The Future of Manufacturing


The rapidly emerging manufacturing technologies like the internet of things, advanced robotics, artificial intelligence- also called industrial 4.0 technologies- are expected to reshape the entire manufacturing landscape. Moreover, the evolving economics of production, including changing customer requirements, make manufacturers create new ways of manufacturing products. However, manufacturing remains essential in developing the advanced world. At the same time, the manufacturing sector has evolved to the extent that it brings both opportunities and challenges for business leaders and ensures they don’t rely on the older manufacturing landscape. 


The Major Report from Mckinsey Global Institute presents that manufacturing strengthens the global economy and will probably transform in the coming years. The following things were concluded in the report:

  1. The manufacturing industry is evolving. The manufacturing sector promotes innovation, trade, and productivity more than any growth or employment. 

  2. Manufacturing is a versatile sector with five different industries having specific success drivers.

  3. Manufacturing is entering a new and dynamic phase. This will provide new opportunities to global manufacturers. 


Manufacturing Role is Evolving

Globally, the manufacturing industries are growing. It now accounts for approximately 16% of GDP and 14% of employment. However, the sector’s size depends on what stage of development it is in. Furthermore, when economies industrialize, the manufacturing industry, employment, and growth also rise quickly. However, when the share of GDP increases, it falls in an inverted pattern, including the employment share. The primary reason behind this is that when wages increase, customers have more money to spend on products and services, resulting in the growth of that sector. Thus, making it an essential source of growth and employment in the manufacturing industry. 

Moreover, the sector is evolving so that it has started making its traditional view completely outdated. Additionally, service inputs contribute to the most significant activity in the sector. Moreover, in the United States, every single dollar of manufacturing output needs 19 cents of services. Also, more than half of the employees work in services roles like office support staff or R&D Managers in the manufacturing sectors. 


The Sector is Versatile and Not Monolithic

Do you know that no two manufacturing industries are alike? Some industries will be more labor-intensive, while others will involve more knowledge-based work. Some depend on heavy transportation, while some rely on their customers for problem-solving. There are five different segments in the industry having various production factors for building factories, carrying out R&D operations, and going to market. 

The most significant segment of gross value-added output is chemicals, pharmaceuticals, and autos. These segments rely heavily on local markets for global innovation and production. They are pretty R&D intensive and need market proximity. 

Another largest segment is regional processing. This sector involves industries like beverages, food, and printing. On the other hand, the smallest segment produces labor-intensive trades with just 7% of global production. 


Manufacturing is Entering a New Phase

By the end of 2025, globally, new consuming classes will be evolved. Most of the evolution will be in the developing economies. As a result, it will create new opportunities in the market. However, in the developed markets, the demand will be fragmented because consumers demand more after-sales service. Furthermore, with rich innovations in materials, you also can drive further productivity gains across geographies. 

However, these opportunities arise in incredibly challenging landscapes. Moreover, in some low-cost labor sectors, wages are increasingly rising. 


Manufacturers Need to Implement New Approaches, Strategies, and Technologies

Companies must develop a highly comprehensive understanding of evolving market trends and customer needs. This will require the implementation of agile approaches and strategies for planning. 

The biggest challenge for manufacturers is to approach these decisions in a very subtle manner. For example, labor-intensive segments will always have low wages. Still, other segments that involve more complex requirements must consider consumer insights, low-cost transportation, skilled employees, and more. 

On the other hand, for policymakers, supporting manufactures and competing globally means that policies must be grounded based on a detailed understanding of the diverse industry segments. Furthermore, policymakers should also consider their short-term and long-term goals for future growth and innovation. 

The two significant priorities for both businesses and governments are education and skills development. Therefore, organizations need to advance their R&D Capabilities and expertise in data analytics and product development.


KloudPLM helps your business enter into the new future of the manufacturing world. Build on Salesforce, KloudPLM is a cloud-based platform equipped with industry 4.0 technologies that provide product innovation and increase manufacturing speed. Schedule a demo to find out how KloudPLM can help you transform your business processes.

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