Businesses that do not, or even cannot, strive to continuously improve, will eventually die. This is especially true of manufacturers facing the fall-out of the near perfect storm of the global financial crisis, recession, fierce competition from the Far East and ever increasing complexity.
Having the right strategies in place to face these issues is critical. As a leading technology and business solutions partner to over 8,000 companies, Infor recently commissioned research specialists IDC Manufacturing Insights to identify and evaluate these strategies are. Over 720 discrete manufacturers were interviewed in the largest survey of its type ever undertaken.
The research shows that the primary strategy of manufacturers is the retention and growth of the existing customer base. A conservative perspective and protection of market share dominates boardroom thinking. However, it is worth noting that this attitude prevails in Europe and North America, but not in China where the development of new products and services are more pressing strategies.
Western manufacturers do realise that new product and service innovation is important (ranking it fifth and sixth respectively) but it is clear that for the next two years, these will be secondary to keeping customers and building on the established base.
If you are typical of the industry, your second most pressing concern is improving productivity. Manufacturers know they need to do more with less. Improving operations to boost the output of current activity without increasing costs is the only option for manufacturers trying to square the circle of growing the business without additional investment in more staff or new facilities.
This means the introduction of new products and services must be very cost efficient. Reducing operational costs such as those involved with new product development, as well as just ‘keeping the lights on’, was the last of the top three strategies for the next two years.
Combining attempts to reduce operational costs and improve productivity means manufacturers need to look at the processes and technology that control production and manufacture. 64% of manufacturers that believe IT is either vital to day to day operations or provides competitive advantage.
In most cases references to ‘IT’ means enterprise resource planning (ERP) systems. The good news is that across Europe, 44% of manufacturers report financially measurable “hard” as well as “soft” benefits from their ERP investment, so it is clear that the correct technology can help you survive. The question is whether or not ERP delivers specifically on the strategies being undertaken by manufacturers in the next two years.
Again the answer is a resounding yes. The research showed that the top three benefits of an ERP system were better decision making, increased profitability of the business and manufacturing cost reduction / efficiency improvements. Stronger, faster decisions are critical if a business is to develop growth from its customer base, and the improved profitability and reduced costs ERP users report, are precisely the strategies that manufacturers want to pursue.
For example, global provider of health and wellness products, HoMedics implemented Infor ERP LN to increase visibility, enhance processes and reduce costs by streamlining sales ordering, accounting and purchasing functions, whilst cutting inventory levels. Likewise Spanish automotive manufacturer Matrici, deployed ERP LN to improve the efficiency of main business processes such as raw material sourcing, outsourced component manufacture, manufacturing management, and financial forecasting.
The current market presents manufacturers with some of the toughest challenges they have ever faced: but the strategies and technology exist to not only survive but also seize the opportunities presented by the market in order to grow. To do this, operational excellence is no longer an option – it must come as standard throughout the organsiation.