The FINANCIAL -- Nearly 66 percent of global manufacturing CEOs say acting with agility is the new currency of business and that if they are too slow, they will be bankrupt, according to the 2018 KPMG Global Manufacturing Outlook.
The survey findings, revealed, show that while CEOs are ready and energized to lead their organizations into the digital future, 70 percent feel the lead times required to move large, resource heavy organizations in a new direction are daunting. More than 50 percent say Boards have an unreasonable expectation for a ROI on digital transformation. And while CEOs recognize the need to keep up with market disruptors, mistakes prove costly on a large scale and many CEOs have not yet taken the steps required to radically change outdated ways of doing business. Some 33 percent agree their organization is struggling to keep pace with technological innovation, according to KPMG.
Yet global manufacturing CEOs are positive about the opportunities for change and growth, with 95 percent of CEOs agreeing the fourth industrial revolution is an opportunity, not a threat.
“Manufacturers are at vastly different stages of transformation, and while some have organized well and started early, ROI is far from guaranteed and many are overwhelmed by the sheer scale of change required to realize benefits of digitization,” says Doug Gates, Global Chair of KPMG's Industrial Manufacturing practice. “Starting this journey is absolutely critical. Lay out a long-term strategy and roadmap. Start with steps that will achieve near-term value while laying the foundation for the new business opportunities that will come from interconnectivity and a broad access to data.”
Machines will augment workers
The future for the manufacturing workforce is bright, with 66 percent agreeing that AI will create more jobs than it eliminates, and the same amount predicting that data scientists will be the most sought-after experts in manufacturing. And while predictive analytics are not prized, with 50 percent having low regard for their ability to predict trends, AI is seen by CEOs as having a strategic benefit rather than one of cost savings. And similarly to CEOs across industries, manufacturing CEOs believe intuition is a key growth driver. Says Gates, “the full benefits of digital transformation are unlikely to materialize unless the strategy encompasses the entire organization. It entails embracing new technologies in the back office, across shop floors and into the supply chains.”
Cyber security is paramount - manufacturing industry primed for attack
Manufacturing CEOs believe cyber-attacks in the industry are a case of “when, not if.” Cyber security worries are greater in manufacturing than other global industries, with only 50 percent feeling well prepared to identify new cyber threats, 14 percentage points fewer than CEOs in other industries. Says Gates, “as manufacturers increasingly rely on connectivity between systems and processes, and most importantly suppliers and partners, there are new areas of vulnerability to protect against. Readiness to respond to any cyber event should be forefront on CEOs minds as they implement new technologies.”
Globalism offers both opportunities and threats
With 55 percent of CEOs agreeing that a return to territorialism is the greatest threat to business growth (ahead of cyber security and disruptive technology), it's clear that today's geopolitical uncertainties are seen to have a uniquely worrying effect on manufacturing compared to other sectors. However, CEOs also see emerging markets as a source of growth for the next three years, with Eastern Europe, Central America and Asia Pacific topping lists for possible expansion.