Digital Tools for Manufacturing Resilience
Investments in technology can help manufacturers navigate economic uncertainty and geopolitical challenges
TAKEAWAYS:
● Despite economic uncertainty, tech spending is rising. Some U.S. manufacturers are increasing their investment in cloud, GenAI, 5G and other technologies to drive ROI and resilience.
● Digital tools are helping to build resilience. Supply chain planning software and simulation technologies are helping manufacturers optimize processes and adapt faster.
● Workforce strategies are increasingly going digital. New tools support digital talent management and targeted upskilling.
Some U.S. manufacturers have continued investing in digital technologies over the last several years despite economic uncertainty, rising costs and a challenging business climate. For instance, technology investments made by manufacturing companies accounted for 30% of their operating budget in 2024, compared with 23% in 2023, with cloud, GenAI and 5G being the top three technologies with the greatest ROI.
Furthermore, some manufacturers are increasingly turning to digital tools to help enhance resilience, improve supply chain visibility and address workforce needs, which could be particularly important in the current dynamic environment. According to Deloitte’s 2025 Manufacturing Industry Outlook, manufacturers anticipate a complex business climate for the remainder of 2025 due to high costs, potential policy changes following global elections and the potential for ongoing geopolitical uncertainty. Raw material costs are expected to rise further, and policy shifts related to trade, tariffs and adjustments to legislation could impact supply chains and investments. Digital technologies have emerged as tools to help navigate these complexities, including in these three areas:
- Supply chain planning and visibility
- Simulation
- Workforce management
Supply Chain Planning and Visibility
Manufacturers are expected to face continued supply chain risks, disruptions, potential delays and elevated costs due to several contributing factors. Ongoing labor shortages from production to transportation to warehousing could contribute to delays and higher costs throughout the value chain. Rising input costs and potential trade policy changes further complicate supply chain management. In recent years, these and other factors have led some organizations to shift their supply chain strategy from cost minimization to balancing cost optimization with resilience. To help achieve this, several manufacturers have reconfigured their supply chains by reshoring portions of their production, nearshoring and growing trade with countries offering cost advantages.
Focused investment in digital tools that enable advanced supply chain planning techniques, better collaboration with suppliers, simulation and enhanced visibility may provide an additional boost. In a recent study, 78% of manufacturers surveyed indicated that they have implemented or are planning to invest in supply chain planning software.
Partnering closely with suppliers, which digital tools can help support, may also be important to increase domestic capacity and improve resilience. Not only can it facilitate knowledge transfer and enhanced visibility, but it could be particularly important in cases where suppliers need to make investments in new technology, equipment, workers or even expand their facility. In a similar vein, industry leaders are expected to evolve their digital applications for supply chain visibility to resolve issues ranging from parts and labor shortages to concerns with quality and reliability of parts.
Simulation
The use of simulation in the manufacturing industry could also continue to grow, especially given the potential for business disruptions, the need to control costs, and the continued proliferation of AI tools. Simulation technologies such as causal AI can support production line simulation, process simulation and business scenario simulation, which appear to be increasingly important for optimizing workflows, reducing bottlenecks and enhancing decision-making.
For instance, business scenario simulation allows manufacturers to use an enterprise model to simulate challenges—such as employee absences, raw materials that arrive with quality issues and supply chain disruptions—and identify potential actions to optimize the response. The AI/ML and digital revolution can also help to revamp sustainment and aftermarket practices, with an emphasis on enhancing both operational efficiency and customer experience.
Upskilling and Retaining the Workforce Necessary to Support Reshoring
The makeup of the U.S. manufacturing industry, with its increasing focus on advanced manufacturing and push toward smart operations, requires technical expertise and advanced training. A 2024 study conducted by Deloitte and The Manufacturing Institute found that roles that require higher-level skills could grow the fastest between 2022 and 2032, and that a combination of technical manufacturing, digital and soft skills will likely be required. The study also underlines the role of digital tools to help meet workers’ changing expectations, reduce turnover and plan for demand volatility.
Companies seem to be increasingly focusing on leveraging digital tools that offer advanced talent planning and workforce management capabilities. These tools can also support manufacturers taking a skills-based approach, which may be increasingly important for broadening the talent pool. AI-based management of employee skills and deployment is emerging as a core capability, utilizing skills matrices and demand forecasting to optimize workforce planning and identify upskilling needs. A recent study indicates that by 2030, AI-based management of employee skills and how people are deployed to meet business needs will be a core capability. If gaps are identified, companies could offer upskilling opportunities for existing employees, which can increase retention, or work within the talent ecosystem to find and develop workers with the requisite skills. Taking this approach could also enable tailored upskilling that helps prepare employees for future work, for example, working alongside advanced technology such as GenAI.
Conclusion
Manufacturers are expected to navigate a challenging and uncertain business climate in 2025 due to high costs, potential policy changes from global elections, and continued geopolitical uncertainty. Focusing on supply chain visibility, simulation and digitally enabled workforce strategies can help companies build resilience, optimize operations and work toward competitiveness for the remainder of 2025 and beyond. By strategically leveraging digital tools, manufacturers can turn challenges into opportunities and position themselves for success in a changing industrial landscape. Moreover, digital transformation, automation and smart operations can help with cost reduction and may be important to offset potential impacts of tariffs. M
About the authors
Kate Hardin is the executive director of Deloitte’s Research Center for Energy and Industrials.
John Morehouse is the research leader for industrial products manufacturing in the Deloitte Research Center for Energy & Industrials.
Kruttika Dwivedi is a manager for the Deloitte Research Center for Energy and Industrials.
Anuradha Joshi is a senior research analyst at the Deloitte Research Center for Energy & Industrials.
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