Global Manufacturers Focused On Innovation & Supply Chains To Drive Growth: KPMG Survey
More companies adopting collaborative innovation models with suppliers and customers; Lack of flexibility and responsiveness is biggest challenge in supply chain
NEW YORK, June 2, 2015 /PRNewswire/ -- Manufacturers are operating in an environment of disruptive complexity, where the confluence of factors such as intense competition, pricing pressures and new technologies are forcing companies to evaluate business models and growth strategies, according to the 2015 KPMG Global Manufacturing Outlook (GMO) survey.
In surveying 386 senior manufacturing executives globally, KPMG found that manufacturers see investing in breakthrough technologies as a "must do," with more than two-thirds of respondents confirming they are focused on long-term innovation strategies. In addition, respondents clearly indicated an expectation for increased investment in R&D and the new manufacturing technologies.
Forty-four percent of global KPMG GMO survey respondents say they will allocate more than 20 percent of their total technology spend on systems to improve the pace and value of innovation (engineering, manufacturing and supply chain) in the next year. U.S. respondents were more bullish, with 62 percent saying they will allocate more than 20 percent of the technology spend to drive innovation.
"Innovation waits for no one. Those who fail to embrace the new reality of the accelerating innovation cycle will quickly be left behind," says Jeff Dobbs, KPMG's Global Head of Industrial Manufacturing. "Investing more in R&D is certainly helpful, but manufacturers need to also focus on continuously enhancing and adapting their innovation models if they hope to survive."
Collaborative innovation models
In order to improve speed-to-market and lower innovation costs, the KPMG GMO survey found that manufacturers are increasingly looking to, and collaborating with, suppliers, customers and third party research organizations. Indeed, 81 percent of global respondents (78 percent in the U.S.) are adopting more collaborative business models with suppliers and customers to improve the value of their innovation investments – up from 68 percent in KPMG's 2014 survey.
Dobbs comments, "The focus on new product development, collaborative innovation and speed-to-market all require new strategies and business models. If manufacturers hope to grow by driving new innovations to market, they need to focus on improving the agility and integration of their supply chain models."
Looking into supply chains, almost half of all KPMG GMO survey respondents cite lowering costs and working capital levels as their top strategic supply chain priorities. When asked to rate their top supply chain challenges, respondents say that a lack of flexibility and responsiveness to changes in demand or product mix is the most frequent issue; this is followed by concerns relating to supplier performance (in terms of risk, reliability and quality) and ensuring sufficient supplier capacity to meet demand and best support new product launches.
According to the KPMG GMO, just eight percent of U.S. respondents say they have complete visibility into their supply chain. In fact, U.S. respondents are almost twice as likely to say their supplier data is not reliable enough and that their technology is not sophisticated enough for greater integration.
"Our survey respondents report they are addressing the challenges and investing in new supply chain technologies that offer lower costs, better planning and improved enterprise collaboration," says Dobbs. "More than a third of our GMO survey respondents say they will place significant investment into improving their procurement systems and one third say they will allocate significant supply chain technology spend on Integrated Business Planning (IBP) systems."
Dobbs continues, "Sensing and truly understanding unmet needs faster than the competition will be key to winning the battle as the pace of connected-product innovation continues to accelerate."
About the Global Manufacturing Outlook
The Global Manufacturing Outlook (GMO) 2015 is based on a survey of 386 senior executives, conducted by Forbes on behalf of KPMG International, and was completed in early 2015. Respondents represented six industries: Aerospace & Defense, Automotive, Conglomerates, Medical Devices, Engineering and Industrial Products, and Metals. All respondents included in our survey held Director-level or C-Suite roles within their organization and 63 percent represented organizations with more than USD 5 billion in annual revenue. Respondents were distributed fairly evenly between the Americas, Europe and Asia. The full GMO can be downloaded at www.kpmg.com/gmo.
About KPMG International
KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 162,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. For more information, please visit www.kpmg.com/gmo.
Contact:
Manuel Goncalves
KPMG LLP
201-307-7735
[email protected]
Twitter: @madgoncalves
SOURCE KPMG International
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