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Five Trends That Will Shape Manufacturing In 2021

After a year of reacting to the sudden shocks of 2020, the beginning of 2021 offers the chance to use emerging trends to identify opportunities and shift your organization’s strategy to capitalize on them. Here are the insights that are transforming manufacturing.

 

Trend 1: A new urgency for end-customer relationships

The events of last year prompted reflection about the things that matter most. Customers are understandably rethinking priorities and raising their expectations. They want products to be better. They want every purchase to add value.

But what does “better” mean, and what defines “value”? Manufacturers won’t know for sure until they forge closer bonds with end customers.

In 2021, smart manufacturers will focus on getting closer to their customers and pinpointing exactly what “better” means in product terms. Before investing in concepts like Big Data and IoT, they will start interpreting the data they already have to help in this effort. They’ll use what they learn to develop smarter products that offer bundles of extended services and benefits—many of them digital—which in turn provide more data about the current shape of demand.

Key take-aways:

  • In the product development process, consider the ecosystem you could create around a core product, including services, apps or software features, as well as subscription models that deliver recurring revenue.
  • Perceptions of overall customer experience (CX) will be as important to differentiation as new specs and features.
  • Consider the digital skill sets you’ll need to understand what end-user data is telling you, and how to apply it to product development.

 

Trend 2: It’s make-or-break for mass customization

Whether B2B or B2C, customers want products that reflect their individual needs. Next year will see greater pressure to achieve customization on a mass scale, and not at the expense of profits.

Mass customization has been with us for a while, but 2020 triggered a hyper-individualized market where perceptions of value rest on how personalized products are.

Manufacturers will have to find ways to satisfy increasingly bespoke demands without falling victim to the painful overheads that come with traditional made-to-order production.

Key take-aways:

  • Accommodating too many bespoke elements can hold broader innovation back. Look to design automation as a way to address categories of customer preference. Otherwise, you risk creating engineering bottlenecks, as systems strain under the weight of customization requests.
  • In the short term, made-to-order production offers an opportunity to revisit pricing and fulfilment. Research from Deloitte shows one in five consumers who expressed an interest in personalized products or services will pay a 20% premium[1] for customized products — and wait longer to receive them.

 

Trend 3: Manufacturing and construction continue to converge

Manufacturing and construction have been learning from one another about how to adapt in rapidly changing markets. In 2021, we’ll see more convergence in areas like supply chain data sharing, modular factories, and the industrialization of construction.

Deeper industry convergence will mean more robust supply chains and the creation of a common data experience that draws from both sectors. That will point to new opportunities, like a sawmill moving from cutting wood to creating pre-configured panels for construction use.

Construction will show manufacturing new ways to be nimble and how to create production facilities that can be re-engineered quickly. That will enable pivoting to new categories, or the ability to accommodate smaller runs of high-value SKUs—an essential piece of the mass customization puzzle.

Key take-aways:

  • As architects act more like designers and designers act more like architects, look to build design skill sets that could be applied in either sector.
  • Consider investing in tools that facilitate seamless data exchange with manufacturing firms and supply chain partners that serve both industries.
  • When working within the construction ecosystem, be sure to provide the right level of detail so that ultimate assets are managed effectively. To be as sticky as possible, aim to have your products specified at source.

 

Trend 4: Automation becomes a cornerstone of resilience

Can mass customization be automated? 2021 is the year we find out. Automation is well established in verticals like automotive with standardized production. But if schematics change frequently, pre-programming isn’t possible.

Artificial intelligence and machine learning will have to do the heavy lifting. That will mean drawing data out of the digital silos currently sitting in disconnected production machinery and software.

With global trade rules in flux and access to low-cost markets disrupted, manufacturers in 2021 will have to extend process automation beyond the factory floor to save on costs and find new efficiencies.

Key take-aways:

  • Avoid building an island solution that can’t be integrated across the value chain. Use a holistic data model and conform to industry standards.
  • Use intelligent design automation to resolve design problems, and let engineers and designers focus on value-added tasks.
  • Be conscious of the need to balance automation and human work. Avoid cautionary industry tales where over-automating production has caused severe delays.

 

Trend 5: Re-shoring isn’t real

As the pandemic disrupted far-flung supplier relationships, many speculated that supply chains would simply repatriate. But even if local suppliers have goods and capacity, if people can’t get to work sites, raw materials and components won’t be delivered.

Supply chains need to be elastic, and 2020 demonstrated how easily they’ll break when stretched. It also became clear just how much manufacturers depend on key suppliers, and how quickly their output can disappear.

In 2021, manufacturers will have to look beyond re-shoring and find new ways to strengthen supply chain resilience.

Key take-aways:

  • Review supplier relationships and look for critical capabilities as well as those with the largest invoices, then invest in greater digital connectivity to strengthen collaboration.
  • Spread the risk of operational disruption by identifying alternative vendors for the most vital materials and components.
  • Add digital skill sets and consider funding for strategic suppliers to help them implement new data and collaboration systems.