Manufacturing is booming! According to July’s PMI (Purchasing Managers’ Index) by ISM (Institute for Supply Management), manufacturing had its highest reading since May 2022 at 55.6 percent. Anything over 50 indicates expansion. The New Orders Index registered 56.7 percent, the Backlog of Orders registered 55 percent, and the Production Index was the highest since November 2021 at 60.5 percent. It is not just the official statistics.
Our clients are seeing an increase in quotes, orders, and activity across the board. And, official records show nearly $10 trillion in U.S. investment, purchase and corporate commitments, with hundreds of billions flowing specifically into manufacturing, semiconductors, energy, critical minerals and other strategic industrial capacity. Unofficial commitments could be double that number. The bottom line? Manufacturing is riding a wave.
Table of Contents
Are You Prepared to Ride the Wave?
Are you prepared to ride the wave? Rapid growth can be just as challenging as a downturn if you don’t have the capacity, resources, and infrastructure to support it. As orders increase, manufacturers should evaluate their end-to-end capacity — not only machines and production lines, but also suppliers, labor, warehouses, transportation, utilities, and other critical resources. Since you are only as strong as your weakest link in your supply chain, a bottleneck anywhere in the supply chain can constrain growth and negatively impact service and profitability.
Start with Customers and Demand
Start with your customers and demand. Which markets, customers, and products are driving the increase? What opportunities exist that you might be able to take advantage of if you pivot or think about your business differently? Which opportunities are likely to translate into profitable growth? Manufacturers should strengthen their demand planning and SIOP (Sales Inventory Operations Planning) processes so they can get ahead of changing requirements, evaluate scenarios, and align demand with capacity, inventory, and resources. The companies that can see around the corner will be better positioned to take advantage of opportunities without creating excess inventory, expediting costs, or customer service issues.
Assess Your Capacity and Supply Chain
Next, assess your supply chain and manufacturing capabilities. Do your key suppliers have the capacity to grow with you? Are there risks buried several tiers into your supply chain? Do you have sufficient production capacity, skilled resources, warehouse space, and transportation options? Are you ready to scale rapidly? With significant investment flowing into semiconductors, energy, critical minerals, advanced manufacturing, and infrastructure, competition for critical materials, equipment, and talent will intensify. Securing capacity before it becomes constrained could provide a significant competitive advantage.
Leverage Technology to Scale
Technology and automation should also move up the priority list. Growth will expose weak processes and outdated systems quickly. Manufacturers should determine whether their ERP systems, advanced planning capabilities, AI, automation, robotics, and business intelligence tools can support higher volumes and greater complexity. The objective isn’t technology for technology’s sake. It is to increase visibility, productivity, responsiveness, and scalability while supporting profitable growth.
Prioritize Profitable Growth
Most importantly, don’t simply chase volume. Focus on profitable growth. Understand which customers and products generate the greatest value, where additional capacity will deliver the strongest return, and which investments will position the business for what comes next. Manufacturers that proactively align their people, processes, technology, capacity, and supply chains with this wave of investment will be far better positioned to turn a manufacturing boom into sustainable growth.
If you are interested in reading more on this topic:
AI & Hyperscale Manufacturing Fuels Profitable Growth