KPMG: Manufacturers Focused on Growth, Reshaping Supply Chain Models

More new research indicates that global companies are setting their sights on growth and global expansion.

As I pointed out last week, nearly all (95 percent) of the CFOs polled in BDO's annual Global Ambition Survey said they are optimistic about their global expansion plans.

Now, a new report from KPMG concludes that global manufacturers have made top-line growth their number one priority in the next two years, despite persistent economic volatility and uncertain demand.

KPMG surveyed 220 manufacturing executives from global companies with at least $1 billion in revenue and found that:

More than half (56 percent ) are planning to sell new products in new and existing markets over the next two years that's up from 37 percent in last year's survey.

39 percent of respondents said they'll grow through mergers and acquisitions (M&A), joint ventures and alliances. 30 percent expect growth through increased production capacity, mainly in high-growth markets.

The US ranks as the top market for expected increase in demand, closely followed by China, then India, with Brazil and Germany rounding out the top five. The US, China and India were also cited by most respondents as the countries where they plan to increase sourcing in the same period.

Slightly more than half see emerging markets as key to their growth strategies.

Most manufacturers said they plan to update supply chain management to achieve these goals.

56 percent of manufacturers said they are reshaping their supply chain models.

Standardization is one of the key strategies. 55 percent of manufacturers plan to standardize their production process. while 45 percent will require standardized inputs. In addition, more than 40 percent said they will focus on cost reduction through a shortening of the overall product development life cycle.

Nearly half of respondents said they will invest in technology to improve visibility across the supply chain, the single most important tool for managing risk. Other measures include helping suppliers develop risk management standards and assessing supply chain processes.

With greater insight into their supply chains, companies can mitigate risk, improve process efficiencies and better adapt to volatility in both supply and demand.

"We talk about business intelligence but the challenge is turning that into strategic and operational planning intelligence in order to tease out emerging megatrends and position the organization to respond on a regional basis," Gerhard Dauner, KPMG head of Diversified Industrials for and a partner in the German firm, said.

More results from KPMG's 2011 Global Manufacturing Outlook are available here.

TAGS: Finance
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