What’s Driving Manufacturers’ Plans for Tech Investments?

The U.S. manufacturing sector has been through the wringer over the past few years. COVID, supply chain disruption, extreme weather events, and global conflicts have added a heavy dose of uncertainty. However, manufacturers’ resilience and determination are paying off in market stabilization.

Sikich recently partnered with Manufacturing Dive to survey 150 manufacturing executives. Our findings reveal optimism about digital transformation. While much of what you hear is, “Will AI take manufacturing jobs?”, the reality is more positive, with 80% of manufacturing executives ranking digital transformation as a critical initiative they’re more than willing to undertake.

Manufacturing Technology Adoption Rates

Our survey found that only 1% of participating manufacturers consider themselves laggards and 6% late adopters of technology. A little less than half called their company an “early adopter” of the newest technology, and a quarter say they are an “innovator” regarding AI and digital disruption. Only 23% rode what they consider the “average adoption curve.”

These findings signal a significant shift from 2021, indicating that more manufacturers than ever are embracing technology innovation. The survey also found that half of manufacturing companies are increasing their tech investments slightly and 33% are going all in with a significant investment in their tech stack in the past year.

The three top technologies respondents are considering investing in over the next 12-18 months are CRM (customer relationship management), ERP (enterprise resource planning), and DMS (demand management system).

What’s driving these investments?

Meeting risks head on: Top of mind for many of the survey participants were security threats and vulnerabilities; environmental, sustainability and governance issues; regulatory compliance; and poor supply chain visibility. The hope is that technology can help them mitigate these risks going forward.

Increase efficiencies: Inefficiencies and productivity issues are a top concern for manufacturers, and one they hope will be improved by technology. In Sikich’s latest Manufacturing Pulse survey in February 2024, the cost of labor and gaps in skilled labor were critical challenges for manufacturers. About three-quarters of manufacturing companies have implemented one or more operational efficiency projects in the past three years, with over half the projects resulting in cost savings. The same share plan to implement a similar project in the next 12 months.

Improved security, convenience and cost savings: About half of participants said that they are considering an ERP investment not only to expand their ERP’s footprint but also to transition to the cloud.

Seamless integration: Breaking down silos across the organization drives better decision-making, increased quality control, greater visibility and lower costs. Three out of five participants also consider it “very important” that their engineering systems such as CAD or PLM integrate with manufacturing applications.

Leveraging AI: A top benefit that organizations hope to achieve when considering a new or expanded tech investment is AI functionality. The main area of interest in AI for most organizations, according to respondents, is robotic process automation, named by 60% of participants. Machine learning for demand forecasting and predictive analytics were also popular areas of AI interest as the need for supply chain visibility and agility increases.

Partner with Sikich to Move Your Manufacturing Tech Investments Forward

When it’s time to modernize your technologies, don’t go it alone. Reap the transformational benefits of technology as soon as possible—while avoiding the disruption, budget and schedule overruns, risk, and uncertainty of poorly planned deployment projects. Sikich has developed the HEADSTART approach for manufacturers, designed to lower risk and speed deployment. Learn more.