MANUFACTURING/SUPPLY CHAIN
The manufacturing sector is experiencing significant technological advancements, with automation and artificial intelligence (AI) being key tools to address workforce turnover while maintaining quality standards. One of the industry’s primary concerns remains the supply chain, but an even greater challenge is replacing experienced workers who are aging out of the workforce. Although manufacturers have identified technological initiatives and other strategies to manage these issues, the follow-through to invest in and scale these systems remains a significant obstacle. In 2024, talent acquisition and quality control remain the top challenges, with talent attraction and retention being the most critical issue for this year, cited by 33% of Clarity Report respondents. This challenge is particularly acute for small businesses, with 60% highlighting it as their number one concern. The transition to a new workforce must be managed carefully, as maintaining high quality standards is crucial.
A new challenge identified this year is managing legacy systems, which ranks third overall. The difficulties of securing these systems, high maintenance costs, and loss of domain knowledge as experienced employees retire are significant issues. Legacy systems also hinder the incorporation of automation, a clear priority for manufacturers. Automation is increasingly seen as a solution to talent and quality control challenges, with 44% of respondents selecting it as a strategy for the upcoming year, rising to 60% among small businesses, which have a large gap to fill (only 14% automated versus 49% overall).
Implementing automation is complex, particularly for small and mid-size businesses that struggle with technology acceptance and the significant cost investments required. In contrast, the largest manufacturers cite scalability as their main challenge in building on their more advanced automated processes. Beyond automation, AI and machine learning (ML) are also key technological focuses. Implementation of AI/ML systems was the top digital transformation initiative, selected by 41% of respondents, up from 29% last year. Deploying more robotic automation tied for second among digital transformation initiatives at 36%, alongside process reengineering, a perennial focus for optimizing manufacturing and other business functions.
High-performing manufacturers, defined by the highest profit/loss margins, are leading the way in automation. Nearly all of this group (89%) report having automated operations, compared to less than half of the other respondents (43%). High performers view automation as a solution to talent challenges, with only 22% citing talent attraction and retention as a top challenge, compared to 35% of other respondents. Additionally, 56% of high performers leverage automation to address their challenges, versus 42% of the broader group. Their key performance indicators (KPIs) also differ, with only 11% tracking capacity utilization, the top KPI overall, while more than half of high performers (56%) track inventory turns.
Manufacturers are increasingly adopting technology to tackle talent shortages and quality challenges. The continuous turnover in the workforce has left manufacturers struggling to replace their most experienced workers. In response, automation, AI, and other technological strategies are becoming central. However, these innovations also bring unique challenges that manufacturers must navigate.
How does Costpoint™ help?
Streamlined Supply Chain Management: Costpoint™ enables aerospace and defense contractors to effectively manage complex supply chains by integrating procurement, inventory, and logistics processes. This integration ensures real-time visibility and coordination across the entire supply chain, reducing delays and improving efficiency.
Advanced Inventory Control: Costpoint™ provides robust inventory management capabilities that are critical for aerospace and defense contractors. It helps track inventory levels, manage stock locations, and monitor usage rates, ensuring that critical components are available when needed while minimizing excess inventory costs.
Automation with TIP SFE: By leveraging the Technology Integration Platform (TIP) with Shop Floor Execution (SFE), Costpoint™ automates various manufacturing and supply chain processes. This automation reduces manual effort, minimizes errors, and accelerates production cycles, leading to increased productivity and cost savings.
Enhanced Supplier Collaboration: Costpoint™ facilitates better collaboration with suppliers through its supplier management features. It allows contractors to manage supplier relationships, evaluate performance, and streamline communication, ensuring that suppliers meet quality standards and delivery schedules.
Real-time Analytics and Reporting: Costpoint™ offers real-time analytics and reporting tools that provide aerospace and defense contractors with critical insights into their supply chain operations. These tools enable contractors to make data-driven decisions, optimize supply chain performance, and quickly respond to changes in demand or supply chain disruptions.
Costpoint™ stands out as the only ERP developed specifically for government contractors, uniquely tailored to address the stringent requirements and complex challenges of this sector. Its comprehensive suite of tools ensures regulatory compliance, enhances project management, and provides accurate cost accounting, all while maintaining robust security and data protection. By offering advanced features for supply chain management and leveraging automation through platforms like TIP SFE, Costpoint™ empowers aerospace and defense contractors to optimize operations and achieve greater efficiency. Dedicated to the success and survival of the industry, Costpoint™ is an indispensable asset for government contractors, providing the specialized support necessary to thrive in a highly regulated and competitive environment.
