That’s (nearly) it folks! While this decade isn’t quite over, the end of 2019 and moving into 2020 has a feeling of change. And looking back, there have been massive changes over the past 10 years.
We’ve seen a growing use of automation and robotics, digitisation and data analytics. And watched 3G move to 4G and now 5G. More recently, innovations such as blockchain, IoT, AI and the cloud have changed the way we work.
We’ve witnessed the USA and China start a trade war, as five generations battle for dominance in the workplace. We’ve seen the rise of the flexitarian and a surge in milk alternatives, fake meat and plant-based products.
Think the future is about Gen Z? Find out how to innovate for an ageing world.
The biggest question now is: what will the next 10 years bring in the world of manufacturing?
We know this is a huge question to answer, but it’s worth trying – given the changes coming up.
And that’s why we asked our panel of experts for their opinions and 2020 predictions for Australian manufacturers.
Meet the experts:
- James Magee, CEO of Operations Feedback Systems (OFS) (follow James)
- Andrew Steele, Account Director at GS1 Australia, along with other GS1 industry specialists (visit GS1 Australia)
- Professor Pierre Pienaar, President of World Packaging Organisation (WPO) and Owner & Director, PackTech Solutions (follow Pierre)
- Dr Angeline Achariya, Executive Director, Innovation & Growth of Simplot Australia (follow Angeline)
- Mark Dingley, CEO of Matthews Australasia and Chairman of APPMA (follow Mark)
Get ready for these big changes in the 2020s
We asked our panel what changes they expect manufacturers and suppliers will need to prepare for the coming decade. Here are their 2020 predictions for Australian manufacturers:
Automate to reduce risk. “Supply chain automation will continue to become a key component of business transformation for large and small manufacturers to assist in reducing risk created by continually increasing costs, which are out of the control of the manufacturers – particularly utilities costs. This may even extend to the need to look for more offshore-component manufacture. Progressive manufacturers will look at ways to offset utilities costs through government subsidies and the implementation of alternative energy sources like solar or wind on premise.” – GS1 Australia
Check out 5 keys to unlocking the value of global supply chains for Aussie manufacturers.
Digitalisation and globalisation. “E-commerce is driving packaging trends. The way we buy products in-store versus online is completely different, yet Australian manufacturers are not yet designing packaging for e-commerce. If this doesn’t change, we’ll fall behind. You only need to look at Japan for brilliant examples of packaging design for the digital world. Digitalisation and globalisation go hand in hand. Whatever goes online, we have access to immediately, no matter where it is in the world. Think about the likes of [online marketplace] Alibaba. There’s no doubt that this business model will grow in the next decade, and manufacturers need to be ready for it.” – Professor Pierre Pienaar
What does the Amazon effect mean for Australian manufacturers?
Environmental change. “[One of the big changes Australian manufacturers will face is] the impact of the nexus of land, water and energy, which is already resulting in major challenges as we look to get more from less with our Earth’s resources. Remember, currently there is no Planet B.” – Dr Angeline Achariya
No ‘Planet B’ is one of the inconvenient truths in the future of food.
Food on-demand. “Within the food industry I think we are seeing a structural shift in the demand side with trends toward food delivery services and ready meals. Brands need to find ways to turn these megatrends into opportunities or risk losing market share in the 2020s.” – Mark Dingley
Better use of data. “We will see a better utilisation of master data and big data, and a more prominent role for data scientists as manufacturers continue to improve supply chain efficiency from farm to consumer, seek to produce more efficiently, sell more effectively, tailor marketing solutions to micro markets, run more targeted campaigns, maximise shelf life, and reduce waste. At the same time, a big challenge will be making sense of multiple data points and then using this to make insightful decisions.” – GS1 Australia
“While there was a lot of talk about data being king in the previous decade, the 2020s will be a time when this truly translates into revenue. With the rise of 2D data-embedded codes in packaging and 5G becoming mainstream, we will see the rise of the truly connected consumer.” – Mark Dingley
Tell your story. “As Gen Z enters the workforce trends such as the circular economy, sustainable/reusable packaging and veganism will continue to become mainstream. Combined with the connected consumer, these will become a significant threat for brands who don’t adopt new technologies in order to tell an authentic story.” – Mark Dingley
Here’s how Australian manufacturers can embrace a circular economy to deal with the recycling crisis, and how to get started with sustainable packaging.
The greatest change is change itself. “Navigating high-velocity change and ambiguity in a rapidly changing world; balancing the need for mass manufactured with bespoke and differentiated offers for consumers and retailers; and IoT and its opportunities and also challenges for a more transparent supply chain.” – Dr Angeline Achariya
Top challenges facing manufacturers in the 2020s
What challenges will manufacturers and suppliers face in the new decade? Here’s what our panel told us:
Shrinking workforce. “Consider these two questions: 1) How many young people in your circle, family, network, etc., are leaving school and university yearning for a career in manufacturing? 2) How many Australian manufacturers have an ageing workforce in their factories? The answer to these two questions points to the single biggest challenge I see facing the manufacturing industry over the next decade. Manufacturing operations is not a desirable career choice and many of the experts that have kept our factories running over the past 50 years are reaching retirement age.” – James Magee
Counterfeit packaging. “There’s so much copying going on and the amount of money we’re spending on anti-counterfeit packaging is unbelievable. It’s estimated as around $1 trillion, but nobody really knows how much. The problem is that more people are getting on the counterfeit bandwagon, so the problem is only going to grow. Manufacturers and packaging companies need to focus on development in this area.” – Professor Pierre Pienaar
Product innovation aligned to global trends and legislative requirements. “For example, sustainable, eco-friendly packaging formats or what is the next plant-based, big-bang product/concept to shift mindsets and consumer purchasing habits? A key challenge and opportunity will be to respond to consumer needs and trends through new products or services. The historical two-year, new-product -development pipeline will shrink as consumers and retailers demand more immediate responses. Small to medium businesses will be best positioned to respond to market trends with nimble, flat management structures enabling priority decision-making processes to develop and launch product to market within short timeframes. Companies will have months, not years, to respond to market trends.” – GS1 Australia
Resource woes. “In Australia, the twin macro challenges of water scarcity and rising electricity costs will continue to be a threat for the manufacturing industry throughout the 2020s.” – Mark Dingley
Making connections. “A challenge will be deciding if, as a manufacturer, there is a more direct path to the end consumer and if pursuing this is worthwhile. Also, establishing a connection for your product to the consumer both in the physical and online world. This is where standards such as Digital Link will come to the fore.” – GS1 Australia
Ingredient sourcing. “The cost and availability of input ingredients and sustainability becoming the price of entry in all choices made from ingredient selection and sourcing to manufacturing, supply chains and getting it in the hands of consumers.” – Dr Angeline Achariya
New generations. “Manufacturing automation will continue to grow in scale and popularity however knowledge and skills will be lost amongst generational change. The generational skills gap will become more apparent in the second half of the 2020s unless we can find ways to attract Gen Z to the industry fast.” – Mark Dingley
Top opportunities for manufacturers in the 2020s
What doors will open in the new decade? What should manufacturers and suppliers leverage for new growth?
Tap into growth of middle-class income earners. “In India, China and Indonesia, the growth of the middle class presents huge opportunities for Australia. How are we targeting them? Every machine exists for the sole purpose of producing something which will be used by the consumer. So, if the consumer has more disposable income than ever before, we should be looking to them and understanding their needs.” – Professor Pierre Pienaar
“The growing middle classes of SE Asia and their shift to a more western diet will provide abundant opportunities for Australian manufacturers.” – Mark Dingley
Global Food Forum wrap-up: how Australian food manufacturers can become Asia’s deli.
Personalisation. “There’s growing consumer demand for anything and everything when they want it, wherever they are. This move towards personalisation will become one of the key differentiators. [Another challenge and opportunity is the move from] offline to online and the need to create more experiences for consumers with blurring lines.” – Dr Angeline Achariya
Personalised packaging reaches beyond a first-name basis with customers.
Use technology to build a workforce with the skills for the future. “Every challenge presents an opportunity and what a wonderful opportunity we have to make the factory of the future a desirable place to work and apply your skill. Ten years ago, we couldn’t have imagined jumping in the car and taking a ride from a stranger (Uber), let alone paying to sleep in a stranger’s house (Airbnb), so who is to say that the manufacturing workforce of the future will look and function the way it does today? Based on the challenges it’s facing, I don’t think the industry can afford to stay the same!
“As a technology-solutions provider to the manufacturing industry, we are excited about the role that technology will play in the life of an operational expert – it already sounds like a more desirable job doesn’t it?! I imagine there is no shortage of highly qualified and talented folks who work and wish to work in the Tesla factories, so how might we bring some of this buzz to your everyday Aussie manufacturer? We don’t believe that working on a product as ‘exciting’ as an electronic car is at all mandatory, instead we believe that increasing the connection your operational workforce has with the performance of your assets, machines and business in general, is key. It often strikes me how differently companies approach performance monitoring, career expectations, growth, learning etc. of their ‘white collar’ employees versus their ‘blue collar’ employees. We believe in the next 10 years, operational experts will be in high demand – a sought-after vocation – and their impact on the business will be recognised and rewarded.” – James Magee
Priorities for manufacturers and suppliers in the next 10 years
With all these changes, what should manufacturers and suppliers put at the top of their list to set themselves up for success?
A global growth strategy. “Develop plans and access investment (ideally with government assistance) to expand outside of local markets. Maximise e-commerce trade platforms for growth and exploration of new product development through enhanced direct consumer feedback. And access and use data to drive better, more insightful decisions. Don’t be afraid to fail, but recognise it and move on. In other words, fail fast.” – GS1 Australia
Understand your customer. “Do we understand our consumer? The more I travel around the world, the more I realise this is an area of negligence. Take the supply chain: from the time you manufacture to the time your product lands on the end-consumer’s table, there might be 15 to 20 different consumers; that is, different people handling the product. You need to consider how to manage those contact points and ensure everyone has the information they need to fulfil their obligations.” – Professor Pierre Pienaar
Target the next generation. “Positioning businesses and brands to attract next-gen talent and consumers will be vital. Embracing the values of Gen Z will put many businesses out of their comfort zone, but will be a fantastic opportunity longer term.” – Mark Dingley
Build a strategy to attract and retain talent. “Manufacturers should prioritise their strategy for attracting and retaining the best possible operational employees. Start by actually listening and genuinely caring about your current crop! The core of the OFS product suite is captured in our name – Operations Feedback Systems – yet it continues to both surprise and frustrate me how much of the amazing feedback captured by our product falls on deaf ears. These are folks who may have spent eight hours per day for 20 years working in your business, who are providing insights and opportunities for improvement every day … in a one-way direction.
“On the flip side, I’m blessed to have some of the most amazing conversations with business leaders, such as the owner of our first Thailand customer Standard Can, K. Sathit Chayavivatkul, who six years ago implemented OFS software in what he recently described to me as a ‘game-changing decision’ for his business. A decision which has ‘completely transformed our culture’.” – James Magee
Collaborate and innovate. “Doing the same thing over and over again is not going to work for the next decade; the pressures and changing landscape requires manufacturers to evolve…quickly. Look to more collaboration along the value chain and forming partnerships for shared value co-creation together where the sum of the parts creates great value. Stand on the shoulders of giants by learning from others and other industries.” – Dr Angeline Achariya
Focus on active and intelligent packaging. “Active packaging isn’t new. It’s simply the art and science of making better materials to enhance the barrier structure, give an extended shelf life, etc.. As consumers, we are putting more demands on the system than ever before. For example, we want bananas at any time of year. How do suppliers provide this? With the right packaging.
“Active packaging now needs to do more, but increasing the barrier structures to ensure food lasts longer means it cannot be sustainable packaging. In other words, as consumers, we are causing the problem of unsustainable packaging. It’s important to come up with packaging that is both sustainable and can keep food for longer. But plastic is not the problem, it may actually be part of the solution. Our collective focus needs to be educating people – especially younger generations – around the impact of plastics on the environment and dramatically change our culture around waste and recycling. For example, the Noosa Council on Queensland’s Sunshine Coast are using sad face and smiley face stickers on residents’ bins to improve the sorting of waste into the correct bins.” – Professor Pierre Pienaar
Build the foundations for efficiency. “Efficiency in manufacturing will be key for us to remain competitive globally. Setting up your business with clear KPIs focused around efficiency and automated reporting/dashboards will be key. What we can’t measure we can’t manage! Data will be king as more business systems become integrated with Machine Learning and Artificial Intelligence. Make sure your business processes around data collection are in order as the outputs can only be as good as the inputs!” – Mark Dingley
OVER TO YOU
Now you’ve heard what our experts think, what are your 2020 predictions for Australian manufacturers in the coming decade? Most importantly, what are your priorities to ensure your business is ready for success in the year ahead?
We’d love to hear your thoughts – share in the comments below.
You can jump even further ahead with the Australian National Outlook – a look at the next 40 years.
Looking for insights and tailored information for Australian makers & movers, domestically and on the global stage? You’ll find it all here. Connect with us now!
Image credits: iStock/ Lisa-Blue (main), iStock/ sarawuth702 (2nd), iStock/ Igor Borisenko (3rd), iStock/ Urupong (bottom)