Manufacturing's New Mandate: Be Fast and Flexible or Die

Over the next year, 60% of companies said they will make capital investments in manufacturing technology and half said they would invest in manufacturing equipment and machines.

To prosper in a volatile world, manufacturers need to be able to shift gears quickly with more flexible, dynamic operating systems and technologies, a new study from Accenture warns, or face being on “the fast track to obsolescence.”

The study of 250 global manufacturers found 82% agree that it will be critical to their growth to be able to dynamically move production from one facility to another or change their product mix at a facility. However, only 27% said they believed their operating model was very effective at accommodating a shift in resources or activities to alternate locations. And only 24% gave their firms high marks for sensing market changes or opportunities before their competitors.

IW On the Air: Listen to Accenture's Russ Rasmus discuss the new study

Even with the challenges that a volatile business environment presents, 85% of the manufacturers said they were optimistic that the growth in their top three markets will increase in 2013-2014.

Manufacturers are making investments to create more “flexible and consistent operations” across their facilities, said Russ Rasmus, managing director of Accenture’s manufacturing practice. Over the next year, 60% of companies said they will make capital investments in manufacturing technology and half said they would invest in manufacturing equipment and machines.

Existing Assets: Some two-thirds of the companies surveyed are working to extend the life of their existing assets. Accenture found that 67% are applying lean principles, while 49% are utilizing total productive maintenance, 48% are applying automation and technology and 21% are employing analytics.

Digital Capabilities: Some 77% of the manufacturers surveyed said they are planning to invest in information technology. Heading the list of IT investments is performance management (53%), the development of dashboards and metrics that help managers monitor operational and business performance.

Workforce Talent: This group of manufacturers has been on the hunt for talent. Two-thirds said they plan to expand their workforces and 76% have added workers in the past two years. The skills gap continues to plague them, with 38% reporting a significant shortage. To close the gap, manufacturers told Accenture, they were tying performance rewards to an individual’s success and enterprise profitability (46%) and offering competitive salaries and benefits (45%).

In keeping with a general trend to move manufacturing resources closer to end markets, 42% of the companies said they had relocated operations, with China and Brazil being the lead destinations. Nearly half (49%) of the companies had established new manufacturing sites, with China, Brazil and the U.S. being the most common locations.

Three out of four manufacturers said they expect to make greater use of contract manufacturing in 2014. Some 54% will use contractors to relieve short-term capacity constraints and 46% said they are doing so as part of a long-term strategy. Brazilian firms are making the most (97%) use of contract manufacturing while France (67%) and the U.S. (66%) will do so the least.

 

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