers to produce complex, high-quality, and safe machineries faster, with less R&D, and with less manpower and production cost.
- Studies have shown that by 2025, spending on robotics will reach $67 billion.
- Rolls-Royce is one company that has benefited immensely from digital twin technology. It allows Rolls-Royce to design better and safer jet engines that operate even in the most extreme conditions. As per Rolls-Royce’s chief digital officer, Neil Crockett, in only 0.2 seconds digital twin technology can predict whether a jet engine will pass or fail the actual testing, besides saving millions of dollars in actual production cost.
Solutions to the challenge of cybersecurity
- With the adoption of new technology and advent of Industry 4.0, which has increased the potential and risk of cyber threats, manufacturing companies will need to regularly hire cybersecurity engineers and analysts and even work with manufacturing cybersecurity experts like IBM and Siemens to protect their business and data from hackers and cyber-criminals.
- A manufacturing company that has taken cybersecurity very serious is the aerospace company Lockheed Martin. They have recruited several cybersecurity experts and are planning to hire more in the near future.
- Manufacturers can ask IoT device manufacturers to incorporate S-SDLC, or Secure Software Development Life Cycle, in their hardware and software from the very beginning. S-SDLC is an important tool against cyber threats, and many of the vulnerabilities of the IoT product security assessments are addressed in the design stage itself by using S-SDLC security.
- One company that has utilized the benefits of S-SDLC in their manufacturing process is General Electric. Their industrial IoT application platform called Predix has successfully managed to incorporate S-SDLC to remove many cyber vulnerabilities from their system.
Solutions to the challenge of digital transformation
- With more business now being conducted in the digital space, manufacturers must enhance their digital footprint and transform their brands digitally. Manufacturers have to ensure that their websites are user-friendly with an eye-catching and attractive layout. Their websites should have blogs, news, and knowledge sections that provide valuable content to their customers.
- The websites should also be available on the mobile platform and in multiple languages to cater to a worldwide audience.
- These companies also must have a constantly active and engaging social media presence on websites like Facebook, LinkedIn, and Twitter, among others.
- A few examples of manufacturing companies that have successfully transformed themselves digitally by making extensive changes to their websites are Royal Phillips, a technology manufacturing leader; Schindler Group, an elevator and escalator giant; and Henkel Adhesive Technologies.
Solutions to the challenge of attracting qualified leads
- With the changing B2B buying habits over the years and business being conducted online, it is imperative for manufacturers to enhance their digital presence, since it leads to new businesses and qualified leads being attracted to them.
- The best way for manufacturers to enhance their digital footprint is by creating a website that has quality digital content and provides knowledge to their audience. The website should have blogs, news, and resources that use SEO tactics and utilize data collection tools such as Hubspot and Google Analytics to create keywords that will place the website higher up in Google’s search results. This will make the company look professional as well as attract qualified leads.
- They should also be highly active on recruiting platforms like LinkedIn.
- A manufacturing company that has kept pace with the changing scenarios and managed to attract highly qualified leads by following the methods mentioned above is the Microsoft Corp. Since their acquisition of the networking platform LinkedIn in 2016, they have managed to stay near the top of the pile.