2018 Global Manufacturing Outlook

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The 2018 Global Manufacturing Outlook report is based on data from 300 manufacturing industry CEOs. This data was part of the 2018 Global CEO Outlook, a survey of 1,300 CEOs in 11 countries, conducted in early 2018 by Forbes Insights on behalf of KPMG International. To support the data, KPMG International conducted a series of interviews with executives at manufacturers around the world. Their experience, combined with the views of KPMG professionals and sector leaders, provide valuable insights for today’s manufacturers. 

Below are some key findings that we identified:

As radical disruption continues to gather pace, manufacturing CEOs are prepared to seize the opportunities of digital transformation with both hands, even though this presents daunting challenges. They are confident in the ability of their organization to weather potential shocks, but express some doubts about whether they can take full advantage of the benefits. The key is to create a vision of what transformation will look like by enhancing business value across the enterprise.

CEOs are taking personal ownership for driving digital transformation and customer data, as well as preparing the workforce for the digital age. Digital transformation is clearly a long-term commitment, and one of the many tasks CEOs must undertake is to persuade stakeholders to be patient, while they lead their organizations on the exciting and challenging digital transformation journey.

The promise of transformation: CEOs are ready to lead the charge, and it will be crucial to balance short-term pressure and long-term goals. But the overall objectives should be bold.

• Two thirds say “I’m prepared to lead a radical transformation of organization’s operating model”.
• Seven in ten say the lead times on digital transformation often seem “overwhelming”.
• More than half say “the Board of directors has an unreasonable expectation for ROI on digital transformation”.

The need for speed: Even though a large majority of manufacturing CEOs concede that it will take years to reap the benefits of digital transformation, they readily accept that they need to plan and move fast.

• Nearly two thirds of manufacturing CEOs agree that acting with agility is “the new currency of business; if we’re too slow, we will be bankrupt.”
• More than a third of CEOs admit their organizations are struggling to keep pace with the rate of technological innovation in manufacturing and almost half say that most of their technology investments are tactical.
• Only two out of five manufacturing CEOs say they will need to improve the way that they monitor market disruption over the next three years and only about half plan to increase investment in processes to detect disruption and promote innovation.

Machines augment workers: There is still some scepticism that data analytics and other tools will transform the organization, but data scientists are the most sought-after skill.

• Almost half of manufacturing CEOs surveyed say they won’t be increasing their use of predictive models or analytics. They express scepticism about the ability of data analytics to forecast business trends, with one out of every two CEOs having a low regard for the accuracy of predictive analytics.
• For all the expected advantages of AI, CEOs perceive the biggest benefit over the next 3 years to be analytical enhancements, not cost savings.
• Robots will manufacture jobs: Almost two thirds say artificial intelligence will create more jobs than eliminate over next 3 years.
• CEOs were asked to select which capability from nine types of skill would be most important in supporting their organization’s future growth plans. Data scientists were chosen as the most important, followed by emerging markets experts.

Deeper business relationships: The heightened connectivity that comes with digital transformation will redefine global enterprises. To help accomplish this, CEOs are looking to build on the opportunities that arise as connectivity brings suppliers, manufacturers and customers closer together.

• Strategic alliances with third parties are the most favoured strategy for achieving growth objectives over the next three years.
• But partnering is not without challenges. CEOs in the survey say that the bbiggest barrier to extracting value from third parties is the difficulty of sharing data securely, so top-tier manufacturers are becoming more selective about which companies they partner with.
• Full supply chain visibility rose to become the third most important strategic priority in 2017, according to a global survey of supply chain professionals . However, only 6 percent of respondents believe they have achieved this aim.

Global risks: Manufacturers are facing new risks as they widen and deepen their global ecosystems. The most notable of these are geopolitical changes and cyber threats.

• A return to territorialism (55 percent) was the most frequently chosen option as being among the greatest threats.
• The second most frequently chosen option is cyber security.
• One out of two says that becoming a victim of a cyber-attack is now a case of ‘when’ and not ‘if’ for their organization.