There are plenty of reasons manufacturers need to transform themselves with Industry 4.0, a wide-ranging set of digital technologies aimed at making the manufacturing process nimbler, more efficient and productive — and more profitable. But today, the most important reason may well be the uncertain trade climate and rising tariffs, which affect manufacturing more than any other industry.
So concludes a study from Deloitte, Deloitte’s 2020 Manufacturing Industry Outlook. One of 2020’s big manufacturing trends, the study says, is that the uncertainly about the effects of the ongoing trade wars between the United States and much of the rest of the world “is driving manufacturing companies to build digital muscle.”
The report notes that many manufacturers have been pleased with their progress towards Industry 4.0 and want to invest more in it. However, the report warns, “the current labor and trade uncertainties within the global manufacturing industry could stall digital progress.” As a result of that, it says, “Many companies have shifted their efforts toward digital projects that build agility and scalability to help them to manage risk.”
Specifically, the report says, manufacturers are being harmed by the disruption in global supply chains caused by U.S. tariff wars with other countries, particularly China. It points out, “US imports from China were down 12.7 percent in the first eight months of 2019 versus the same period in 2018. Meanwhile, US imports from Mexico were up 5.9 percent, and US imports from Vietnam were up 37.4 percent. In a matter of months, manufacturers have shifted both sourcing and production to different geographies, seeking tariff-friendly combinations. For manufacturers, this must be executed precisely given lead times (and even customer approvals) for both original equipment and their highly profitable aftermarket components.”
How can manufacturers quickly change sourcing, production and supply chains in response? The report concludes, “Digital ‘muscle building’ can be one of the leverage points to increase flexibility in global supply chains. Applying artificial intelligence, cloud computing, advanced analytics, robotics, and additive manufacturing to the value chain can increase visibility and transparency, allowing manufacturers to make faster changes to operations to respond to market-based threats or opportunities.”
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The Best Platform for Building Digital Muscle and Getting to Manufacturing Industry 4.0
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