Manufacturers need to utilise the latest technology to stay relevant, innovative and competitive. Their biggest challenge is how best to use technology to achieve operational goals such as reducing costs, improving quality, productivity and safety whilst pushing product innovation. Without investment in automation and other digital technologies, they risk losing market share to competitors. Strategic investment in AI and robotics is increasingly crucial to deliver long-term value and business sustainability. Embracing Industry 4.0, particularly the Internet of Things (IoT) and the IIoT (Industrial Internet of Things), opens doors for manufacturers to create a more digital focus, including real time tracking and quality management. 


Supply chain issues have significant working capital implications for manufacturers, who will need to work with both customers and suppliers to manage fluctuating prices and demand. The disruption to the global supply chain from natural disasters, war, and pandemics to name a few, are requiring manufacturers to consider diversifying their supply chains to utilise multiple suppliers across varying locations to ensure minimum disruption to production. That paired with the challenges of an inflationary materials market extend beyond financial concerns: bulk purchasing may protect margins where the business has the storage capacity and infrastructure in place to deal with larger orders, which could have a positive impact on product lead times. Manufacturers who are able to respond with agility to a fluctuating supply chain will increasingly stand out from their competitors. 


According to the UK’s Office for National Statistics, recent figures suggest that labour productivity declined in the manufacturing sector by 0.9%. Manufacturers must explore ways to close this productivity gap and secure a competitive advantage. Data is now available to identify areas where streamlining the production cycles improves efficiency. Good examples of this are the development of lean manufacturing systems, performance dashboards and predictive maintenance.


Manufacturers need to review their future talent requirements and consider how to incentivise existing staff to encourage retention. The cost-of-living crisis is pushing up wages, and there is a continued shortage of entrants to the job market. The fast pace of technological change in the sector has created a skills gap, where the skills required within a team are different from the traditional mindset of those who have been in the industry for a long time. Maintaining and increasing investment in training at all skill levels is key. Manufacturers investing in new systems and equipment are also much more likely to invest in the personal development of their people. Funding is now available as part of the Government’s Industrial Strategy to support Knowledge Transfer Partnerships and strengthen leadership skills. 


The UK is one of the world’s top five most innovative economies, according to the Global Innovation Index. To innovate effectively, manufacturers face challenges in balancing competing demands of winning new contracts, delivering projects and helping customers. Manufacturers are leading the way with investment in R&D and opportunities exist to utilise tax incentives, such as R&D tax relief and the Patent Box regime. Making the most of these reliefs will leave manufacturers with more funds to invest in building a stronger business and recruiting skilled staff. 


To strengthen their position as global suppliers, UK manufacturers must continue to invest in boosting their sustainability credentials and drive efficiencies in the process. Growing public awareness of environmental damage requires businesses to adopt a proactive approach and take steps to mitigate their carbon footprint and reduce waste. Businesses are under increasing pressure from governments worldwide to address their impact on the environment. In the UK, large companies are now required to include Streamlined Energy and Carbon Reporting in their financial statements, whilst companies using more than 10 tonnes of plastic packaging per annum may be subject to a new plastic packaging tax. In response, Britain’s manufacturers are implementing a growing range of sustainability measures and reaping cost-saving benefits. According to Make UK’s Sustainability Report, manufacturers are beginning to look beyond the initial cost-saving benefits and instead focus on the long-term benefits of sustainable approaches within their organisations. 

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Posted in Blog, Manufacturing