Manufacturers Look to Improve Profitable Growth through Innovation, Collaboration and Supply Chain Integration
Manufacturers are entering into a new era of ‘disruptive complexity’ which is fundamentally changing the way manufacturers compete and succeed, according to KPMG’s 2014 Global Manufacturing Outlook (GMO) .
Key findings of the study include:
–Only 12 percent of manufacturers are ‘very effective’ at determining product profitability
–40 percent acknowledge limited visibility across the supply chain
–Almost half plan to double their R&D investment over the next 2 years
–88 percent say partnerships will drive innovation
–74 percent indicate they can achieve a globally integrated supply chain in 3-5 years
“Over the past few years, manufacturers have seen an explosion of new technologies and innovative developments in material science, advanced manufacturing and synergistic operating models. With this accelerating pace of change, manufacturers the world over are now starting to take stock of the more complex world that they are operating in, and are using that insight to redefine ‘the art of the possible’,” noted Jeff Dobbs, Global Chair, Industrial Manufacturing and a Partner with KPMG in the US.
Improving supply chain visibility
This year’s report reveals that limited visibility across the supply chain remains a growing concern for manufacturers, even though many have made notable progress towards improving transparency.
Forty percent – versus 20 percent in KPMG’s 2013 GMO – say they lack information and material visibility across their supply base. Thirty eight percent say they lack critical details on supplier performance, and 36 percent lack adequate supply chain IT systems. According to half of respondents, the biggest obstacle to achieving more visibility is a lack of mature technology, followed by lack of governance (19 percent) and lack of strategy (14 percent).
Despite those challenges, visibility has improved over the past twelve months with 22 percent of respondents now claiming to have complete visibility (up from just 9 percent in 2013). For the most part, these gains in visibility have resulted from stronger relationships between manufacturers and their top tier suppliers. More than three quarters of respondents say that their relationship with top tier suppliers is now strong enough for them to share real-time capacity and demand data.
“The upward trend is promising given the fact that almost three quarters of our respondents think they can achieve a globally integrated supply chain within the next five years,” Dobbs said. “However, we believe there is still much work to be done around trusted relationships, transparency, and technology enablement to foster these types of collaborative business models“.
This fifth annual Global Manufacturing Outlook, Performance in the Crosshairs, was completed in early 2014 and surveyed 460 senior executives across six industrial sectors split equally among the Americas; Europe, Middle East and Africa; and Asia-Pacific. Click here to view the full report.
