Survey: Manufacturers Plan to Meet Growth Objectives by Increasing Investment in Technology

Manufacturers plan to meet the challenges of increasing competition and pricing pressures by investing heavily in new advanced manufacturing and digital technologies, according to the results of the 2016 KPMG Global Manufacturing Outlook survey, released this week.

KPMG wrote:

“Manufacturers are highly focused on achieving new growth; many expect to be aggressive in their search for new opportunities. Yet with limited baseline growth expected in most markets, manufacturers will need to either invest into new technologies in order to ‘grow the pie’ or resort to a brutal competitive fight to steal market share away from rivals. The only certainty is that there will be winners and losers.”

Here’s a brief overview of the survey results.

The future looks bright…

Manufacturers are very positive about their growth prospects over the next 1 to 2 years:

  • 46% are confident or very confident about the growth of the global economy
  • 64% are confident or very confident about the growth of their company
  • 57% are confident or very confident about the growth in their country

The top external factors affecting a company’s growth are:

  • Economic growth
  • Disruptive technologies
  • Prices of raw materials
  • Pricing pressures
  • Regulatory environment
  • Savvy customers

In terms of priorities for the next 1 to 2 years, the highest priorities are (in order):

  • Improving cost and performance management
  • Protecting the current business
  • Exploiting opportunities for growth

Overall more than two-thirds (69%) of manufacturers categorize their overall growth strategy as moderately or very aggressive, and most believe that their organization is a staying on top of their industry and actively disrupting current business models.

…but risks remain

Over the next 1 to 2 years, the four greatest risks to growth are expected to be:

  • Economic downturn
  • Disruption in the sector my new entrants
  • Capacity of leaders in the organization to drive change
  • Supply chain failing to deliver

Manufacturers will reach their goals and deal with risks by increased investment in R&D and technology

More than 6 in 10 companies will address their growth priorities “predominantly” through increasing their organic investments, including in R&D.

In terms of particular technologies, manufacturers expect to put more money toward:

  • Robotics
  • Advanced materials science
  • Additive manufacturing (3D printing)

Many of these ventures will involve collaboration with third parties.

Finally, manufacturers also plan to invest in new digital technologies, primarily:

  • The Internet of Things (IoT)
  • Supply chain analytics
  • Demand sensing
  • Global demand management
  • Procurement systems

View the full report for more information about what manufacturers see coming down the pipeline in the next 1 to 2 years.

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