Parsec’s 2024 State of Manufacturing Survey reveals an industry in motion—embracing digital strategies and AI—but facing persistent gaps in supply chain resilience, workforce readiness, and the full adoption of MES tools.
The digital transformation of manufacturing is no longer aspirational—it’s happening. Parsec’s 2024 State of Manufacturing Survey shows that 76% of manufacturers across North America and Europe have started implementing digital strategies, with 26% claiming to have completed their initiatives. But while these numbers look promising on the surface, they expose deeper challenges: adoption remains uneven, and critical gaps in technology, labor, and supply chain resilience risk undermining progress.
The takeaway is clear: manufacturers may be moving forward, but they’re still far from fully unlocking the promise of Industry 4.0.
Supply Chain Resilience: The Push for Flexibility
It’s no surprise that 70% of respondents cite supply chain management as “very” or “extremely” challenging. The economic downturn, lack of operational visibility, and mounting geopolitical pressures have forced manufacturers to rethink outdated approaches like just-in-time fulfillment. Diversifying suppliers, increasing inventory levels, and strengthening partner relationships are all strategies being deployed to improve resilience, but let’s call this what it is: a reactive shift.
These strategies, while necessary, mark a step back from lean supply chain models designed to maximize efficiency. For many manufacturers, this recalibration feels like trading efficiency for insurance—necessary in today’s volatile market, but not sustainable as a long-term model without the right digital tools. Technologies that improve predictive capabilities and end-to-end visibility need to underpin these changes. Without them, manufacturers risk reacting to crises rather than proactively mitigating them.
Reshoring: A Faltering Trend in North America
Reshoring has long been touted as the answer to supply chain disruptions, but the survey reveals waning enthusiasm, especially among North American manufacturers. Just 12% have completed reshoring initiatives, and 47% have no plans to do so in the future. High labor costs, logistical challenges, and facility constraints are major deterrents, and these issues are unlikely to disappear anytime soon.
The North American hesitation around reshoring underscores a larger point: while bringing operations closer to home sounds great in theory, it is far more complex—and costly—in practice. For many manufacturers, the focus is shifting away from proximity and toward resilience through technology-driven supply chain optimization.
Labor Challenges: The Skills Gap Widens
Workforce shortages are nothing new, but manufacturers are facing a deeper problem: the skills gap. While every respondent reported workforce-related challenges, the lack of qualified candidates remains the most significant pain point. This isn’t just a numbers issue—it’s a capabilities issue. Rapidly evolving technology requires workers with new skill sets, but training programs and onboarding are struggling to keep up.
It’s a problem manufacturers can no longer afford to punt down the road. Wage competition and labor availability may ebb and flow, but the need for a tech-savvy workforce will only intensify as automation and AI become more embedded in operations. Manufacturers must step up investment in training, talent development, and partnerships with educational institutions to build a sustainable workforce pipeline. Anything less risks turning today’s labor challenge into tomorrow’s crisis.
AI Adoption: Enthusiasm Without Readiness
The survey reveals a striking figure: 99% of North American manufacturers are exploring AI, signaling near-universal recognition of its transformative potential. Yet nearly 30% admit they aren’t prepared to use it effectively. This disconnect highlights a critical issue—while manufacturers are eager to embrace AI, they’re struggling to operationalize it.
This isn’t surprising. AI is only as good as the infrastructure and data supporting it, and many organizations still lack the systems and expertise to implement it meaningfully. Manufacturers must first ensure their processes, tools, and people are ready for AI. Otherwise, it risks becoming yet another underutilized tool rather than a competitive advantage.
MES: A Missing Link in Digital Transformation
Despite the industry’s obsession with ERP systems, the survey reveals a glaring knowledge gap around manufacturing execution systems (MES). While 82% of manufacturers have upgraded or adopted ERPs in the past year, just 42% have done the same with MES platforms. Alarmingly, 74% believe their ERP alone eliminates the need for MES, a misconception that highlights how misunderstood MES platforms remain.
The truth is, ERP systems manage the big picture, while MES connects the dots on the shop floor. Manufacturers leveraging both systems report measurable benefits, including improved flexibility, supply chain visibility, regulatory compliance, and decision-making. MES tools are the missing piece that enable manufacturers to make Industry 4.0 a reality, translating strategy into real-time execution.
If manufacturers want to bridge the gap between vision and results, they must move beyond ERPs and invest in tools that provide granular, actionable insights.
The Road Ahead: Digital Transformation as an Ongoing Journey
Manufacturing is undeniably moving in the right direction, but the survey underscores a hard truth: digital transformation is not a one-and-done project. It’s a continuous process that demands resilience, adaptability, and a willingness to address uncomfortable gaps—whether in labor, supply chains, or technology integration.
Enthusiasm for AI and data-driven tools is encouraging, but enthusiasm alone won’t solve these challenges. Manufacturers must ensure their strategies are backed by readiness—building stronger workforces, leveraging the right technologies, and understanding the role of tools like MES in creating fully connected, efficient operations.
The promise of Industry 4.0 is closer than ever, but there’s no shortcut to getting there. For manufacturers, success will come from turning progress into momentum and treating digital transformation not as a milestone but as the new operating reality. Those who recognize this will not only weather the challenges ahead but redefine the future of manufacturing.
