Canadian Manufacturing

Research, partnering and tech mastery positions manufacturers for a new era of growth: KPMG

A renewed focus on innovation, partnerships and technology utilization puts manufacturers in good stead despite continued volatility

Toronto and Montvale, N.J.—Renewed concentration on R&D, a dramatic increase in partnering and visibility across the supply chain and the explosion of technology and the data that comes with it will define global manufacturing for the next several years, according to the latest research from accounting and tax advisory firm, KPMG.

Yes, the volatility will continue. Yes, you must deploy more sophisticated strategies and tools to compete. But KPMG’s 2013 Global Manufacturing Outlook predicts companies that navigate this course well will drive growth and contribute to our nascent “manufacturing renaissance.”

KPMG hired the Economist Intelligence Unit to survey 335 senior manufacturing executives in November, 2012. Respondants included C-level and board members from companies making more than $500 million in aerospace and defence, automotive, engineering and industrial products, metals and conglomerates. Nearly 30 per cent of these companies posted more than $5 billion in annual revenues with 90 per cent coming from North America, western Europe and Asia-Pacific.

Key findings from the 2013 report include:

  • Nearly a third plan mergers or acquisitions to capitalize on new markets. For companies posting more than $5 billion in revenues, this rises to almost 50 per cent.
  • Four in 10 respondents plan to exit unprofitable, non-core product lines and unprofitable, non-core business units over the next two years.
  • Companies of all sizes see closer working relationships between suppliers and other partners as critical to better respond to changes in the market. More effective and efficient collaboration enables firms to optimize inventory, logistics and operational costs.
  • Many companies have a substantial opportunity to boost performance, agility, and resilience by improving visibility across their supply chain network. Nearly half of the companies say they lack visibility beyond their Tier 1 partners. Just nine per cent can assess the impact of supply chain disruptions within hours; although for the biggest companies this rises to 20 per cent.
  • Many companies see suppliers as a source of ideas, not just of production and logistics. Half of the respondents say partnerships, rather than in-house efforts, will characterize the future of innovation.
  • Investing in R&D and innovation remains a priority: 42 per cent expect their company to invest greater than four per cent of revenue in innovation over the next two years.
  • Nearly a third of respondents whose firms are stepping up R&D say their company will invest in breakthrough innovation. The remaining two-thirds of respondents who see a resurgence of R&D activity are focused on incremental innovation—enhancing existing product lines and services. This number rises to 78 per cent among larger companies.

Read KPMG’s 2013 Global Manufacturing Outlook here

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