A Year of Growth, Powered by Technology, Cloud and AI
14 February 2025
14 February 2025
Robin Cook, Head of Sales at Inforlogic, looks at UK manufacturing’s top five challenges for 2025, and explores the ever-increasing role of digital in addressing these, adapting to new environments, and driving performance
As 2025 gets underway, manufacturers are facing a mixed bag of both challenges and opportunities. Many are mitigating increasing costs as a result of government policy and rising energy bills through accelerated digital adoption and new avenues for revenue streams.
In fact according to a survey of manufacturers from PwC, technology, cloud and AI are viewed as significant drivers of growth, with almost a third (29%) of manufacturers citing this as an opportunity in 2025. Given that only 7% are focusing on headcount, it’s clear growth is likely to come through output, where automation and AI will play a role.
Innovation remains a priority with manufacturers leveraging digital not only to upskill the workforce and mitigate skills pressures, but to reduce the cost of new product development.
In their quest to instil increasing levels of agility and resilience from which to drive innovation and carve out market share, there is no question that digital prevails as the biggest enabler of success. And as ESG initiatives and reporting continue to bite, the industry is stepping up to get serious about sustainability.
Driven by government policy and rising energy prices, cost pressures are showing no sign of abating. Against a backdrop of cost cutting throughout the pandemic and Brexit, manufacturers have exhausted obvious areas to trim expenditure and are instead looking increasingly at how technology can enable them to do more with less.
Research from Make UK highlights that 70% of manufacturers have experienced cost increases of up to 20% over the last year, with 8% reporting increases of up to 50%. This not only impedes confidence but puts more pressure on technology as a lever to help offset this unwelcome trend.
Supply chains continue to represent a challenge across the world, with recalibrating and reinforcing supply chain strategies following a highly disruptive five years. An increase in risk as a result of Brexit, the pandemic, Suez Canal incident and global political uncertainty has seen a shift towards re-shoring, near-shoring and single/dual-sourcing models. In fact 58% of UK manufacturers say they reshoring to capitalise on benefits such as greater supply chain resilience and cost efficiency.
This move away from large global supply chains also supports shifting market dynamics, as proximity to production makes it much easier to innovate and adapt. And the amazon-isation of expectation means that localisation and expedited fulfilment has become a competitive necessity.
Cited as one of the biggest global challenges facing not just manufacturing, but all industries, 75% of manufacturing professionals, according to Barclays Corporate Banking, highlighted a lack of skills as the biggest barrier to growth. With a third of the UK workforce set to be comprised of Gen Z by next year, this adds further fuel to an already substantial fire as this demographic typically channels a new set of demands and dynamics in the way employment is viewed and accessed.
Fulfilment, ESG policy and flexibility must be prioritised in job roles to combat the demographic’s general reticence when it comes to high retention levels, and digital will undoubtedly filter the leaders from the luddites when it comes to upskilling and aligning systems and processes.
ESG agendas and consumer demand are driving a need for more sustainable practices. Manufacturers must seek out new ways to reduce waste, increase renewable energy sources and promote best practice, but more than this, the convergence of sustainability and innovation is redefining value creation. This presents new challenges and opportunities but requires a collaborative approach, underpinned by intelligence and insights to deliver effectively.
Despite recognition that digital is intrinsic to growth, many UK manufacturers still hold a cautious sentiment towards new technology, adding small applications in isolation rather than integrating systems which are aligned with strategy across the entire operation.
Technology is paramount in meeting a need for more customised, faster and sustainably produced products. And in unlocking widespread productivity, automation and intelligence to drive competitiveness, manufacturers must expedite their efforts to embrace technology, automation and AI in particular, to drive positive change.
Reassuringly, 52% of manufacturers expect improvements in the deployment of digital in 2025, as mindsets evolve and its potential is understood more widely.
To find out how Inforlogic’s team of experts can help supercharge your digital initiatives and help address these challenges for greater performance contact us today.
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