KPMG International’s Global Manufacturing Outlook (GMO) report shows that manufacturers are painfully aware of the many short-term challenges they face. Increasing competition, volatile energy and input costs, new technologies and supply chain visibility are all creating immediate challenges for organizations that – at the same time – are fighting to prepare for the launch of the ‘next wave’ of innovations.
Key highlights of this year’s KPMG Manufacturing Report include:
- Manufacturers are increasingly innovation-led and focused on improving R&D efficiency and value. Half of all manufacturers say their strategic focus is innovation-led.Thirty-two percent cite the development of new products and R&D as a top strategic priority.Thirty percent say the biggest challenge for their organization is R&D inefficiency.
- Sales growth and cost reductions continue to top the agenda as manufacturers prepare for increased competition. Fifty-five percent of respondents cite sales growth as a top priority and 41 percent say they are focused on reducing the cost structure. Almost 40 percent say that their biggest challenge stems from intense competition and pressure on prices.
- Manufacturers are increasingly looking for breakthrough innovations and are increasing investment into R&D. Forty-one percent of respondents say their primary strategy for innovation is to pursue breakthrough advances. Seventy- four percent of respondents say they will spend upwards of 4 percent of revenues on R&D over the next two years.
- Manufacturers are entering into partnerships and adopting new technologies in order to improve speed-to-market and lower innovation costs. More than three-quarters of all respondents say that partnerships will form the basis of innovation for their company. Almost half say they are adopting new manufacturing technologies to drive innovation.
- Reducing costs and preparing for new product launches are high priorities for manufacturing supply chain organizations. Lowering costs and working capital levels is cited by 46 percent as a top supply chain priority. Twenty-nine percent say they will restructure to support growth and 32 percent say they are reconsidering their global footprint based on growth expectations.
- Concerns about supplier performance and capacity remain high but visibility into supplier organizations remains surprisingly low. Behind the need for greater flexibility, supplier performance and supplier capacity is cited as the second and third biggest supply chain challenges globally. Yet just 14 percent of respondents claim to have complete supplier visibility into Tier 1, 2, and beyond.
Read the full report HERE.