KPMG’s 2011 Global Manufacturing Outlook linked 56 percent of the global manufacturers they surveyed with plans to sell new products in new and existing markets over the next two years. That number is up from the 37 percent who said the same thing in the previous survey. Wow! Top-line growth is once again the name of the game for the 220 manufacturers (international conglomerates with a minimum of a $1 billion in revenue) that participated in the survey.
In spite of markets doing peculiar, sometimes-unpredictable and perpetually-worrisome things, 80 percent of survey participants expressed some level of optimism about growth. Growth, they believe, will be fueled by new products.
The anticipated growth will be inhibited if their entire supply chain is not engaged and along for the new ride. Growth, through product development, requires that supply chain objectives align with longer-term planning. Products produced by the supply chain, to the needs of customer, is a key determinant of growth for every company in the chain.
This notion is supported by the findings in a recently completed study entitled, Why Planning and Agility Are So Important to U.S. Supply Chain Competitiveness. The study, conducted by the GenEdge Alliance, the MEP affiliate located in Virginia, was undertaken with 19 OEMs representing 9 different NAICs codes. The initial findings of the study were then validated by 49 small and medium-sized manufacturing companies (1st , 2nd, and 3rd tier suppliers) representing 16 NAICs codes.
According to the study, “in order to achieve profitable share growth (not just increased sales), companies must achieve consistent product development pipelines for new markets and new customers. It is nearly inconceivable to imagine this happening without planned collaboration between customers.” Additionally, the study noted that, “product development relates closely to planning because of the need to frame sourcing decisions adequately for long-term manufacturing capability and material sourcing requirements related to innovation (new products or existing products in new markets)”.
One key to the future ability of supply chains to rapidly develop new and improved products will be the collaborative use of advanced modeling and simulation software to speed the process of product development at all stages, from concept to design to production. Close to half of the respondents in the KPMG study said they will invest in technology to improve their supply chains. That’s a good start for those looking from the top of the chain down to the lower tiers.
On the flip-side, small and medium-sized companies need to accelerate the pace at which they learn about new product and new growth market opportunities so they can make better informed decisions about being suppliers in their current chains or looking for new customers, with new products, themselves. And herein is a great challenge for organizations like MEP…