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Deloitte: Top 10 manufacturing insights for 2021 and beyond

With the outbreak of COVID-19 back in March 2020 driving the manufacturing industry to look for ways to be disruption-proof, Manufacturing Global breaks down Deloitte’s ‘2021 Manufacturing Industry Outlook’, identifying the ways in which organisations will seek to achieve a ‘disruption-proof’ status in 2021 and beyond.

10. Workforce agility

“In what could become a permanent change for the industry, the majority of manufacturing leaders seem unlikely to return to all the pre pandemic work arrangements,” details Deloitte.

In light of the pandemic, manufacturers are seeking ways to transform their workforce and workplaces in order to effectively manage disruption and uncertainty.

In a poll conducted by Deloitte, “61% of surveyed executives are planning to develop a hybrid model for their production and nonproduction processes over the next three years,” with 28% identifying upskilling and building new skills to match evolving work environments as top challenges faced today.

9. Talent shortages

Alongside shifts in where work is carried out, Deloitte identifies that the industry continues to struggle when it comes to filling certain jobs with skilled workers, with the increased number of furloughs and retirements only widening the skills shortage.

“To manage persistent output levels with a reduced workforce and constrained work environment, many manufacturers have accelerated their adoption of automation and robotics. These changes in operations are driving many manufacturers to reevaluate the role of the workforce.”

8. Agile supply chains

With organisations being forced to critically evaluate their supply chains to become more agile, Deloitte identified in a recent survey that “only 21% of respondents were confident in their supply network’s visibility and ability to swiftly flex sourcing, manufacturing, and distribution, if needed.”

As a result Deloitte expects visibility and flexibility to be a top priority for manufacturers in 2021 and beyond.

7. Visibility and flexibility

As a result of disruption experienced in the early days of the pandemic, in a poll conducted by Deloitte – post election – 44% of executives plan to recalibrate their supply chains by shifting towards a regional model in the next year, with many in the US particularly looking to reduce their dependence on China.

6. Productivity and digital investments

Whist productivity has been a key component for most manufacturers over the last decade, COVID-19 has further shone a light on the issue. “Many production environments have new mandates to maintain physical distancing requirements, which could further constrain efforts to increase productivity and throughput.”

This is where Deloitte identifies that digital investments will be a key player in addressing ongoing challenges of business continuity during unknown disruptions.

5. Digital twins

Leading on from productivity and digital investments, within its report, Deloitte explains that “in its simplest form, a digital twin is a representation, or blueprint, of a physical thing […] Using a digital twin, a manufacturer can virtually recreate a product, its production, and even simulate its performance in the real world without having to ‘bend metal’ or take any other physical action.”

The benefits of using digital twins include increased productivity, due to reduced development time for new products, as well as avoiding costly defects, and enabling flexibility and agility for responding to unknowns.

4. Visibility

“For manufacturers, the events of 2020 may be a warning to develop better systems for navigating disruptions like the one we are currently experiencing,” reflects Deloitte, who details that visibility is likely to be a critical capability for manufacturers in the future. However, where this visibility is needed will depend on how a given company is affected by the pandemic, manufacturers who have seen a surge in demand will require visibility across their supply network as production increases.

3. Forecasting

“The pandemic has affected different segments within manufacturing in very different ways,” notes Deloitte. “Some segments have been negatively affected by rolling economic shutdowns in different regions over the past 10 months, which have caused a ripple effect throughout all manufacturers that are part of these value chains.”

Whilst commercial aerospace and heavy equipment are experiencing significant decreases in demand, others such as home improvement, outdoor power equipment, paper products, sanitizers, and exercise equipment manufacturers are experiencing sugars in demands reflecting the changing market needs. This can also be seen for HVAC and building automation manufacturers, who are gaining interest from hospitals, offices, and other commercial building owners, and as vaccines for COVID-19 become available, there is also increased demand for aspects of the supply network

“Across all these varied experiences, there is a common thread: the difficulty in forecasting in the current environment. […] However, it is possible that disruption could become a ‘predictable’ part of the business environment, even if the source of that disruption is unpredictable.”

2. Employment levels

In its 2021 Manufacturing Industry Outlook, Deloitte also identifies that 2020 experienced a significant dip in manufacturing employment levels, which the company attributes to “forced shutdowns in the early days of the pandemic and suppressed orders, with April recording the lowest employment levels since 2010.”

Despite recent gains, employment levels are still low, which is resulting in ongoing uncertainty.

1. Disruption-proof

With 2020 taking the title of ‘a year like no other’, the manufacturing industry has certainly felt the impact of COVID-19. As the uncertainties continue into 2021, manufacturing operations continue to be uneven due to pandemic-driven shutdowns.

Looking to the future, Deloitte states that it could take longer to reach pre-pandemic levels due to its projections based on the Oxford Economic Model (OEM) anticipating “a decline in annual manufacturing GDP growth levels for 2020–2021.”