Top 5 Critical Manufacturing Industry Challenges (And How to Conquer Them)

Eric Severstad
Posted by Eric Severstad on November 2, 2023
Colleagues walking manufacturing plant floor discussing current challenges

As tough as this year is looking for the manufacturing industry (a forecasted 3.5% drop in revenue in 2023), there's reason for optimism, too.

We talk with business leaders within manufacturing every day, and we hear their challenges and struggles. We also discuss possible solutions, opportunities, and action plans that can make a real difference heading into 2024.

When we attended Manufacturing First Expo & Conference 2023 last week, we heard similar outlooks from the breakout session leaders, in-person exhibitors, and keynote speakers.

Bill Fournet, historian, leadership expert, keynote speaker, and CEO of The Persimmon Group, kicked off the day with his talk about disruption. From global supply chain issues to ChatGPT, there's been no shortage of disruption for manufacturers the last few years. Bill encouraged manufacturing leaders with four keys to building a team that can handle disruption: adaptability, resiliency, awareness, and judgment. "You have to be proactive because you don't know what's coming next," Bill said. 

So today, we’re highlighting 5 of the most pressing manufacturing industry challenges and providing insights into how industrial manufacturers can proactively address them. 

  1. Leveraging AI and Other New Technologies
  2. Continuing Labor Shortage
  3. Inflation
  4. Supply Chain Disruption
  5. Engaging Qualified Leads

1. Leveraging AI and Other New Technologies

Technologies that seemed so important last year — automation, robotics, the Industrial Internet of Things (IIoT), Industry 4.0 — have been out-hyped by artificial intelligence (AI) in 2023. While previous technological advancements have been important to adopt, AI is revolutionary, and it's critical to get up to speed as quickly as possible.

The affordability and accessibility of game-changing technology with a wide breadth of applications is really what makes AI so important. Manufacturers of any size can grasp an advantage through efficiency gains, forever changing their growth trajectories.

Manufacturing First attendees heard it bright and early during Bill's "How to Survive in the Age of Disruption" talk, and it continued throughout the day ... AI is THE disruptor of our lifetimes

In his breakout session focusing on AI in factory automation, Involta's John Kehoe asked this rhetorical question: "I can complete this task manually or a computer can help me do it faster and smarter ... what should I choose?" However, he added that AI usage "must align with existing processes."

The afternoon session with Greg Linnemanstons, President of Weidert Group, shared real-world  AI tools in action; use cases that are helping sales and marketing professionals get ahead right now. "If your competitors aren’t using AI already, they will be soon. You can’t wait to begin implementing the right tools for your needs," Greg said.

Missed Greg’s session at Manufacturing First? Grab a copy of his slides here:

Of course, AI isn't the only technology that can help solve manufacturing industry challenges:

  • The Industrial Internet of Things (IoT) is growing rapidly and is expected to quintuple through 2029 (CAGR of 26.4%)
  • Smart manufacturing is using IIoT devices to boost productivity, enhance quality, and reduce costs
  • Enterprise Resource Planning (ERP) technology, now often infused with AI, helps manufacturers manage mountains of data, forming insights that inspire better decision-making
  • Integrated CRM technology is using personalization and other automated techniques to fulfill ever-rising customer expectations; plus customer-facing teams now have a single source of information for better customer interactions

2. Labor Shortage

The pandemic complicated the challenge that was already hitting the manufacturing industry, and the effort to recover continues. While AI, automation, and robotics have helped fill the gap the past two years, human workers are still needed to problem-solve, analyze, and manage workforces.

Appropriately, Manufacturing First had an expert to speak on the labor crisis. Chris Czarnik, award-winning international speaker, author, and business trainer, shared insights and stats. "The labor pool continues to shrink as Boomers leave the workforce. The U.S. will be 8 million people short for at least the next 10 years," he said. 

Chris provided a blueprint for manufacturers to "sell their jobs to candidates" with the same level of strategy and tactics with which they sell their products, including getting creative to attract and retain workers.

Instead of traditional advertising (newspapers, radio, billboards), the effective way to connect is through social media, often using video to highlight a company's strengths.

Plus, today's younger generations today aren’t only looking for a career; a positive culture focused on employee and community wellbeing is a differentiator.

To build a workforce, some manufacturers are partnering with local community and technical schools to support trade programs. From die making to welding to robotics, early training helps solidify relationships.

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3. Inflation

Inflation during the pandemic peaked at 9.1% in June 2022, the highest rate since November 1981. More recently, however, prices had increased by 3.7% (September 2022 to September 2023) according to the 12-month percentage change in the consumer price index1.

Many manufacturing business leaders aren't impressed, and why should they be? When goods and raw materials are hard to acquire, they become more expensive.

The fact is, manufacturers are still reeling from the impact of the pandemic, the supply chain challenge (see #4 below), and the the war in Ukraine. Inflation is expected to remain higher than normal for the final two months of 20232.

We can do little about inflation, yet remember that the demand for goods is strong for most manufacturers.

4. Supply Chain Disruption

There’s a link between supply chain disruption and the inability to fill manufacturing jobs. A lack of workers is woven throughout the supply chain, including manufacturing, warehousing, distribution, logistics, and more.

Although #4 on this list, the importance of supply chain challenges shouldn't be underestimated. Of U.S. executives (surveyed by Deloitte), 72% believe "the persistent shortage of critical materials and the ongoing supply chain disruptions present the biggest uncertainty for the industry."

More than any other industry, manufacturing as been negatively affected by supply chain challenges. Both offshoring of electronic components (including shipping delays) and domestic production (struggling to keep up) have contributed to major supply chain disruptions. One emerging way to mitigate risks is with the increased utilization of digital technology, specifically AI. 

On the positive side, despite supply chain challenges, labor shortages, and an uncertain economic environment, the manufacturing industry continues to surpass the expectations of previous years3. Plus, “Made in America” products have made a resurgence, helping to minimize reliance on global suppliers.

5. Engaging Qualified Leads

Traditional marketing efforts — trade shows, trade ads, cold calls — don't work for manufacturers like they used to. Neither do some digital marketing tactics. Now, it's an AI age.

Here are some AI tools to consider for engaging qualified leads:

  • Chatbots — Not a new idea, yet modern chatbots infused with AI can actually have natural conversations with website visitors and automatically qualify leads based on their responses
  • Lead scoring and nurturing — AI-powered tools analyze behavioral data and interactions to automatically score leads based on readiness to buy, and then they deliver personalized, timely content and recommendations to leads
  • Predictive lead scoring — Machine learning predicts which leads are most likely to convert based on historical data
  • Social prospecting — Monitoring tools use AI to identify prospects talking about relevant products, pain points, or competitors; sales teams then engage prospects
  • Email personalization — AI email tools dynamically insert personalized content, subject lines, calls-to-action, and recommendations into emails based on prospect data and activity

Of course, testing different AI tools will help determine which are most effective for engaging your qualified leads.

AI tools are most effective when combined with inbound marketing efforts, SEO tactics, and valuable content that provides answers to prospects' questions and helps solve problems. Trust is built through relevant blogs, case studies, eBooks, infographics, and other helpful resources. Then, leads are more likely to engage on a personal level. Learn more here: What is Inbound Marketing (in a Nutshell)?

Weidert Group has partnered with our friends at Databox, a software company that helps businesses improve their ability to see their data in real-time and draw meaningful insights. We’re inviting WI-based manufacturers to complete our survey focused on the state of industrial sales and marketing.

We also have a benchmark group where you can anonymously connect your website marketing data (Google Analytics and Google Search Console) and see how you compare to your peers’ performance. Click below to participate!

Sources: 1Statista 2Nationwide 3Deloitte

Topics: Manufacturing

click here to take the state of industrial sales and marketing survey