By Henning Dransfeld, Director of Industry Strategy and Solution at Infor
2023 is going to be another transition year for the high tech & electronics industry. Like every other industry, high tech is dealing with year three of the pandemic and the associated disruptions that have become SOP during that time. New technology, changing customer demand and overall the availability of new digital tools make 2023 a crucial year for manufacturers in the high tech space. Here are the major trends and priorities to track.
The Trends:
Coping with an increasing downturn in the high tech & electronics industry will be a challenge in 2023. As demand for many products slows, the industry is no longer suffering from the capacity constraints of recent years. High tech devices and products continue to permeate an increasing number of industries, but product sales are slowing in 2023. One of the biggest challenges the industry faces is to accurately reflect demand in production to avoid building up excessive capacity again. Good visibility and flexibility will be key in uncertain market conditions. Organizations will need to further invest in cloud-based analytics and artificial intelligence tools to get ahead and optimize.
Rapid lifecycle and quicker obsolescence of electronics products will put pressure on manufacturers to speed development and shorten the time to finished products reaching customers.
Implications for electronics manufacturing companies will include:
1. Flexible production in times of slowing demand â Talk of economic uncertainty and a looming recession may lead to a reduction in demand next year. High tech growth has been unprecedented until now, but the demand for products such as semiconductors and sensors is falling. To avoid excessive inventory, high tech companies must adapt quickly. To alleviate these pressures, high tech organizations will need to invest in cloud-based demand forecasting tools, such as analytics and artificial intelligence, to provide more flexibility and connectivity across businesses in 2023.
2. Adoption of Industry 4.0 â High tech organizations will continue to prioritize improving manufacturing operations on the shop floor by implementing Industry 4.0 technologies, which connect computers and systems to one another to create smart factories and enable digital manufacturing. By implementing Industry 4.0 solutions, businesses will be able to run processes more efficiently and smoothly with a smaller labor force. Especially as there is heightened talk of recession, Industry 4.0 technologies can assist with economic resilience.
3. Augmented reality/virtual reality will be deployed with business-driven motivation â According to the data and analytics firm IDC, top AR/VR use cases are to enhance the collaboration between employees and to develop and deliver new offerings to market quickly. This becomes a key factor in response to shortening product lifecycles.
4. Software-driven production will replace hardware â Manufacturers are keen to reduce complexity from hardware. Software in R&D and design can more efficiently increase capacity quickly and render an organization more responsive to market changes. This software must be provided based on a standardized architecture and through open and interconnected digital platforms to avoid rebuilding expensive silos.
5. The supply chain is changing, and vendor-managed inventory (VMI) is back en vogue â For example, as printing becomes an increasing part of electronics manufacturing, the demand for conductive links and flexible films is on the rise. Understanding product availability and demand forecasts becomes key. The supply chain for the production of electronics components and industrial electronics gets more dynamic. The silicon chip shortage is pushing electronics manufacturers to deploy more sophisticated forecasting for components like circuit boards. VMI is en vogue again, to reduce delivery cycles and increase internal production capacity.
6. Companies will search for alternative materials â As supply chain woes have become the norm in the post-pandemic era, this materials research is critical for the viability of the industry and to improve overall strategy. Once high tech organizations determine methods to circumvent these global challenges, the industry will be better positioned to meet customer demand.
The 2023 Agenda: Optimize increased capacity and flexibility through standard digital platforms
IDC was the first to assert that electronics producers have to flexibly adapt to economic uncertainty to stay relevant beyond 2022. Use collaboration to create visibility, and link early demand feedback to supply/product requirements changes. Creating a more dynamic and agile intelligent networked high tech factory is not just up to the executives; IT also plays a major part. And the IT industry is in the midst of a large transformation, which has now reached core systems including its cornerstone: enterprise resource planning (ERP). The legacy ERP monolithic model is giving way to a more modular, cloud-based hub-and-spoke networked approach, which can adapt and scale in line with business priorities. Industry-specific requirements for high tech & electronics in 2023 should be met with a packaged, vertical ERP solution. This solution will address these complex requirements with an integrated, highly standardized, and preconfigured set of pliable, multi-tenant cloud functionalities that can be deployed quickly. These functionalities should include:
– Flexible contract management: The ability to adjust vendor contracts on the fly during operations, with pricing visibility and flexible options to meet evolving needs.
– Flexible inventory management: Full visibility for quick decisions in parts and inventory through alternate part numbering, serial number traceability, and drilling down into lot and sub-lot components.
– Flexible innovation upgrades: Accelerate product development cycles with integrated product lifecycle management (PLM) and quick extensibility with the no-code/low-code toolset.
– Flexible manufacturing: Alternative planning capabilities and flexible solutions supporting printed circuit board (PCB) manufacturing.
– Flexible for quick expansion: Quickly set up new branches or divisions with out-of-the-box localizations that support manufacturing operations in multiple countries.
