The manufacturing industry in 2024 is defined by a combination of challenges and opportunities arising from technological advances, economic uncertainty, and market changes. Despite the various challenges faced, digital transformation, AI, and an emphasis on operational efficiency offer a promising path for growth and innovation.

To gain insight from industry experts on the direction of manufacturing, Fictiv collaborated with Dimensional Research to examine the state of the industry, our 9th annual State of Manufacturing Report. We interviewed more than 178 leaders in engineering, supply chain, manufacturing, and product development across a variety of industries, including medical devices, robotics, automotive, aerospace, and consumer electronics.

We found persistent concerns about rising global tensions, operational inefficiencies, and ongoing supply chain disruptions. Despite the ongoing challenges, however, there is a silver lining: technologies like AI and on-demand manufacturing offer efficiencies and a way forward.

Here are 3 big takeaways from our report that indicate where manufacturing is headed.

Economic concerns are at the fore in this election year.

Manufacturing leaders face a variety of economic pressures that affect their 2024 company strategies. Key challenges include economic difficulties such as inflation, interest rates, and risk of recession among 47% of respondents, labor costs and shortages (39%). Additionally, a significant number are expressing concern about the impact of the global economic crisis.

Given today’s global conflicts, trade wars and general instability, it is not surprising that international tensions are affecting long-term supply chain planning. In fact, 89% report that they are either “somewhat” or “very” concerned about the possibility of escalating trade wars in the next few years, and 86% say global tensions factor into their strategic planning. There is a consideration.

These concerns have merit. President Biden recently announced that the U.S. will raise tariffs on Chinese products, including an increase in tariffs on EVs (from 27.5% to 100%). We’re already hearing reactions from manufacturing industry leaders on the potential impact.

On the other hand, events like the US presidential election seem to weigh less on leaders. Only 21% predict that election uncertainty will affect the industry.

Supply chain flexibility is top of mind.

For the third year in a row, improving manufacturing and supply chain visibility topped the list of business priorities (54%), followed by flexibility and agility (48%), now ranked as the second most important priority. (up from fourth last year). For supply chain leaders, tracking parts from concept to prototype to production is just good business. After all, how can you fix mistakes or obstacles if you can’t see them?

One way leaders can address these challenges is technology.

Technology and innovation are changing the game.

Take AI. Last year’s excitement about its potential impact remains, but this year’s data shows that 88% of respondents have already implemented AI in their manufacturing and supply chain operations.

The perception seems to be that AI is critical to success as well (with 87% reporting that implementing AI is “…essential to the future success of my company”). And AI is the second most cited influence on companies’ 2024 strategies (45%) in 2024.

Typical implementations include supply chain management, product design, quality control and inspection. Additionally, 78% predict AI will cut jobs in the next two years, a potential solution to the labor shortage.

But that’s not all.

Streamlining procurement is another way AI can increase productivity, efficiency and new product introductions (NPI). Greater efficiency translates into more time for innovation. And digital manufacturing is an important part of that. When technology enables more efficiencies, your teams are freed up to spend more time refining their designs and developing new products to bring to market.

Look ahead

After four years of unprecedented global disruption, our findings suggest that manufacturing leaders are more focused than ever on balancing innovation, profitability, AI implementation, and productivity issues. The report backs this up, exposing persistent concerns about the global economy and its impact on supply chain management.

To meet increasingly aggressive revenue and cost goals, supply chain teams need to be agile, find operational efficiencies, and leverage technology to deliver savings opportunities in 2024 and beyond.

Read the report to know more.