The business of manufacturing is changing rapidly in Canada and around the world. Customers are expecting more customized, and often highly personalized, products and services that are reliably delivered in smaller volumes as needed and at low costs. Stakeholders, governments, and investors are more and more demanding, especially when it comes to environmental sustainability, social responsibility, and, workplace and corporate governance practices. 

Labour and skills shortages are widespread and becoming more pronounced – a quarter of Canada’s manufacturing workforce will retire by 2030 while employees under 30 currently account for only six percent of workers in the sector. Global supply chains are being disrupted by pandemic-induced closures, logistics bottlenecks, trade and geopolitical tensions, shortages of critical parts, and escalating costs of production. Intense competition is driving prices down for high volume commodity producers. And the rapid pace of technological change is disrupting markets and threatening to turn many manufacturers into commodity producers, if not driving them out of business altogether.

Manufacturers need to navigate a risky business environment which has become highly volatile, uncertain, complex, and ambiguous all at the same time. But there are opportunities for business growth as well. Manufacturers will play a pivotal role in addressing some of the world’s most pressing problems in addressing climate change and improving environmental sustainability, supply chain resilience, food and water security, and health care. Next Generation Manufacturing Canada (NGen), Canada’s Global Innovation Cluster for Advanced Manufacturing, aims to ensure that Canada’s advanced manufacturing sector capitalizes on those opportunities to create jobs, generate economic growth, and deliver environmental, health, and social benefits for all Canadians.

The role of technology is critical as we look to the future. Never more so than in manufacturing, the economy’s major integrator of technologies. Digital technologies are allowing manufacturers to gather information about their products, production and business systems, suppliers, customers, and business partners like never before. Today, every product or piece of equipment is potentially a data platform, and digital technologies are being used to connect the information being gathered from sensors embedded in smart products and equipment, across manufacturing processes and operating systems, facilities, and supply chains. They are, even more widely, linking customers, investors, and other stakeholders directly to the “shop floor” where products are being made.

Connectivity and advanced computing are enabling companies to deploy data analytics and artificial intelligence to discover problems they might not have known existed in their complex manufacturing processes or supply chains, automate their production systems, and deliver new types of data-based services for customers. As a result, manufacturers are improving the quality, speed, efficiency, and resilience of their operations, lowering costs, and developing new ways of creating customer value, new business models, and new sources of revenue that help distinguish them from their competitors.

Digitization is also allowing manufacturers – and researchers – to achieve a far better understanding of the science of manufacturing. From genomics and molecular science to materials chemistry and the physical interaction of materials and equipment, digital technologies have enabled rapid advances in fields ranging from biomanufacturing, nanomanufacturing, additive manufacturing, and electronics to more traditional yet highly innovative sectors like specialized metals and other structural materials, metal fabrication, textile computing, food and resource processing, medical devices, smart machinery and equipment, planes, trains, and of course, automobiles. Our transition to a net-zero economy will be possible only if we use advanced digital capabilities to address the strategic innovation challenges that stand in the way of sustainable electric vehicle value chains, widespread industrial decarbonization, and circular manufacturing.

That’s the theory. How we actually translate advanced technologies into solutions that manufacturers are able to manage, afford, and create value from is a far more difficult process. It requires a great deal of scientific knowledge, engineering expertise, and experimentation to take a prototype or a technology that works in the laboratory or even in small-scale production and apply it in a large-scale production environment.

But it takes more than that. It takes strategic leadership to rethink what a manufacturing business is all about – not simply getting a product out of the door but offering a solution to customers and to customers’ customers. Leadership that positions manufacturers in a competitive space that allows them to take advantage of business opportunities and enables them to identify and mitigate business risks. Leadership that sees the necessity of change, not just to keep up with technology but to differentiate a business from that of its competitors. Given that only about seven percent of Canada’s manufacturers undertake any form of competitive benchmarking on a regular basis, it seems like we have a long way to go.

It also takes a sharp focus on process excellence –  and equally on production, business, and supply chain processes. Over 80 percent of Canada’s manufacturers report that they have invested in at least one advanced technology over the past three years, but fewer than half say they have achieved their business objectives as a result. Globally, the record for successful digital transformations in manufacturing is less that 25 percent. Why? The problem usually comes because business objectives aren’t clear. Critical processes are not well defined. Companies don’t always have a good idea about what processes add value, what is non-value-adding waste, and what should be improved in the first place. And technology implementation is usually left up to the techies rather than together with the business side of the business.

Without a clear sense of what needs to be improved, technology deployment quickly becomes an overly complicated and costly affair, usually creating more problems than it solves and way above the budget. This is especially so when businesses simply look to replace existing ways of doing things with digital solutions. It doesn’t make sense to use a new supercharged tool to do things that many companies are pretty good at anyway.

All of these problems are compounded if companies do not have the information systems or the skill sets needed to manage digital technologies successfully. It’s not just that Canadian manufacturers are culturally more risk adverse when it comes to technology adoption. There are good reasons for companies – smaller ones in particular which make up 95 percent of Canada’s manufacturing sector – to be cautious. Show me that it works. Show me that it will help my business. Show me that I’ll get a payback on my investment. Help me prepare.

That’s where collaboration comes in. When it comes to challenges in technology adoption most are common across all sectors of manufacturing, although most companies seem to be trying to solve them on their own. There’s much to be gained by businesses sharing best practices (or lessons learned). Working together and pooling data can help smaller companies, and many larger ones too, achieve things they simply couldn’t on their own. That is especially clear when it comes to building customized technology solutions for manufacturers. The exact and correct ready-to-go off-the-shelf solutions are hard to find. Workable solutions usually require the integration of a number of technologies and manufacturing processes. Collaboration is key to building world leading advanced manufacturing capabilities in Canada and creating new technology solutions that can lead to exponential business growth. 

Science and technology hold great potential for the future of Canadian manufacturing. Our experience at NGen has taught us, however, that tools, as advanced as they may be, are not enough to ensure an economically or environmentally sustainable manufacturing sector. It takes leadership, collaboration, process excellence, and above all talented people to build next generation manufacturing – in Canada, anywhere.