Manufacturers can prepare for the future by adding new technology, prioritizing customers, and tracking the shifting political landscape.
By: Jeff French, National Managing Partner, Consumer and Industrial Products Industry Practice, Grant Thornton LLP
Manufacturers are confronted with a variety of challenges that could determine their future success. Technology is dramatically changing the pace and efficiency of the factory floor. Customers are demanding more customized products, and they want them delivered faster. Political uncertainty raises concerns about taxes, trade and the supply chain.
Leaders in manufacturing are making visionary decisions and reinventing themselves to stay ahead of these trends. They are using innovative technologies, advanced data analytics, and taking a more strategic view of risk. They’re also assessing political and regulatory changes to determine their impact on a long-term focus.
The takeaway: Manufacturers that embrace new technology, prioritize their customers, and keep a watchful eye on the shifting political landscape will be positioned to succeed.
These insights come from a Grant Thornton LLP survey of more than 375 manufacturing executives who were asked to share their strategic visions during a time of technological and political uncertainty. Survey respondents were C-suite and senior director-level executives from a range of manufacturing sectors, including food and beverage, industrial machinery, automotive, steel and metals, and chemicals.
The survey results, published in The Future of Growth and the Manufacturing Industry, suggest that every manufacturer needs to follow the path of these industry leaders, taking bold steps to foster far-sighted, strategic and profound change.
The survey indicates that forward-thinking manufacturers need to focus on four critical priorities: building the digital supply chain, anticipating shifting customer needs, increasing transparency, and finding talent for the smart manufacturing age.
Building a digital supply chain
Industry leaders are using technological advances to improve the performance of their supply chain. Those innovations include artificial intelligence (AI), advanced robotics, 3-D printing and prescriptive analytics. Robots are increasingly working alongside humans on the shop floor. 3-D printing allows engineers to respond quickly to changing customer demands.
The connectivity of the digital supply chain promises to transform performance. The digital supply chain enables manufacturers to capture data from sensors, use advanced analytics and AI to extract insight from the data, run prescriptive analysis, and then provide real-time information to optimize performance. Potential improvements include better demand forecasting and automated inventory, improved time to market, and lower-cost sources of raw materials.
Digital technology transforms the supply chain from a linear model to an intelligent, agile network that responds rapidly to fast-changing customer needs.
Anticipating shifting customer needs
Leading manufacturers are customer focused, and 62% of survey respondents said “building stronger customer relationships” was a high priority. But achieving that goal isn’t easy. Customer needs and preferences are changing fundamentally — and fast.
Manufacturers need to continually anticipate new market trends. Industry leaders are using advanced data analytics to gain a better understanding of their customers. Knowledge of changing customer needs is crucial as the industry increasingly evolves from a pure product focus to embrace data-driven services.
Manufacturers with a deep understanding of their customers’ needs can add wraparound services to their products, which may strengthen customer relationships and give companies a competitive edge.
Escalating demands for transparency come from a variety of stakeholders: customers, suppliers, taxing authorities and regulators. Manufacturers need to address this trend by using data analytics to provide stakeholders with the information they need.
Customers increasingly are demanding supply chain transparency to determine such issues as the environmental impact of production, and whether products are being made in an ethical manner. They want to know how the products are made, as well as the source of the raw materials.
Shifting political and regulatory attitudes are also driving transparency. Manufacturers need to be concerned with issues such as border taxes, transfer pricing and international tax planning. Regulators and NGOs will continue to attempt to improve the “fairness” of tax laws to ensure an even playing field for countries. Manufacturers should be prepared to deal with these changing tax policies.
Finding smart manufacturing talent
While technology is important in smart manufacturing, it takes people to make it work. But even the most sophisticated manufacturers are finding it difficult to find enough skilled workers, according to the survey. Manufacturers must tackle the talent gap to ensure they have enough skilled employees to compete in the future.
Manufacturers need to retrain their existing workforce as new technologies redefine the competencies of production workers. Manufacturers also must recruit employees with new skills, such as data scientists and computer coders.
To attract top talent, mainstream manufacturers need to communicate a compelling vision for how they plan to drive innovation in smart manufacturing. Uncertainty about future immigration policies means manufacturers need to focus more on domestic training. Companies need to collaborate with the local government and community colleges to help identify and train skilled workers.
The bottom line is that forward-thinking manufacturers will use advanced analytics to understand how their customers’ needs are changing, and they’ll build the supply chains, technologies and talent needed to better serve the customers of tomorrow.
About the Author
Jeff T. French is national managing partner of the Consumer and Industrial Products practice, and leader of its manufacturing practice. He has more than 25 years of public accounting experience. French’s business experience includes acting as the lead service partner for numerous clients, as well as serving as the primary business adviser to CEOs and boards of directors. He has worked with a broad range of public and private clients, from startups to large corporations. He has advised clients on audit and financial reporting, acquisition strategies, due diligence and integrations, public offerings, and international statutory audits.