Navigating industry shifts: An outlook on 2024
Summary
In 2024, companies will manage workforce shortages, sustainability demands, cost pressures, and innovation pace. Digital transformation offers solutions, and those who embrace it will overcome challenges and thrive.
Now that we are well into the 2024-25 fiscal, it’s time to consider how the trends and challenges of 2023 will influence the year ahead. Last year, amidst uncertainty, companies across industries persevered, envisioning a promising future. The market saw innovations like the growth of smart and connected products and increased clean energy interest, aimed at improving functionality and user experience through software and electronics. Challenges related to supply chain management, workforce dynamics, and sustainable innovation spurred uncertainty while also offering opportunities for creative solutions.
As per Colliers’ report, India’s manufacturing industry is expected to reach $1 trillion by 2025-26 driven by emerging themes such as advanced technologies, sustainable practices, Industry 4.0, a focus on local manufacturing, AI integration, 3D printing adoption, and IoT-driven processes. However, looking forward to 2024, it is imperative to address the challenges which will allow us to examine each trend relative to the others and assess how it has changed over the last twelve months.
Decoding the five pressure gauges
Considering this set of pressure gauges, with one dedicated for each trend or challenge, we can think about how the readings on these pressure gauges will change from 2023 to 2024, and about what may be driving each change in pressure:
- Workforce (Up): The challenges related to a changing workforce not only persist but are expected to grow more intense in 2024. The market demand is boosting the need for highly qualified engineers in the systems, electrical, and electronics domains. The next generation of engineers and technicians brings ample talent and passion to the industry but not quickly enough to reinforce teams in need of resources. Consequently, various industries are facing shortages in key roles, spanning from engineering to manufacturing and beyond, leaving companies to explore innovative approaches to replace outgoing talent and experience by blending fresh talent with new technologies. Furthermore, Government initiatives such as the Skill India Digital (SID) programme aim to enhance the innovation, accessibility, and personalisation of skill development, with a specific emphasis on digital technology and Industry 4.0 skills, play a vital role in fostering a multi-skilled workforce in India.
- Sustainability (Up): Companies are adopting multiple incentives and forces pushing the industry towards a more sustainable future, including new regulations, new business opportunities, and the ability to drive social change while also establishing positions of industry leadership in environmentally friendly operations. Going forward, the pressure on companies to address climate change and improve overall sustainability will continue to grow. This is a key focus area for Indian companies, and initiatives like the Green Credit Programme will contribute to bringing India closer to its Green India goal. Businesses must adopt sustainable measures to prevent significant penalties, whether from government entities, lost business opportunities, or tarnished brand image.
- Pace of Innovation (Even): A continuous trend of accelerating innovation prevails across many industries and will persist in 2024. Companies continue to grapple with faster development cycles driven by the necessity to innovate to stay ahead of the competition. Although this demand creates significant pressure, it is anticipated to largely remain unchanged from 2023.
- Cost (Up): Cost challenges are consistent with worldwide trends as sectors are impacted by higher labour and material costs. On the consumer side, costs are on the rise, reducing both willingness and ability to bear any additional costs increases. Consequently, companies are unable to increase prices to offset increased costs and must therefore seek to increase efficiency to manage costs and maintain their operating margins.
- Supply chain (Down): Supply-chain pressures have eased, especially with the recovery of silicon chip production. Despite this decline in pressure, companies must remain vigilant to the next disruption. There is no telling when or where the next disruption will occur, as was demonstrated by the COVID-19 pandemic.
But the question arises — how do companies get ready to take on the challenges of the future? To thrive in the future, companies must look beyond immediate fluctuations in industrial pressures and adopt a strategy to become more resilient, agile, and adaptive. The most effective approach is through digital transformation, enabling companies to manage their businesses in both the real and digital worlds. This unlocks a critical resource: data, enabling its flow between all stakeholders involved in product development and production process. While data is abundant, the true differentiator lies in those who merely connect silos and those who harness data to generate deeper insights and drive value for the business. Doing so enables companies to pursue higher levels of maturing in their digital transformation, enabling even more powerful capabilities.
Path towards digitalisation
The success of a digital transformation programme depends on not just tools and technology but also on how these are used, how individuals adjust to change, and how procedures are changed. During COVID, companies hurriedly acquired tools without assessing their actual needs, and many of these companies never invested time or effort into understanding their new tool(s) or updating processes for optimal utilization, hindering potential benefits. To fully harness the capabilities of digital transformation, companies must identify tools driving process transformation, optimize/redefine processes, educate users, and provide ongoing support.
Technology plays a key role in enabling digitalized solutions to tomorrow’s challenges. Technology partners can offer much more powerful solutions along with industry experience and technological expertise to kickstart digital transformation and support companies along their journey. In the evolving landscape, AI and IT/OT convergence will further revolutionise the processes, enabling faster data processing, increased innovation, and informed decision-making in manufacturing.
Into the future with digital transformation
Digital transformation is crucial in addressing immediate pressures coming in 2024, offering companies a strategic evolution plan by unlocking the potential for higher-level functions like automation of data management and eventually the closed-loop optimisation of products and processes. The journey includes five major milestones: configuration, connection, automation, generative design, and closed-loop optimisation.
Leaders are generally entrenched in the first two stages of configuration or the switch from a document-based to a model-based data framework, and connection, which focuses on breaking down siloes that isolate model-based data, enhancing traceability and accessibility of the data. However, higher levels of digital transformation maturity leverage advanced technologies to work as a force multiplier for engineers, industrial planners, technicians, and more. These higher forms of automation rely on AI to transform engineering and other processes. The role of AI will continue to grow throughout the digital transformation journey. The fourth level, generative design, further leverages the capabilities of AI to generate designs of products, manufacturing processes, and other artefacts in line with a company’s design history and based on user inputs.
AI-powered generative design can work across domains to integrate varied sets of requirements and optimize performance at a system level. The final stage implements this generative design technology in a closed-loop process of generation, evaluation, iteration, and selection, enabling teams to achieve complex tasks efficiently.
To reiterate, digital maturation is a process that companies should begin with a plan and a long-term perspective. Adapting to day-to-day challenges necessitates agility and strong partnerships throughout the industrial ecosystem. Companies that embrace this journey will not only overcome the challenges and pressures of 2024, but surge ahead of the competition by advancing faster, operating more efficiently, and developing sophisticated products and processes.
— Mathew Thomas is Country Manager and Managing Director, Siemens Digital Industries Software India
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