“Era of Disruptive Complexity”

Manufacturers are entering into a new era of ‘disruptive complexity' which is fundamentally changing the way manufacturers compete and succeed, according to the KPMG's 2014 Global Manufacturing Outlook (GMO).

"Over the past few years, manufacturers have seen an explosion of new technologies and innovative developments in material science, advanced manufacturing and synergistic operating models. With this accelerating pace of change, manufacturers the world over are now starting to take stock of the more complex world that they are operating in, and are using that insight to redefine ‘the art of the possible'," said Jeff Dobbs, Global Chair, Industrial Manufacturing and a Partner with KPMG in the US.

In an attempt to capitalise on this environment, manufacturers say they will dramatically increase spending in R&D, pursue new collaborative business models and integrate new technologies to analyse and stimulate profitable growth.

A focus on understanding profitability

This year's GMO reveals that only 12 percent of manufacturers would categorise themselves as being ‘very effective' at determining product profitability. Further, 85 percent of respondents said they plan to make either ‘moderate' to ‘substantial' investments into systems for product or service cost improvement over the next 12-24 months.

"This isn't simply about mining data and building spreadsheets; it's about accessing the appropriate information, at the right level of granularity and - maybe most importantly - with the right speed and frequency to generate timely insights that help people make better business decisions," noted Jim Scalise, a Management Consulting Partner with KPMG in the US.

 

Innovation - the major theme

"Innovation has been a major theme for manufacturers in the emerging markets. But, whereas much of the focus was once on product innovation (particularly in creating global products with local flavour), today's manufacturers are now looking at innovation across other management spheres such as cost optimisation, feature addition and partnership value programs which aim to generate innovative ideas in collaboration with suppliers and business partners. In India, for example, companies are keenly focused on collaborating with supply chain and logistics providers to improve reliability, enhance capacity and reduce costs by identifying and maximising process and business practice innovation." -

Richard Rekhy, Chief Executive Officer, KPMG in India.