UK manufacturing in 2023: Sustainability, digitalization and the power of data

It has undoubtedly been a turbulent few years for the UK manufacturing industry. On top of the supply chain headaches caused by Brexit and the pandemic, spiraling energy prices have presented new financial challenges in recent months. All of this comes as larger, darker clouds loom overhead, with recent S&P Global/CIPS UK Manufacturing PMI data showing that the UK manufacturing industry is on the brink of a recession.

To succeed, or even just keep afloat, in this environment, it is now more important than ever for manufacturers to innovate and drive greater operational efficiency. So, what are some of the actions manufacturers need to take to be successful in 2023?

1.       Use the power of data for visibility and control over factory energy costs

The government’s initial six-month Energy Bill Relief Scheme only runs until March, making it hard for manufacturers to build accurate financial forecasts beyond Q1. Although 'energy intensive' sectors were previously given additional government support, there can be no guarantees on what will happen from March onwards. This means manufacturers need to be doing everything they can to control and limit unnecessary energy consumption.

This is where data holds the key. The advance of Industry 4.0 means there are eyes and ears in every corner of the factory, and these insights can give great visibility over exactly where energy is being used. This can fuel intelligent decision-making, from operational decisions such as which machines to use, when and what for, to how much they are charging customers. These data-driven insights will play an increasingly crucial role as manufacturers battle spiraling energy costs.

2.       Speed up the journey to digital

2023 simply has to be the year that the penny drops on digital. UK industry must accelerate the journey to digital, as US manufacturers are increasingly eating their UK counterparts’ dinner. Our research shows 94 percent of UK manufacturers believe the industry has fallen behind the US due to a lack of digital investment, and 93 percent of them believe this poses a risk of going out of business in the next decade.

This may sound dramatic, but continuing to use pen, paper and spreadsheets for increasingly complex operations poses a huge risk. It is concerning to think that major nuclear and space projects are potentially being run via spreadsheets. At best, this approach can cause inefficiencies and lead to mistakes, at worst, it could lead to project failure and leaders losing their jobs. This means that the time to act is now, otherwise the UK industry risks falling further behind.

3.       Be ready to prove sustainability

With mounting political and public pressure to address the climate crisis, sustainability simply has to become a more central factor in strategic decision making for manufacturers. The importance of a sustainable future was echoed at COP27, heaping the pressure on the manufacturing industry which was already trying to work towards those commitments made at COP26, including a move away from coal as early as 2030, and delivering net-zero carbon footprints by 2050.

Against this backdrop, in 2023 we will see manufacturers adapt their business models in line with sustainability goals, whether that’s setting out to reduce their reliance on plastics, or hydrocarbon-based raw materials. With regulatory scrutiny only set to rise, manufacturers simply have to put themselves in a position to provide proof of their progress, and be ready to implement complete product traceability reporting to verify the make-up of each and every product.

Navigating a path forward

Amid challenging times, manufacturers can weather the storm by championing data and accelerating their digital journey. By becoming more innovative and agile, UK manufacturers can have better visibility over energy use, and start closing the gap on tech-savvy US competition. It’s also important manufacturers are ready to prove they are meeting sustainability regulatory demands. If they can do this, UK manufacturers will be better positioned to navigate the prevailing macroeconomic headwinds, and keep the ship sailing in the right direction.

Image credit: agsandrew/ depositphotos

Rashpal Mundi is Senior Partner Manager at iBASEt.