DATAHONE is leading the way in smart manufacturing solutions and is set to become one of manufacturing’s benchmark businesses for digital transformation.
The SME has already established a strong presence across the North, first established in Leeds and later expanding into the North West at Liverpool Science Park.
At the beginning of 2022, DATAHONE spent considerable time undertaking an in-depth survey of 50 SMEs to gain insight into the challenges facing manufacturing in 2022. Their findings have led to the creation of a White Paper and thought leadership piece.
Datahone’s research investigated the headwinds facing manufacturing this year but also touched on the opportunities within the industry that businesses should be looking to exploit. Most notably, the technologies relating to Industry 4.0 and monitoring of production within the factory environment.
Challenges facing Manufacturers in 2022
While margins for many manufacturers around the UK are likely to be squeezed, in DATAHONE’s view, it’s crucial for them to garner every bit of productivity within their production process. They have been able to source their research from amongst others, the Bank of England, IMF, ONS, EU, The Financial Times, The Manufacturer magazine, MakeUK, Gov.UK.
Some of the largest concerns for the manufacturing sector in 2022 centre around rising energy and raw material costs. The scarcity and supply of energy to the UK indicates that prices are likely to increase further throughout the year and into next. Raw materials including oil (vitally important for the production of plastics and pharmaceutical products) and magnesium (almost all of which is produced in China) have and will continue to affect both the cost and speed of production to manufacturers in the UK. The full White Paper discusses both issues in detail.
Another challenge to UK manufacturing is supply chain and shipping concerns. Scarcity of products has resulted in manufacturers having to adopt a ‘just in case’ process as opposed to the usual ‘just in time’. This method of increased stockholding has placed a strain on profit margins and at least for the meantime, this will continue for the remainder of the year. DATAHONE’s research examines the large rise in cost of shipping containers since 2021, with a container jumping from around £2,000 to £20,000. Again, further adding to the squeeze on margins.
UK inflation has been a big concern over the last six months or so. Predictions in late 2021 have now been eclipsed by the actual figure of 7% announced in March 2022. This is the highest rate of inflation seen since 1992. Concerns over the increase of rising costs has been expressed by many manufacturers, with Unilever announcing their intentions to increase prices further due to their continued rise in overheads. Added to this is the 1.25% increase in NIC’s for the next tax year and beyond.
Opportunities for Manufacturers
DATAHONE’s research has looked into some of the positives for manufacturers during the current year including the Chancellor’s announcement of the super deduction tax relief offering 25p on the pound for capital purchases, the vast amount of funding for innovation schemes available and the likelihood that (for some) of an economic upturn as we look beyond the Covid 19 pandemic.
The UK Government has recognised the importance of the technologies coming out of Industry 4.0 by creating several schemes to help fund digitalisation projects in the manufacturing industry.
Made Smarter, and many other schemes like it, has done some fantastic work with UK manufacturers in helping them to embrace digital technologies within their production process. DATAHONE’s own Intelligent Factory service has provided manufacturers with real-time data analytics to ensure that management can make quicker and better decisions in an effort to become as productive as possible.
Many of the issues discussed within the full white paper have a negative impact on profit margins: Real-time data analytics provided by Intelligent Factory however are helping to protect them. One reason why our international competitors outperform the UK in productivity has been their greater willingness to invest in new technologies, many of which are grouped under the collective term Industry 4.0.
To download the full White Paper discussed in this article, please follow the link here.