Industrials & Manufacturing Roar Back
Although manufacturing has been in a slump for the two years, industrials and manufacturing have roared back. Industrial production has been up for three months in a row, and it surged to its highest ever recorded rate in February. This data aligns with the PMI index that measures manufacturing activity with two months of expansionary rates. To add to these compelling statistics, there have been numerous announcements of millions – and billions into U.S. manufacturing. The bottom line appears to be that the industrial sector and manufacturing is on a roll. Are you ready to scale production, increase capacity utilization, and bring on new capabilities?
Slew of U.S. Manufacturing Investments
A slew of investments have been announced into U.S. manufacturing. Companies from the U.S. and around the world are investing in American manufacturing for reasons ranging from avoiding tariffs to the potential for significant revenue growth and tax cuts to positive PR to supporting U.S. consumers with rapid responsiveness.
For example, if we just review recent announcement of at least $1 billion, there is a long list. Apple will invest $500B, Nvidia will invest hundreds of billions, Lilly will invest $50B, TSMC will invest $100B, Novo Nordisk will invest $4B, GE Aerospace will invest $1B, and Siemens will invests $10B. These investments support AI, high tech, medical, defense, and other critical industries. Remember, for each $1 invested, almost $3 is added to the economy. This could add up and stimulate massive growth!
Are you Ready to Scale Manufacturing?
As compelling as these investments and the potential for U.S. manufacturing to grow, we must be ready to scale up rapidly. As the opportunities arise, you must be ready to take advantage of them. Thus, successful clients are acting now with an eye to the future.
Our most successful clients are focused on the following priorities:
- Process upgrades: upgrade your supporting processes (planning, scheduling, order fulfillment, quality, inventory etc.
- Technology upgrades: upgrade your ERP system and/or better leverage your ERP system, roll out advanced technologies such as predictive analytics, CRM, advanced planning, and automation and robotics.
- Manufacturing capability upgrades: upgrade your manufacturing capabilities. How can you increase your output, efficiencies, and ability to make additional products?
- Capacity upgrades: upgrade and expand your capacity so that you can make additional products and increase your output. Refer to our article, Demand and Capacity Planning Pivotal for Profitable Growth, for more information.
- Reconfiguring supply chains: As you expand manufacturing capabilities, are you reconfiguring your supply chains proactively? Specifically, are you sourcing new suppliers, reshoring and nearshoring key capabilities, etc.?
- Risk mitigation strategies such as cyber: Risks continue to increase in volume, urgency, and potential impact. Are you devising risk mitigation strategies to reduce your serious risks and proactively navigate all risks?
- Predictive planning with SIOP: SIOP (Sales Inventory Operations Planning) is a strategic forward-looking process that predicts demand, translates the demand into supply including capabilities, capacities, resources, and labor requirements, and highlights key decisions such as make vs buy, strategic sourcing etc. To read more about how to rollout successfully, read our book, SIOP: Creating Predictable Revenue and EBITDA Growth.
- Talent strategies: develop talent strategies to allow you to scale up/ down rapidly, seamlessly, flexibly, efficiently, and ethically.
- Financial strategies: develop the appropriate financial resources to support your ability to scale to take advantage of key opportunities.
The Bottom Line
Manufacturing is going to ramp up. If you are prepared to scale, you will be able to take advantage of opportunities as they arise. If you are prepared to pivot resiliently, you will create loyal customers and grow. Otherwise, you will “miss the bus”. Refer to our Supply Chain Bytes video on this coming boom. Take the leap, prepare for success, invest wisely, and your business will thrive while your competition struggles to navigate the latest supply chain disruption and keep up with changing conditions.
If you are interested in reading more on this topic:
Unlocking North America’s Manufacturing Potential