Five trends shaping UK manufacturing in 2026

Tuesday, February 10, 2026

Operator op de werkvloer gebruikt Ridder iQ op een tablet.

Summary: This blog breaks down five trends UK manufacturing SMBs will face in 2026—digitisation progress, where AI is (and isn’t) being used, the biggest barriers to tech adoption, the ongoing skills gap, and why cloud ERP is becoming the operational “hub.” You’ll also get three practical actions to take this year to improve efficiency, get AI-ready, and support teams with intuitive tools.

When you’re busy with the day to day, it’s easy to lose sight of the bigger picture. How are your peers faring in the face of new and ongoing challenges, and what digital tools are they investing in? What exactly are they doing to become more profitable and gain a competitive advantage?

To see what the year has in store for SMBs in the UK, we surveyed over 300 firms to create our UK Manufacturing Trends Report 2026. In this blog, we’ll break down five key trends from the report and provide practical steps to help you stay ahead of the curve.

Top trends for manufacturers

Our report takes a comprehensive look at where the sector is heading in 2026, covering everything from the adoption of smart technologies to the challenge of closing skills gaps and meeting sustainability standards.

Trend 1: SMB manufacturers are digitising

Our research shows that 84% of SMBs have begun to digitise their operations. While most have connected key processes, they haven’t yet reached full automation – an understandable position given that SMBs often lack the R&D budgets of larger firms.

While companies like Rolls Royce are using digital twins to cut development time, SMBs are taking pragmatic, incremental steps towards streamlining their processes – including using technologies like ERPs and real-time dashboards to track performance and data.

Trend 2: Firms are optimistic about AI

Almost three-quarters of SMB manufacturers have a positive view of AI. However, while 93% say AI is critical for staying competitive, nearly half have no plans to use it for inventory management or predictive maintenance.

Currently, most firms use AI for tasks like marketing, customer service, and drafting emails. The real competitive advantage lies in embedding AI at the heart of core processes like predicting demand or streamlining production.

Trend 3: Time is the biggest barrier to digital growth

Most manufacturers plan to prioritise automation and technology to improve their efficiency in 2026. However, 64% of firms are struggling to adopt these tools because of a lack of time.

Many are also missing out on available funding because they are unaware of support schemes and government-backed loans that could help them scale production.

To overcome these challenges, firms are using ERP systems to save time and ensure their technology spending delivers a clear return. With immediate insight into costs and capacity, they can identify production bottlenecks and manage their resources more effectively.

Trend 4: The skills gap is still biting

Skills shortages remain the top workforce challenge for 42% of manufacturers, specifically when recruiting engineers and operators. While physical demands are dropping as the industry becomes more digital, the need for data literacy is increasing.

The report reveals a significant gap in digital confidence. Only 10% of manufacturers feel firmly confident in their team’s current digital skills, while the majority describe themselves as only slightly or somewhat confident.

To address this, firms are moving toward intuitive software that requires less technical training. ERP systems are helping manufacturers manage data and production without the need for extensive training.

Trend 5: Firms are using ERPs to streamline their processes

Cloud-based ERP systems are one of the most sought-after technologies for manufacturers in 2026. Over half of the firms we surveyed already use Ridder iQ to manage their operations, with 46% reporting measurable improvements in their business within the first 12 months.

Manufacturers are primarily using ERP data to improve costing (72%) and scheduling (65%). By centralising this information, they can move away from manual spreadsheets and use real-time data to track production efficiency and on-time delivery.

As technology like AI and advanced analytics becomes more common, the ERP acts as the central hub for all business data. It provides the foundation firms need to connect their processes, manage their inventory, and make informed decisions about their future growth.

Tips for 2026

Here are three practical ways to prepare your business for the shifts expected in 2026:

Track your KPIs closely: Don't wait until the end of the month to see if a job is profitable. Use Ridder iQ to track costs and production from across the shop floor in real time.
Prepare for AI: AI is only as effective as the data you provide. Centralising your processes in a modern ERP ensures all your data is accurate and accessible, making it easier to adopt and make the most of AI tools later on.
Support your team with intuitive software: Since digital confidence is low across the sector, look for tools that are intuitive and easy to navigate. Ridder iQ replaces complex manual processes with a clear visual interface that makes data accessible to every member of the team.

Want to dive deeper into the stats? Download the full UK Manufacturing Trends Report 2026.

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To see how Ridder iQ can help you digitise in 2026, request a demo today

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FAQs

We’re an SMB with limited time and budget—what’s the best “first step” to digitising without trying to automate everything at once?

The best first step is to take a pragmatic, incremental approach by centralising your core data. According to the blog, while large firms might invest in complex digital twins, SMBs are seeing the most success by implementing an ERP system to connect key processes. By moving away from manual spreadsheets and using real-time dashboards to track performance, you can streamline your existing operations and identify production bottlenecks without the need for a massive R&D budget or total automation from day one.

How can we use AI in a way that actually improves core manufacturing operations, not just marketing and admin tasks?

While many firms currently use AI for drafting emails or customer service, the real competitive advantage in 2026 lies in embedding AI into your production cycle. The blog suggests that the most impactful applications are in demand forecasting, inventory management, and predictive maintenance. To get there, you must first ensure your data is accurate and accessible; centralising your processes in a modern ERP like Ridder iQ provides the high-quality data foundation required for these AI tools to effectively streamline your production and manage resources.

What should we look for in a cloud ERP to make a measurable impact in the first 12 months?

You should look for a system that prioritises visibility and ease of use. The report shows that 46% of firms using Ridder iQ saw measurable improvements within a year, specifically by focusing on improved costing (72%) and scheduling (65%). A successful ERP should offer a clear visual interface that supports your team’s digital confidence and provides real-time insight into KPIs. This allows you to track the profitability of a job while it is still on the shop floor, rather than waiting until the end of the month to see the results.

Why are so many manufacturers saying “time” is the biggest barrier to digital growth—and what can we do about it?

The report highlights that many firms want to prioritise automation/tech, but struggle to implement tools because day-to-day pressures leave little capacity to evaluate, deploy, and train teams (64% cite lack of time). A practical way to break the cycle is to focus on systems that reduce manual work immediately—e.g., using an ERP to centralise costing, scheduling, and shop floor data so you can spot bottlenecks faster, reduce spreadsheet work, and make quicker decisions with real-time visibility.