Fabio Belloni is Chief Growth Officer and cofounder of Quuppa and a leading authority on advanced location technologies.
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The manufacturing and logistics industries have been dealing with colossal challenges over the past few years. Disruptions in the supply chain surged and rising energy costs have been a major impediment. But despite these challenges, there have been some welcome developments as well.
For instance, product-as-a-service (PaaS) business models have become more prevalent. Emerging location technologies are making manufacturers more efficient, while vendor outsourcing is reducing costs and expanding competitive reach. There’s a good deal to celebrate as well as anticipate for the coming year.
Let’s look at five key areas that will affect the way goods will be made and distributed in 2023. Perhaps unsurprisingly, we’ll find that they are interconnected.
1. IoT will continue to expand.
Speaking of interconnectivity, that is the essence of the Internet of Things (IoT.) IoT refers to the connection of physical devices (such as sensors or actuators) through a wide variety of wireless methods, ultimately reporting back to some sort of smartphone, tablet or reporting dashboard.
In manufacturing and logistics, IoT devices collect and analyze data to help companies improve business operations. The data can highlight inefficiencies, help process managers to streamline distribution and improve infrastructure maintenance. The information can also help companies improve worker safety and reduce waste.
Given the wide-ranging capabilities of IoT, the total number of IoT devices is expected to more than double over the next two years. This also means that companies will need to scrutinize the security vulnerabilities related to smart devices.
While cybersecurity standards are improving, we are still in an environment with increasing reliance on mobile devices. Businesses and online security professionals must remain vigilant to protect systems from unauthorized access.
More manufacturing and logistics companies may consider implementing mobile device management (MDM) strategies to protect their systems and their data. With MDM, the use of dedicated work devices, such as laptops and tablets, is closely monitored and protected by a secure VPN, password protection and maybe even GPS tracking. MDM can even wipe a device of data if the data has been compromised.
2. More companies will embrace PaaS
Another trend we can expect to accelerate in 2023 is the adoption of the PaaS model. PaaS refers to the process of selling the outcomes that a product can provide rather than the product itself. PaaS has caught on, in particular with manufacturers looking for ways to increase profitability, create better customer engagement and expand into new areas of business.
Rather than sell equipment to customers, equipment is leased in the PaaS manufacturing business model. When a product changes hands, it’s the beginning of the business/customer contract, not the end. A one-time sale now becomes an ongoing relationship where the customer focuses on gaining benefits from the product, and the vendor can be responsible for maintaining and updating as new updates or product features are made available.
The PaaS business model provides the solutions providers with the opportunity to offer services like maintenance contracts and customization based upon specific needs and conditions. This makes for a much more personalized business relationship. Service fees guarantee manufacturers a reliable income base while also providing enhanced customer support and stronger relationships.
3. MES will continue to rise.
Among the big tech trends in manufacturing and logistics is manufacturing execution systems (MES). MES tracks and documents the overall manufacturing process with real-time data. MES monitors everything from production scheduling to inventory control and employee schedules. For example, a manufacturer with an extensive inventory of parts can use an MES to keep track of data on all the various parts, incorporating descriptions and even digital photos of each part.
MES also creates reports all along the process, from product orders to delivery, and also integrates with other technologies like enterprise resource planning (ERP) systems to aid in mitigating supply chain problems, budgeting and managing personnel. MES provides the essential tools to supervise the lifecycle of production, including inventory, personnel, machinery and safety.
4. Working environments will become safer.
In 2019, the manufacturing industry accounted for 15% of all nonfatal injuries in the U.S. private sector. Now, the ongoing labor shortage in the U.S. is making things worse: Fewer people on hand means more rushing and an even greater likelihood of injury. Employees who are forced to carry more of the workload burden are prone to make mistakes, as are inadequately trained replacements.
Creating a safer working environment is crucial to improving productivity, and technology in the form of IoT devices is aiming to help this. These include sensor-tracking bodysuits to aid posture, environmental sensors that measure air quality and real-time locating system (RTLS) devices to inform supervisors where equipment and staff are located at all times.
By incorporating this data into logistics and manufacturing facilities, mistakes that lead to emergencies and losses can be more easily avoided.
5. More companies will outsource supply chain management.
One of the lessons we’ve learned from the last few years is that outsourcing the management of a company’s supply chain to third-party logistics providers (3PL) can be a successful strategy. After Covid, the demand for long-delayed goods pushed up the need for the fulfillment cycle to be faster and more reliable. As globalization has broadened markets everywhere, a 3PL can remove the burden of handling transportation and delivery.
3PL providers can also take care of inventory management, warehousing, distribution and order fulfillment. Using a 3PL helps companies streamline whichever part of the supply chain they want to outsource, from sourcing materials to delivering the final product.
Conclusion
It’s important that companies manage to seamlessly coordinate all their systems together. If not, it can create more work down the line. It’s also important to focus on data analytics and reporting: A continuous feedback loop of data allows companies to adjust on the fly and ensure that the systems are working together efficiently and effectively—because the one prediction that we can all count on is that more technology is on its way in the manufacturing and logistics industries.
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