Manufacturing industry is poised between innovation, growth, and profitability

The manufacturing industry is at an inflection point—poised between innovation, growth, and the drive to reduce costs and increase profitability—following years of supply chain disruptions, global tensions, and a recent drive to adopt AI, according to a report from Fictiv.

Manufacturing leaders say the top challenges impacting their 2024 strategies are economic headwinds (47%) and labor costs and shortages (39%). Other factors include increasing competition, increasing pressure to drive profitability, and changes in consumer behavior and spending.

Those results came from the ninth annual “State of Manufacturing Report” from Fictiv, which is a San Francisco-based provider of manufacturing network and custom manufacturing services. The firm’s report surveyed 178 director-level decision-makers who work in engineering, supply chain, R&D, and digital innovation roles for companies that produce consumer electronics, medical devices, automotive, industrial and robotics, aerospace, or energy.

Survey results showed that corporate strategies for 2024 include some familiar themes, as respondents said for the third year in a row that improving manufacturing and supply chain visibility (54%) is their top priority, followed by increasing supply chain resilience and agility (48%). And for the second year in a row, respondents said that prioritizing investments in sustainable manufacturing remains a priority (42%), most likely because sustainability has been embedded into company values and practices (53%).

"The last four years have redefined what a world-class operations or supply chain team needs to operate successfully in a tough economic environment,” Dave Evans, co-founder and CEO of Fictiv, said in a release. “It’s become the expectation for supply chain teams to decrease costs and get products to market faster, all while doing more with less due to lower expenses as companies push to profitability as their number one metric. With all the headwinds faced in navigating risks over the last four years, supply chain leaders have one of the world's toughest jobs. Now, these leaders are battle-hardened and looking for efficiencies everywhere, turning to technology and regionalization strategies.”

Additional results of the study showed rising supply chain regionalization. Increasing U.S. manufacturing (also known as on-shoring) remains the leading supply chain strategy for the third year (66%), yet it has fallen substantially since last year. At the same time, North American production (known as near-shoring) has increased again this year (53%).

Concerns about global supply chains are driving those stands, as 86% of respondents say global tensions are long-term planning considerations. However, while they say it is still important for U.S. manufacturers to on-shore (66%), this trend has fallen since last year (77%), even as they say the need to diversify global manufacturing operations has increased this year.