Five front-of-mind issues for manufacturers in an uncertain and changing world
31 March 2016
A few weeks ago, we at Strategy& published our latest annual Industrial Manufacturing Trends. It’s provided fertile ground for conversations with manufacturing CEOs, with our core message – that despite market uncertainty, manufacturers must weather the risk that comes with embracing new technologies – resonating with everyone I’ve spoken to.
During those conversations, I’ve also been finding that five issues emerge consistently as front-of-mind for UK manufacturers of all types. Given the pressing and topical nature of these issues, I’m sure they’re equally prominent in all other markets globally.
So what are they? If I were to sum up each issue in a single word, I’d say they’re around innovation, digital, skills, expansion, and footprint. I’ll now take a closer look at each one in turn.
First, innovation. Today, manufacturing innovation can no longer just be about developing new products. Instead, it’s also about having an innovative organisation behind those products – one that’s geared up with an employee base that can contribute actively, creatively and consistently to product innovation focused on meeting real customer needs.
With this in mind, manufacturing CEOs are seeking out ways not only to develop an innovation culture internally, but also to collaborate externally and innovate with customers and suppliers. Interestingly, our annual Global Innovation 1000 study underlines that the best innovators are generally not those who invest the most in R&D, but invest the smartest.
Second, digital. It goes without saying that digital technologies have transformed and disrupted every industry. Manufacturing is no exception – and companies are striving to establish precisely what it means for them. Big data, analytics, 3D printing and the Industrial Internet of Things (IIoT) all have huge relevance, as does cyber security on the risk side. We’re helping clients get to grips with all these areas.
The final three issues are all related to globalisation. On skills, industrial and manufacturing companies are struggling to recruit and retain the best technical talent, who are often attracted by more glamorous sectors such as high-tech and media. At the same time, globalisation is expanding the available talent pool and demanding decisions over where to locate talent to support global operations. To win the global war for talent, smart manufacturers are rethinking career paths and offering employees more flexibility and creativity – actions that simultaneously help them retain the best people and build an innovation culture.
Fourth, expansion. As manufacturers tap into new customers and markets worldwide, they need an expansion strategy that adds real value to their products. This means ensuring they can provide not just the products themselves, but also the back-up support and services that customers will need in every market.
Last but not least, footprint. A further imperative for successful global expansion is creating the right shape and size of footprint, including the supply chain needed to support the international operations in every market. This demands decisions on questions such as whether to site R&D and engineering activities centrally or locally, and how to retain the business’s DNA, brand and global standards while expanding across markets. It might even involve collaborating with competitors to realise economies of scale in some markets.
Looking across these five issues, they all share one common driver: the rising complexity that manufacturers have to manage in an increasingly digitised and globalised world. Smart use of the IIoT will be key to finding the right solutions. To help manufacturers do this, we’ll soon we’ll be launching our Industry 4.0 survey findings, examining how the IIoT will affect the entire manufacturing value chain.
At first sight, digital technology might look like part of the complexity challenge for today’s manufacturers. But applied in the right way, it becomes the core of the solution. Put simply, it’s time to seize the digital opportunity.
