Manufacturers want collaborative and agile suppliers to aid innovation, survey finds

9 July 2015

Collaborative and agile suppliers are part of a "must do" innovation strategy for global industrial manufacturers, according to a survey.

Research by KPMG found 81 per cent of respondents were adopting more collaborative business models with suppliers and customers to improve speed-to-market and lower innovation costs.

According to the consultancy's 2015 Global Manufacturing Outlook (GMO) survey, 55 per cent of the 386 senior executives cited sales growth as one of their top strategic short-term priorities.

However, many also see innovation as a critical path to growth, the research found, with more than two-thirds of respondents confirming they are focused on long-term innovation, with investing in breakthrough technologies a “must do” long-term strategy.

Almost half of all respondents cited lowering costs and working capital levels as one of their top three strategic supply chain priorities.

A lack of flexibility and responsiveness to changes in demand or product mix is the most frequently cited supply chain challenge. This is followed by concerns relating to supplier performance (in terms of risk, reliability and quality), and ensuring sufficient supplier capacity to meet demand and support new product launches.

Some 44 per cent of survey respondents said they would allocate more than 20 per cent of their total technology spend on systems to improve the pace and value of innovation, including engineering, manufacturing and supply chain, in the next year. And 32 per cent cited the development of new products and R&D as a top strategic priority.

KPMG’s global head of industrial manufacturing Jeff Dobbs said those companies who fail to embrace the new reality of the accelerating innovation cycle would quickly be left behind.

"Investing more in R&D is certainly helpful, but manufacturers need to also focus on continuously enhancing and adapting their innovation models if they hope to survive," he said. "The focus on new product development, collaborative innovation and speed-to-market all require new strategies and business models. If manufacturers hope to grow by driving new innovations to market, they need to focus on improving the agility and integration of their supply chain models."

The research also found 81 per cent of respondents were adopting more collaborative business models with suppliers and customers to improve speed-to-market and lower innovation costs.

"Our survey respondents report they are addressing the challenges and investing in new supply chain technologies that offer lower costs, better planning and improved enterprise collaboration."

“More than a third of our GMO survey respondents say they will place significant investment into improving their procurement systems and 31 per cent say they will allocate significant supply chain technology spend on integrated business planning systems," he said.

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