April 14, 2023 Report Identifies How Manufacturers Increase Resilience

Report by the Manufacturers Alliance Foundation and Roland Berger identifies how manufacturers increase competitiveness and resilience.

Report features input from C-suite U.S. manufacturing industry leaders regarding the trends impacting their operations and how they are responding, and reveals an appetite to invest in strategic change

• Six interlocking global megatrends, including sustainability, digitalization, regionalization, industry disruption, geopolitical risk, and customization of products are shaping the next era of manufacturing
• U.S. manufacturing companies now rank digitalization (76%) and sustainability (72%) as the most relevant and important trends in their operations
• Reshoring and localization are gaining traction, with 52% of surveyed manufacturing companies implementing or expanding localization initiatives, and another 22% piloting initiatives
• When asked where they are localizing, North America topped the list for intended destination for manufacturers surveyed
• 52% of manufacturers surveyed plan to build new facilities as part of their relocation strategy
• Manufacturers surveyed indicated U.S. will rise to most competitive manufacturing nation by 2030

CHICAGO – The U.S. manufacturing sector is experiencing disruptive change, and manufacturing leaders are moving exponentially faster and juggling more priorities than ever before. Among the most important issues impacting their operations, manufacturers rank digitalization and sustainability as top priorities. In the wake of supply chain challenges, and market preferences, among other factors, more companies are pursuing localization and reshoring to the Americas. Furthermore, as the pace of disruption has become the new benchmark for change in the manufacturing industry, leading-edge manufacturers continue to strategically invest and move forward. These are among the key findings in the new report by the Manufacturers Alliance Foundation and Roland Berger, “Manufacturers Disrupting Themselves: Increased Competitiveness and Resiliency Through Next Generation Manufacturing.”

Manufacturers Alliance and Roland Berger conducted interviews and surveys with C-level leaders from dozens of manufacturing companies, primarily located in North America, in Q1 of this year. Survey respondents included subject matter experts in finance, strategy, and manufacturing operations.

“Now more than ever, manufacturers are recognizing that in order to move the needle, they must embrace next generation manufacturing trends, and proactively develop a pragmatic set of solutions that address today’s global challenges,” said Michelle Drew Rodriguez, Partner, Roland Berger. “Through the report developed by Roland Berger and Manufacturers Alliance, our goal is to provide insights on how leading next-gen manufacturers are prioritizing and already activating each of these trends in their go-forward strategies, as well as how their best practices can help create a roadmap for other manufacturers looking to increase their own competitiveness and resiliency.”

Manufacturers Alliance Foundation President and CEO Stephen Gold noted, “While manufacturing has faced years of disruption through a global pandemic, supply chain crisis, and threat of an economic downturn, to name a few, the pace of change continues to accelerate. Successful manufacturers continue to face these headwinds with innovation and an eye on long-term growth. This report highlights six megatrends manufacturing executives ignore at their own peril.”

Among the Key Findings in the Report:

Business model innovation has come to manufacturing
Following in the footsteps of other sectors, manufacturing is increasingly looking at business model innovation instead of strictly focusing on product innovation. Additional sources of growth include new solutions, differentiation through software, and novel services.

Digitalization is table stakes for competitiveness, and a prerequisite for sustainability After many years of taking a ‘wait-and-see’ approach to digitalization, companies now realize digitalization is essential for them to succeed. Companies now rank digitalization (76%) and sustainability (72%) as the most relevant and important trends. There has been considerable investment uptick in both over the last two years, and manufacturers are investing and making progress in both areas with long-term goals in mind. The daunting nature of handling these two massive trends has been replaced by the realization that, when done right, they solve each other.

Reshoring and localization are gaining traction (and becoming a competitive advantage)
After decades of outsourcing, the idea of locating manufacturing within the market it serves is taking on new importance in wake of surging transportation costs, trade wars, geopolitical risk, the accelerated pace of climate events, and broken supply chains. More companies are pursuing or considering localization and reshoring; the U.S., Canada, and Mexico topped the list for intended destination for manufacturers surveyed. Among survey respondents, 52% stated they are implementing or expanding localization initiatives, and another 22% said they were piloting initiatives (with others limiting relocation to specific functions or products). A whopping 52% of manufacturers surveyed plan to build new facilities as part of their relocation strategy.

Technology leaders are much more likely to pursue lot-size-one or individualized manufacturing
Many manufacturers are pursuing local-for-local strategy based not only on the difficulty and cost of shipping a large product, but also because of local market preferences and the demand for specific functions.

Digitalization is playing an important role in the ability to deliver customized products, as well as the development of new products, solutions, and services. Customization initiatives and pilots are already being planned or are underway or expanding at 78% of companies; 34% of them are pursuing fully individualized manufacturing approaches, with the goal of lot-size- one (producing a single item) – the exact opposite of traditional mass production. Among companies that consider themselves to be early adapters, 54% are pursuing individualized manufacturing.

About Manufacturers Alliance Foundation
Manufacturers Alliance Foundation is the 501(c)(3) partner of Manufacturers Alliance. The Alliance Foundation provides educational opportunities for the manufacturing community and its stakeholders through insights, events, and tools for today’s most critical business decisions. The Alliance Foundation focuses on talent, technology, digital transformation, and competitiveness. Learn more about the Alliance Foundation: manufacturersalliance.org/foundation.

About Manufacturers Alliance
Manufacturers Alliance® powers leaders. We bring together an unparalleled network of manufacturing executives to advance their careers, grow their companies, and support the whole community. We accomplish our mission through peer communities, education, and business insights on the topics that matter most to the sector. Learn more: manufacturersalliance.org.

About Roland Berger
Roland Berger is a global management consultancy with offices in all major international markets. Driven by our values of entrepreneurship, excellence, and empathy, we at Roland Berger believe the world needs a new sustainable paradigm that takes the entire value cycle into account. As an independent firm solely owned by our partners, Roland Berger’s employees work in cross-competence teams across all relevant industries and business functions, providing the analytic approach and expertise to meet the profound challenges facing our clients and the world. rolandberger.com.

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