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The Future of Manufacturing by Matthew Chang in Supply Professional Magazine


Check out Matthew Chang's feature in Supply Professional Magazine where he explains the future of manufacturing as it relates to workers, artificial intelligence, robotics, and blockchain. Click here or continue reading.


New technologies are enabling manufacturing capacity across North America.


The future of manufacturing is that we will make things once again.  North America is adjusting to the rebalancing of global trade and supply chains.  This includes the three manufacturing power houses, Canada, USA, and Mexico, each of which are reclaiming manufacturing capacity that had been sourced overseas for the last several decades.  New production is emerging in North America around fabricated metals production, technology hardware, final assembly, and retail goods.  The three nations are beginning to expand their trade as block, which also means more manufacturing occurring in North America.  North America is making again, and this begins a virtuous cycle where the more we make, the more we will look to make.


 

In 2022, USA-Mexico Trade of goods accounted for $779BN dollars and USA-Canada trade accounted for $793BN dollars of goods.  From 2009 to 2022, USA manufacturing capacity has grown from $1.9TN to $2.3TN, Canada from $175BN to $204BN, and Mexico from $160BN to $222BN.  The overall growth between the 3 countries is 22% and $491BN over 13 years, with inflation removed from the figures. Given the lag between demand and increasing capacity, I expect the pace of expansion of the manufacturing sector in North America to expand at a more rapid pace.  The supply chain, shipping, and manufacturing capacity problems of the COVID-19 pandemic time period are just now being addressed with new CAPEX spending for projects.  Expanding capacity in 2023, 2024, and 2025 will create more options to fulfill orders at the local, regional, and national level, thereby decreasing our dependence on goods shipped over the seas.


Given the lag between demand and increasing capacity, I expect the pace of expansion of the manufacturing sector in North America to expand at a more rapid pace.  

 

Workers.  The central question around manufacturing capacity is the ability of labor to meet the demand.  At the same time, we see manufacturing capacity increasing year over year, labor is becoming tighter.  In 2023, 5% of USA manufacturing jobs are open, companies are looking for skilled labor.  With increasing manufacturing capacity and hundreds of thousands of job openings we must identify solutions to the labor shortage.  Technology solutions are rising to assist with the labor shortage.  Upskilling workers to achieve more production per person allows for higher wage growth among manufacturing workers.  A host of new technologies are working through pilot stage of development, soon to be headed for industry deployment at scale.  Those technologies include AI, robotics, and blockchain.  More specifically, large language models, generative AI, collaborative robots, industrial internet of things, cloud-based software, autonomous vehicles, and advanced sensing.  There is a soon-to-be-here list of technologies that are transitioning from academia to industry and will be available in the next 5-10 years to continue expanding the productivity of each worker.


 

Artificial Intelligence.  Certainly, this topic has claimed its fair share of the headlines this year, as well as accounting for a large amount of the growth in the stock market.  AI comes in many forms, some of which have been in everyday use for a very long time.  The early beginnings of AI date back to the 1950’s and include military applications.  However, the emergence of ChatGPT was an introduction to AI for the lay person, because now you can talk to an AI product, and it can talk back.  AI will have several major impacts on increasing productivity and decreasing labor requirements in the use of autonomous navigation, machine learning, and generative AI that can talk about or paint a picture of an idea.  These tools will allow workers to be physically more productive when aided with intelligent machines.  It will also allow for workers to be more productive when dealing with information and managing data.

 

Robotics.  Robotics come from nearly everywhere in the world.   Almost every major region of the globe has carved out a robotic specialty for itself.  Robots today come in many form factors, including aerial drones, vehicles, robotic arms, and many form factors that imitate animals (spiders, dogs, birds, etc.).  Robotics are divided into two primary categories, which are:

1)      high precision, high speed

2)      human friendly, collaborative

High precision and high-speed robots usually work as part of a larger automated system and are closed off from direct contact with humans.  To envision this type of work, imagine a high-speed beverage bottling facility or an automated automotive manufacturing center.  These types of robotic implementations are increasing in number year after year, but they do require a stable set of products to manufacture and retooling can be quite complicated and expensive.  Human friendly robots are being upgraded with advanced sensors and machine learning to collaborate with humans in the work.  Collaborative robots, aka co-bots for short.  Cobots are enabling automation of everyday tasks in a wider variety of workplaces, especially smaller workplaces with varied production requirements.  Cobots excel in working safely around humans, aiding humans, and navigating in pedestrian environments.  Robotics in general will continue to increase production capacity faster than labor growth.

 

Blockchain.  The use of blockchain in manufacturing promises to clear up many of the inefficiencies and ambiguities of our global supply chain.  Currently, there are entire commodities markets of goods (gold, corn, oil, timber) where the origin of the raw material cannot be identified and the conditions of mining, growing, and manufacturing cannot be identified.  The data demands were far too complex for systems of the past.  Layer on top of this new economy desires, such as tracking carbon scores, or recyclability and the system is broken.  Prior to block chain, there was no organized and cost-effective way to track all of the contributory data required to understand the mark-up and origins of manufactured goods.  Blockchain pairs well with low cost and low power sensing, e.g., the industrial internet of things (IIoT).  Now, data can be recorded at various points along the supply chain to track efficiency, environmental conditions, and geospatial data. This increased amount of information, kept automatically, and with very low cost of acquisition increases the quality of goods, the social aspects of manufacturing, and creates transparency into on-time performance.  Polygon and Algorand are some of my favorite blockchains for supply chain that might not be everyday household names yet.

 

The landscape is changing with a growing manufacturing sector and a tightening workforce.  A cadre of technologies are coming online to fill the gap.  Early adopters are pushing projects forward that are powered by artificial intelligence, robotics, and blockchain technology.  The push to upskill workers with more technology tools will lead to higher productivity.  Education, training, and university curriculums must be adapted to further reinforce the flow of skilled labor into the manufacturing sector, especially with the rising technology demands.  Manufacturing companies must continue to choose North American expansion as a strategic priority.  Commodity supplies must be stabilized in supply and pricing.  With these structural changes in place, the future of manufacturing is very bright.  As workers are armed with a set of high-tech tools, working in manufacturing will be considered very cool.


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