On your agenda 2016 Global manufacturing outlook How to be a growth leader in industrial manufacturing
The only certainty in the highly competitive manufacturing industry? There will be winners and there will be losers. According to KPMG’s Global Manufacturing Outlook, today’s manufacturers are more focused on driving growth than ever before. But the road ahead won’t be easy. There is no sign that the markets will increase dramatically over the coming years, and with limited baseline growth, competition for new opportunities is likely to be intense. How are leading manufacturers preparing for the fight for growth? Big moves Over the next two years, nearly three quarters of manufacturing executives say growth will be a high priority for their organization and 31 percent say it will be an extremely high priority. Many are prepared to take aggressive action to drive future growth – even making fundamental changes to their business, like changing their product and service offerings, entering new markets, and transforming their supply chain operations. Please rate the priority for exploiting opportunities for growth (over the past 12 to 24 months and in the next 12 to 24 months). 50% 44% 43%
40% 31%
31%
30% 23% 18%
20% 10% 3%
0%
5% 1%
Not a priority at all
2%
Low priority
Past 12 to 24 months
1 | 2016 Global manufacturing outlook
Medium priority
High priority
Extremely high priority
Next 12 to 24 months
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Looking to new markets Most manufacturers recognize that they will need to open up new markets if they hope to achieve growth. No longer is this strategy purely about cost‑savings; overseas expansion is about capturing new customers too. To get started on your overseas expansion: —— Adapt your products and services against the needs of buyers in key regions; —— Align your relationships and infrastructure to win and sustain business in new markets; —— Enable your strategy by building, acquiring or partnering. To what extent will your organization do the following in the next 12 to 24 months? 16%
Change the range of products you offer
39% 11%
Change the range of services you offer
31% To some extent
49%
36% 19%
Enter new sectors Not at all
40%
8%
Enter new geographic markets
45%
56% 49%
Significantly
Betting on new and improved In seeking growth, many manufacturers are more focused than ever on achieving breakthrough innovations. They are placing big bets on new or improved products and services, driven by increased investments in R&D and innovation. They are also focused on making incremental improvements to existing product and service lines or rethinking their product and service portfolio, enabling them to capitalize on opportunities created by changing customer demands and new customer-facing and operational technologies. To compete on innovation: —— Ensure your corporate planning process provides the visibility needed to make smart R&D investment decisions; —— Develop innovation processes that prioritize speed, quality and margin;
“New products and services must be driven by need rather than a desire to showcase a new technology. Manufacturers must start thinking about how they can add new pools of value to their customers and then leverage all of the technologies at their disposal to rapidly deliver on that value.” Tom Mayor, Principal, Strategy Practice Industrial Manufacturing
—— Leverage disruptive technologies in accelerating innovation and return on R&D investment.
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© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS 538575
Enabling the supply chain A flexible, transparent supply chain is a critical factor in supporting manufacturers’ growth objectives. More than one-third of manufacturers say unexpected supply chain failure poses a significant risk to their growth agendas. That’s why manufacturers are taking fundamental steps to enable operational improvements across the supply chain. From data analytics to Internet of Things (IoT), many are putting technology to work to enhance supply chain performance. Extend your supply chain to achieve growth by: —— Continuously evaluating the financial and operational impacts of existing and emerging risks; —— Developing a programmatic approach to supply chain risk mitigation; —— Setting up third party governance programs, controls and resources. About KPMG’s Global Manufacturing Outlook This report is based on a survey of 360 senior executives conducted in early 2016 by Forbes Insights. Respondents, who represented six industry sectors (Aerospace & Defense, Automotive, Conglomerates, Medical Devices, Engineering and Industrial Products, and Metals). The respondents were fairly evenly distributed between the Americas, Europe and Asia. To support the survey data, KPMG International conducted a series of interviews with leading manufacturers around the world. Their experiences, combined with insights from KPMG professionals and sector leaders, provide valuable context for today’s manufacturers. Why KPMG’s Industrial Manufacturing practice? KPMG LLP’s Industrial Manufacturing (I.M.) team understands the complexity now flowing through the industry. We leverage our deep industry insight and our hands-on experience to help manufacturers shape a successful future while strengthening performance today. Using a cross-functional approach, KPMG’s I.M. team empowers the world’s leading manufacturing companies to achieve their goals. We put our breadth of experience and industry-specific knowledge to work for our clients, guiding them to make better decisions today to potentially create the greatest impact tomorrow.
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“U.S. manufacturers know they are operating in a highly competitive global marketplace. New competitors and disruptors continue to emerge from the East while new technologies are speeding up the product lifecycle. As manufacturers contemplate this reality, many are also continuing to focus on optimizing their manufacturing operations and managing what is becoming an increasingly complex and interdependent value chain.” Brian Heckler, U.S. National Sector Leader Industrial Manufacturing
Manufacturers are going to face fierce competition over every scrap of market share. To prepare your organization for success:
1
Evaluate your customer and business segments, products, services, regions and channels to understand the elasticity in each of your markets;
2
Reassess the long-term market outlook to ensure your business objectives align with future growth opportunities;
3
Create a demand-driven and responsive business model that provides flexibility and agility to respond to increased – even unpredicted – demand and market disruptions.
© 2016 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDPPS 538575
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