Forecasting a Cloudy 2022 for Manufacturing

Every year I write an article about my predictions for the new year. But predictions can often be a bit misleading. Don’t get me wrong; I enjoy postulating about what trends and technology will surge in the coming year. But nothing is written in stone. So, let’s do this: let’s call this forecasting. Predictions are kind of general. We try to pinpoint things a little more; so, we’ll call it forecasting.
 
We in the manufacturing industry tend to overestimate the short-term effect of technology, while still underestimating its effects over the long term. One thing I don’t want to do is imply that these things will happen only during the 2022 calendar year, but rather are the themes that I feel will gain the most intensity, focus, and relevance for manufacturing organizations sometime during this year (or just beyond).

Forecast #1 – Pandemic Response Becomes Post-Pandemic Strategy

I’ve written extensively about the pandemic. We have all felt COVID-19’s tremendous impact on health, society, industry, and economics over the last few years. We’ve witnessed entire industries shutting down and others severely disrupted. Workers have been directed to work from home and, in some cases, self-isolate. Everything was turned upside down overnight…and continued to change repeatedly over 2020 and 2021.
 
Because businesses had no experience with this sort of thing, they had no adequate contingency plans. Most business were forced to adapt rapidly, on the fly. Every day was a firefighting day—and as soon as the fires were out, along came the next wave or variant of the virus.
 
Rapid changes to manufacturing operations in response to supply and demand chain volatility, logistics, or workforce availability—and sweeping changes to technology platforms to support remote work—needed to be implemented in weeks, sometimes even days. There was never enough time for proper planning, risk assessment, or even preparing a detailed business case for anything. Manufacturers had no choice; changes simply had to happen quickly.
 
The last two years have taught us these two things: First, that the impact of the pandemic will be with us for the foreseeable future, perhaps indefinitely. And second, that we not only need to make permanent some of the rapid changes we recently made—and make them more robust and operationally sound—but we also need to rethink many parts of our business operations. How flexible are they? How robust are they? And how are they able to support other future events that may have unprecedented impact on the business? Not just to withstand another pandemic, or wave, but any major unforeseen highly disruptive event such as a natural disaster, trade war, economic shock, or terrorist atrocity, for example.
 
Therefore, I’m predicting that this will be the year in which businesses of all sizes and across all industries will move from the firefighting era of the pandemic-response to an era of operational change and restructuring—in the form of a post-pandemic strategy.
 

Forecast #2 – Cloud Computing and SaaS—the New Normal

If you plotted the rise of the adoption of Cloud Computing and Software-as-a-Service (SaaS) on a graph, it would look like a hockey stick. Over the last two to three decades, it has been slowly increasing in adoption—with the curve becoming steeper and steeper—because more and more IT departments, CIOs, CFOs, CEOs, and many other disciplines are now realizing the extraordinary business benefits of Cloud/SaaS over traditional in-house client-server IT architectures.
 
Coupled with advances in, and the maturing of, core technologies and high-performance internet connectivity, and (perhaps most importantly) the robust security capabilities offered by modern cloud solutions, a “cloud-first” strategy is becoming more popular for organizations turning to new technology.
 
The pandemic has obviously had a role to play in that recent acceleration to a cloud-first strategy. Supporting remote workers through anytime/anywhere access to critical business processes and information was solved largely through the rapid deployment and migration to cloud-based solutions. Many companies that had been reluctant to make the leap to the cloud—due to either misunderstanding or lack of understanding—had their hands forced by the health scare.
 
Replacing legacy systems is low-hanging fruit for companies seeking digital transformation. Therefore, I believe that 2022 will represent the “tipping point” in cloud adoption with a cloud-first strategy becoming the standard default position for most legacy renovation projects and the major technology consideration in a post-pandemic strategy.
 

Forecast #3 – Tribal Knowledge Will Become Codified

“Our people are our business.” “Our company is only as good as our people.” And “Your people are your most important asset.” These are familiar expressions to us all; we’ve heard them resonate throughout the business world and promoted in boardrooms for many decades. I do not wish to belittle the sentiment behind those words, but we need to also consider their potential pitfalls.
 
In many industries—and manufacturing is no exception—people build up significant levels of skills, knowledge, and experience in their roles. But most of that tacit knowledge is stored mentally and rarely documented or codified. For example, an operator may hone a certain skillset over many years in a particular process area using a specific piece of machinery. She just knows how to perform the tasks correctly and get the best out of the equipment and resources. But what happens when she, or her immediate peers, are no longer available to perform those tasks (from the impact of COVID-19 or some other event)? How are new people who are unexpectedly drafted into those roles expected to suddenly acquire those decades of tacit knowledge? How much does it restrict agility and flexibility on the part of the manufacturer? It exposes the significant risks associated with over-reliance on tacit, or tribal knowledge.
 
I’m forecasting that 2022 will be a pivotal year in this regard as organizations move to codifying what is currently considered to be tribal knowledge. And they’ll do so by using solutions such as workflow and business process management, as well as emerging solutions like predictive and prescriptive analytics, and by leveraging machine learning and AI technology.

Forecast #4 – Sustainability Accelerates Digital Transformation Momentum

Over the last couple of years, digital transformation has become a major strategic priority for most organizations. Digital transformation of legacy systems and processes is now seen as a critical and urgent requirement. Indeed, many industry analysts and pundits suggest that we may see decades of innovation in this area occur over the next five years. I believe we will see significant increases in adoption rates this year.
 
Before the pandemic, digital transformation was almost entirely focused on business performance outcomes—improvements in efficiency and productivity, for example—and the impact those have on the bottom line. In other words, the motives were mostly framed around commercial benefits.
 
During the pandemic, the driving force swiftly changed to mitigating risk—either from an operational or a strategic perspective. For example, is an organization able to withstand significant disruption across the supply chain and cope with volatility in demand or logistics? Is an organization flexible and agile enough to respond to uncertainty that is changing on a weekly, if not daily, basis? Is an organization able to cope with large numbers of employee absences or remote (offsite or off-shopfloor) working requirements, yet still maximize output?
 
While both (operational and strategic) drivers will remain an important and valid case for digital transformation, another will begin to take center stage in 2022—sustainability (here’s what I said last year about sustainability). Organizations of all sizes across every industry are now recognizing the responsibility they hold—and the scrutiny being placed on them by governments, consumers, and society at large—to become much more environmentally responsible in their business activities. For example, for matters like waste, resource usage, carbon emissions, and recycling, organizations will increasingly turn to digital solutions to optimize efficiency and productivity and significantly reduce environmental impact.
 

Forecast #5 – Industrial Automation Leads to Information Automation

Automation has undoubtedly been a stunning success for manufacturing for many decades. Ever since the industry turned to the mass production of goods, organizations have continually sought new ways to replace physical tasks with automated alternatives. While the focus has been on migrating physical activities from workers to automated processes, the same cannot be said of our cognitive activities—that is, the activities related to the collection, analysis, and extraction of value from information. 
   
Even in high-end automated environments like this, it is not uncommon to see “information” being captured and recorded manually by operators. For example, quality personnel pull product off the line at regular intervals and perform manual inspection, record quality characteristics, and make a pass/fail determination. Production counters are captured for measures such as production rates, units produced/rejected, or line up/down time. My point here is that value is rarely extracted from that information. It’s perceived as an overhead, or a cost of doing business.
 
Information is rapidly becoming the next battleground in the war against inefficiency and lagging productivity. We now have the technological capability to effortlessly capture data in real time, analyze that data automatically (and in real time) using sophisticated algorithms, and present the results of that analysis in highly illustrative and intuitive visualizations. This makes decision making much quicker and more effective, enabling critical decisions to be made in real time to ensure that industrial processes are running optimally—and, where that is not the case, enable us to better predict when and where problems are most likely to occur, before they impact efficiency and productivity.
 
As industrial automation delivers ever-diminishing returns (because much as the low hanging fruit has been harvested and now has become commonplace), I believe that 2022 will see information and cognitive automation within industrial environments begin to become much more prevalent.
 

In Closing

So, those are my forecasts for 2022. I don’t want to imply that these things will happen during the 2022 calendar year. You can see that some have been slowly gaining momentum over the last several years and may occur sometime over the next few months, while others may very well stretch out into the future (or occur just after the next year begins). But these are the foci in the manufacturing industry going forward. Here’s to a stellar year!
 
I encourage you to take advantage of the technology at your fingertips today: contact one of our account managers (1.800.772.7978 or via our website) for more information about our industry-leading quality management software solutions. They’ll get—and keep—your organization on the right track as the industry shifts toward more and more technology…and the companies that use it well.