ACCENTURE 2013 GLOBaL MaNUFaCTURINg STUDY

How Leading Manufacturers Thrive in a World of Ongoing Volatility and Uncertainty

As part of our ongoing commitment to helping organizations achieve high performance, Accenture regularly conducts substantive research to shed light on key challenges our clients are facing and provide thoughtful guidance clients can consider in addressing those challenges. An important part of Accenture’s broader research efforts is our study of manufacturing. When we conducted the previous edition of our manufacturing study in 2011, we wanted to understand how manufacturers in United States had fared in the two years since the official end of the recession in June 2009 and where they saw their business and most important markets headed in the near future. We also wanted to get a sense of how companies were preparing for the future as they tried to reconcile their manufacturing operations to accommodate intensified, multifaceted volatility. What we found was manufacturers had seen an uptick in revenue during that time and were working to prepare their operations once again for growth. In 2013, we expanded the scope of our research to a global base of manufacturers in North America, South America, Asia and Europe that had global operations. Our goals for this most recent effort were largely the same as before—to understand

how companies were performing and how they were aligning their operations with market challenges and opportunities. As you’ll read on the following pages, our research uncovered some very intriguing findings. From those findings, we gleaned four high-level insights. One, more than ever manufacturers need to align their investments to foster greater operational flexibility. Volatility is the new normal, and companies that are unable to quickly shift gears when the market changes are on the fast track to obsolescence. Two, globally consistent, repeatable operating models and reliable, predictable production facilities are fundamental to enabling the flexibility required in today’s market. Three, digital technologies are becoming increasingly important in manufacturers’ efforts to improve their performance across the enterprise by streamlining processes, enabling faster and better decisions, and creating stronger relationships with customers. And four, manufacturers must excel on multiple fronts to be successful. The ability to balance critical factors such as cost, risk, flexibility, quality is critically important to competitiveness and growth.

One group of companies in this year’s research stood out in this regard. This cadre of manufacturing leaders are growing much more strongly and profitably than others in large part because they recognize the importance of operational flexibility to high performance and are committed to investing in the capabilities that will foster it. We believe there is much that other manufacturers can learn from how these leaders approach their business, as well as from our research findings overall. On behalf of Accenture, I’d like to thank those manufacturing executives who gave their valuable time to participate in our study. I hope you find the results informative and useful as you consider how best to organize and equip your operations to execute your growth strategies in the coming year and beyond.

Russell Rasmus
Managing Director for Manufacturing Accenture

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CoNtENtS
IntroduCtion KeY ResearCH FindinGs Perspectives on Growth Capturing Growth Driving Consistency and Flexibility Through “Production Systems” Avoiding the Pitfalls of Facility Relocation or Startup Getting the Most From Contract Manufacturing Solving the Manufacturer’s Skills Dilemma A Formal, Collaborative Approach to Asset Reliability Manufacturing Leaders The Benefits of Becoming a Digital Business How a Control Tower Can Help Manufacturers Make Better Production Network Decisions The Sustainability Journey: From Compliance Assurance to Performance Assurance AppendiX Methodology and Demographics 3 7 7 9 11
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28 29 33
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ConClusion 41 42 42

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INtroDuctioN
The headlines in the media today offer a glimpse of the challenges manufacturers confront on a daily basis:
So which is it? Is the global economy a future “train wreck,” as one publication described it, heading for a fresh round of slowdowns, layoffs and cash crunches—or worse? Or has it turned the corner and are better days ahead? Unfortunately for manufacturers, it’s both. The fact is, today’s economy remains as volatile and unpredictable as ever, with pockets of strong growth counterbalanced by sluggish demand and positive trends neutralized by negative ones. That’s causing headaches for all companies, but especially manufacturers, which face the formidable challenge of ensuring its asset-intensive, highly complex operations are capable of continually switching gears to accommodate the global economy’s ongoing stops and starts. To shed light on the factors shaping manufacturing in today’s environment, as well as how manufacturers are refining their manufacturing strategy and operations to remain successful, Accenture embarked on a comprehensive research study of major manufacturers around the world. The study included a survey of 250 senior manufacturing executives in large companies headquartered in North America, Europe, South America and Asia. These companies have global operations and represent six main industry sectors (automotive, consumer products, industrial equipment, electronics and high tech, oil and gas, and chemicals and natural resources). At a high level, our survey revealed that while manufacturers overall are growing and remain optimistic about their prospects in the near future, economic and market volatility and shortcomings in critical areas of their operations could pose a threat to their growth agenda. More specifically, the following key findings emerged from our research:

Manufacturers have experienced steadily improving business performance since 2011.
Production levels, revenues, and margins all have increased during that time for the vast majority of participating companies, and most manufacturing executives are optimistic about continued growth in the future. In fact, executives believe their most important markets still offer plenty of growth opportunities.

“Patchy world economy weighs on quarterly profits” yet “Upbeat forecasts adds to optimism over economic recovery.” “Asian economies encounter stiff winds” but “Consumer confidence high in southeast Asia.” “Europe continues to weaken world economies” although “European shares jump amid economic optimism.” “IMF issues dreary report card on future of world economy” however “Businesses pick up hiring on increased economic optimism.” “Asian stocks advance on China growth” yet “Global economy shifts as China falters, Japan, U.S. Rebound.”

Penetration into emerging economies will shift the source of manufacturers’ revenues.
The market in which a manufacturer is based is likely to be among the company’s three largest markets in terms of current revenue. Today, the United States, followed by China, are among the top three markets for the largest percentage of manufacturers—which is not surprising given those are the world’s biggest markets. However, executives anticipate that within a few years, China and Brazil will become much more important sources of revenue.

Manufacturers are locating production facilities closer to sources of demand.
Since 2011, a surprising four in 10 manufacturers surveyed reported having relocated production facilities to new locations and, even more surprising, five in 10 said they started new production facilities during that time—largely to support entry into new markets and reduce operating costs. Consistent with their growing importance as revenue-generating markets as noted above, China and Brazil are the favorites for both relocated and new production facilities.

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Introduction

Introduction 4 .

manufacturers are striving to build a more flexible and dynamic operating model that enables them to quickly respond to changes in demand. is critical to achieving their growth goals. and visibility into the full network’s operations. and to be considering relocating manufacturing operations in 2013 and 2014. They are likely to have a good understanding of the local cultural differences and needs in its most important revenue markets. leaders possess a strong belief that the ability to flexibly and dynamically alter production to match demand is critical to achieving their growth goals—and consequently have built an operating model that effectively accommodates the dynamic shifting of resources and activities both to different physical locations in their manufacturing network and within a specific facility in response to market developments or changes in demand. automation technology. leaders continually make adjustments to their production facility network to help them meet demand and control operating costs. leaders are twice as likely than other manufacturers to have relocated manufacturing operations since 2011. Contract manufacturing is on the rise. In fact. To support flexibility. manufacturers diverge on how they view contract manufacturing as it relates to their own business: A majority see it mainly as a way to relieve short-term capacity constraints. Yet many manufacturers are not confident in areas that are key to flexible and dynamic operations—such as market-sensing capabilities. which we deemed 5 Introduction . to have started new operations during that time. “manufacturing leaders. One key to accommodating such flexibility is a high degree of consistency and standardization across all dimensions of the operating model. To contend with an increasingly volatile and unpredictable global economy. In addition to the preceding. while the remainder consider it a part of their long-term strategy. However. While non-leaders view contract manufacturing as merely a way to relieve short-term capacity constraints. Digitization of manufacturing is creating challenges in attracting and retaining the right talent. Overall. A small group of companies in our survey—about 8 percent—reported having increased their production levels. and more than three-quarters have increased their manufacturing workforce in the past few years. as well as investments in initiatives to increase the efficiency and productivity of individual manufacturing facilities. a large majority of manufacturers also said they are focused on extending the life and contributions of existing assets through initiatives such as applying lean principles to reduce waste. and extensively use modular and consistent business processes and policies that enable them to quickly and dynamically allocate Flexible and dynamic operations are vital to manufacturers’ growth. which helps enable manufacturers to seamlessly shift production from one facility to another.” were far more likely than other companies in our study to also report having grown revenue by more than 10 percent since 2011 and to anticipate growth of more than 10 percent in 2013. uncertainty about customer demand. be highly adept at accurately sensing market changes or opportunities before competitors do. modular and consistent business processes and policies.Economic and market volatility is the overriding threat to manufacturers’ growth agenda. profitability and labor efficiency by more than 10 percent since 2011. Executives participating in our study cited a variety of volatility-related factors as potential impediments to their ability to grow— including global currency instability. Eight in 10 executives overall agreed or strongly agreed that the ability to flexibly and dynamically move production from one existing facility to another. and potential changes in government regulations. Helping to drive such compelling business results are some underlying approaches and practices that leaders employ—and that are less evident among the rest of our survey sample. or to change the product mix at an existing facility to match demand. our research also enabled us to identify some of the advanced practices that correlate strongly with superior business performance. Leaders also are much more likely to be planning to increase the use of contract manufacturing and see contract manufacturing in a more strategic light. have full visibility into its network’s operations that enables them to effectively manage the network and make appropriate decisions to balance demand and capacity. political or social unrest in key markets. While manufacturers’ performance in the past few years has been encouraging— and optimism runs high—possible storm clouds remain on the horizon. seven in 10 said improving their company’s operating model to more effectively support such flexibility is a priority in the next 12 months. and analytics. and in information technology solutions. For example. manufacturers in our survey appear to be confident they have a talent strategy that enables them to hire. Leaders also appear to be more advanced than others in key capabilities that are critical to operating more flexibly and dynamically. develop and retain the skills they need to compete effectively. This group. However. Participating companies continue to make capital investments in new plants and manufacturing equipment and technologies. total productive maintenance. Yet many manufacturers still have several skills gaps primarily because they are unable to find or unwilling to pay the going rate for the more advanced skills needed in the digital environment. For instance. unpredictable commodities costs. Manufacturers are focused on improving their operating model to be more flexible. Three-fourths of manufacturers in our study said they will augment their production facility network in the next 12 months through a moderate or extensive use of contract manufacturing. Manufacturers are striving to strike a balance between investments in new and existing assets. leaders see it as part of their long-term strategy and an important component of their broader production facility network.

For instance. squeeze more capacity and productivity out of the assets and infrastructure they already have. and get the right people in place where they are most needed are best positioned to grow and thrive in today’s volatile global economy.and part-time employees. and tend to build a diverse workforce that includes full. which in turn boosts labor efficiency and supports a more flexible and dynamic facility network that can enable them to more easily adapt to changing market conditions. are voracious acquirers of talent. When it comes to people. those that are able to infuse a high degree of flexibility in their operations.   Introduction 6 . leaders have a talent strategy that enables them to acquire or build the skills they need to compete effectively. leaders increasingly are looking to make their current operations more reliable and responsive.manufacturing capacity across the facility network (including contract manufacturers) in response to changes in its markets. Finally. leaders are twice as likely as others to be focused on extending the life and contribution of existing assets—particularly through total productive maintenance and the use of operations analytics to help improve the efficiency and productivity of individual manufacturing facilities. even those that are optimistic about growth. But as the manufacturing leaders in our study suggest. contractors and consultants. focus their hiring on people in countries where demand is strongest or who have skills that are strategically important to the company. There’s no doubt that these remain challenging times for manufacturers.

executives remain wary of marketplace and economic volatility and are taking steps to infuse greater flexibility into their operations in response. Their responses suggest that more flexible and dynamic operations have helped them substantially increase revenues and margins. manufacturers overall have rebounded. political or social unrest in key markets. with 94 percent reporting their company’s total production level has increased (Figure 1). Ninety-three percent of executives surveyed said their companies have posted overall revenue growth since 2011 (Figure 1) and virtually all manufacturers anticipate some growth in 2013 (with 63 percent anticipating at least six percent). Driving that output has been an increase in capacity: More than two-thirds of manufacturers overall said they increased capacity since 2011. Forty-one percent indicated moderate optimism. Regardless of which specific markets executives cited as their top three. Furthermore. followed by China. and potential changes in government regulations (Figure 2). uncertainty about customer demand. the current environment is not without its challenges. One of the biggest challenges manufacturers face is the economic and market volatility that prevails in many markets and remains a major concern among manufacturing executives in all regions. Executives participating in our study cited a variety of volatility-related factors as potential threats to their growth agenda. unpredictable commodities costs. with nearly three in 10 indicating the increase was more than 20 percent. and that they expect to continue generating such positive results in the future. growth is expected to be mostly or entirely organic. while manufacturers remain optimistic about their business and their markets. compared with 21 percent.KEY RESEarch FiNDiNgS In embarking on this research effort. For 60 percent of manufacturers. which believe growth will be primarily or entirely through inorganic means such as M&A. including global currency instability. Given these challenges. Manufacturers’ output has increased as well. This is especially true of manufacturers that have performed most strongly in the past few years. However. or to change the product mix at an existing facility to match demand. 7 Perspectives on Growth . is critical to achieving their growth goals. executives see changes afoot as emerging markets appeared poised to make gains at the top of the list. joint ventures. and improve labor efficiency. it is not surprising that 82 percent of executives overall agreed or strongly agreed that the ability to flexibly and dynamically move production from one existing facility to another. and 22 percent have boosted profits by more than 10 percent (Figure 1). Perspectives on Growth While some countries’ economies continue to experience the lingering effects of the Great Recession. boost production levels. What is the source of manufacturers’ growth? The United States was cited by the largest percentage of manufacturing executives as the country from which their company currently derives most of its revenue. Perhaps most important is that margins are up. while just 15 percent said they were pessimistic about growth in their top markets. and alliances. confidence in these markets remains strong. with China and Brazil expected to grow in importance. especially those in mature markets. 44 percent said they are highly optimistic these economies will grow in the next 12 months. Accenture sought to understand manufacturers’ views on several key issues: • Recent and future growth and the sources of that growth • Challenges that might affect their ability to achieve their growth goals • How well suited their operating model is to supporting their growth agenda • Where they are locating production facilities—and why • Their ability to attract and develop the skills they need to grow • Which investments do they consider critical to driving growth Our survey of 250 executives at global manufacturers (see Appendix for more details on research methodology and participant demographics) provided ample evidence that although manufacturers’ business performance has improved since the recession. Beyond next year. An overwhelming majority of manufacturers in our survey have experienced strengthening business performance in the past few years and most anticipate that trend to continue in the near future. Ninety percent of manufacturers have increased their overall profitability since 2011.

production level and profitability since 2011. 40% 35% 30% 25% 24% 20% 15% 10% 5% 4% 0% 2% 3% 4% 4% 7% 20% 22% 36% 36% 35% 36% 31% 34% Declined / Decreased 1% to 10% Total Revenue Growth Flat Grew / Increased 1% to 5% Total Profitability Grew / Increased 6% to 10% Grew / Increased > 10% Total Production Figure 2: Issues manufacturers indicated could impact their ability to grow in 2013-14. Global currency instability Unpredictable commodities cost Stronger competitors Pressure to reduce operational costs Uncertainty about customer demand Political/social unrest in key markets Potential changes in federal government regulations Applying innovation to stay ahead of the competition Weaker pricing power for finished goods/services Aging workforce/shortage of talent Extreme weather/natural disasters Shortage of commodities 15% 15% 14% 22% 25% 24% 27% 29% 33% 32% 36% 43% Perspectives on Growth 8 .Figure 1: Total revenue growth.

• Just 26 percent strongly agreed their company extensively employs modular and consistent business processes and policies that enable it to quickly and dynamically allocate product design and manufacturing capacity across the facility network (including contract manufacturers) in response to changes in its markets. Manufacturers also recognize that robust. switching over to producing a different product mix) in response to market developments or changes in demand. talent. However. thus. Nearly 60 percent of all manufacturers indicated various aspects of their operating model accommodate to some degree the dynamic shifting of resources and activities to different physical locations in their manufacturing network in response to market developments or changes 9 Capturing Growth . and reducing material costs (Figure 3). reducing labor costs. The scenario is slightly better when it comes to supporting flexibility inside a single location. manufacturers have made solid progress in these areas.Capturing Growth As they pursue growth. enabling them to effectively manage the network and make appropriate decisions to balance demand and capacity. But again. Operating model: More work needed to support flexible and dynamic shifting of resources to accommodate changes in demand Recognizing the highly volatile business environment in which they operate. in demand. The most popular lever by far is improving operational efficiency. Nearly two-thirds said various aspects of their operating model accommodate to some degree the dynamic shifting of resources and activities within a specific facility (for example. manufacturers are adapting key aspects of their operating model to make their operations (both network-wide and at the specific facility level) more flexible and dynamic and. and operating model that can help support the operational flexibility executives see as critical to driving growth. sustainable growth is dependent on a solid base of operations—a base that includes the right production facility network. For instance: • Only 24 percent of executives strongly agreed their company is highly adept at accurately sensing market changes or opportunities before competitors do. • Forty percent strongly agreed their company has a good understanding of the local cultural differences and needs in its most important revenue markets. • Only 29 percent of executives strongly agreed that their company has full visibility into its network’s operations. followed by improving quality. but shortcomings in key aspects of their operations remain that could make it difficult for them to achieve their growth goals. According to executives participating in our survey. manufacturers will rely on a number of levers to maintain or improve profitability. in no case was a specific dimension described by more than 27 percent of respondents as providing very effective support (Figure 4). More specifically. reducing inventory levels. However. most manufacturers have experienced uneven progress in creating more flexible and dynamic operations and consider improving their capabilities in this regard to be an important priority in the short term. no dimension was named by more 28 percent as providing very effective support (Figure 5). executives’ feedback indicated shortcomings in key capabilities that can be critical to operating more flexibly and dynamically. help improve overall operational and financial performance.

Organization structure and incentives system Business processes. totals may not equal 100% 30% 26% 29% 28% 29% 32% 2 3 33% 39% 41% 30% 32% 35% 4 27% 20% 17% 26% 23% 20% 5 . Organization structure and incentives system Information technology infrastructure Production facility network Business processes.Very effectively Figure 5: How effectively manufacturers’ operating model accommodates flexibly and dynamic shifting of production within a single location. and capabilities Information technology infrastructure Talent/skills base Production facility network Information technology applications 4% 3% 4% 2% 3% 6% 6% 8% 10% 11% 9% 8% 1 .Very ineffectively Note: Due to rounding. policies. and capabilities Information technology applications Talent/skills base 3% 3% 4% 5% 3% 3% 6% 11% 9% 12% 12% 10% 1 . policies. Improving operational efficiency Improving quality Reducing labor costs Reducing inventory levels Reducing material cost Improving throughput in current facility 12% 35% 33% 31% 30% 57% Figure 4: How effectively manufacturers’ operating model accommodates flexibly and dynamic shifting of production across different physical locations.Very effectively Capturing Growth 10 .Very ineffectively Note: Due to rounding. totals may not equal 100% 25% 24% 26% 27% 29% 27% 2 3 37% 38% 35% 39% 40% 34% 4 28% 26% 25% 21% 19% 24% 5 .Figure 3: Most common levers manufacturers will use to maintain or improve profitability.

and plant employees are happier in their jobs. Because it can enable manufacturers to be more flexible and dynamic and. And it is not a replacement or alternative to a functional management structure or simply a lean continuous improvement methodology. respond more effectively to the volatility of the marketplace. Change management is vital to implementing and sustaining a new mindset and way of working across the enterprise. in turn. But while the term “production system” is well known. and do production leveling. That shift. a robust production system is fast becoming a “must have” for growth-oriented manufacturers. One of the key approaches to drive modular and globally consistent capabilities is through the instantiation of a manufacturing production system. the drug company is now able to match and lay out a plant to allow it to flexibly adapt to product run type. A leading-practice production system can be a major asset for today’s manufacturer. Furthermore. content. the company took major strides to embed a continuous improvement mindset and culture across the company. and a production system requires a major culture change. Additionally. changing a company’s culture is extremely difficult. as part of the production system implementation. a deeper analysis revealed that the plants actually were running at only 50 percent to 60 percent of capacity—and that many of the factors impeding plant performance were not beyond their control. skills. Executives at the company wanted to get more out of their factories. and structures. which refined its production system to dramatically improve the company’s performance. Perhaps one of the most-overlooked of the preceding six elements is change management. more organizations are utilizing their production systems and their supporting resources as the platform for transformational change. is helping the company overall to be more proactive in identifying inefficiencies and other issues that can impede a plant’s performance. its true meaning often is not. in turn. It is not a centralized standardization system or performance reporting tool. instead of seeing themselves as responsible only for running manufacturing lines. As a result of this effort. and stakeholder engagement and communication—and continuously “take the pulse” of the organization to help ensure that the changes are taking root. • Strategy and Guiding Principles – a comprehensive framework to align business strategy and value targeting with expected sustainable results • Capability Management –the enablement of manufacturing resources (people process. but rather. However. in turn. companies adopting a production system must take advantage of the entire change management toolset— including leadership and organizational alignment. continuous improvement and elimination of waste in manufacturing environments—which. the company conducted training for shopfloor employees on basic problem-solving techniques. Now. Thus. metrics. Importantly. the age of the machines. and rewards • Technical Management – the coordination of critical information technology to enable manufacturing capabilities to meet valuetargeting expectations • Lean Principles – a foundational element that drives customer focus. a production system is an integrated and value-driven management system that can enable consistency. At its most basic level. or a replacement of all existing methodologies. 11 Capturing Growth . organization. it’s important to clear up some misconceptions about production systems. and the design of the facilities. A production system is not an information technology system. A major side benefit is that plant work is now more challenging and rewarding. were losses the company could address. By adopting a new production system. Thus. talent acquisition. worker skill availability. There are six critical elements to building a comprehensive production system. the complexity of the products being made. the drug company ultimately was able to boost the capacity of its existing network by more than 10 percent. Managing Director. technology and policy) toward business strategy and coordinated value generation • Change Management – the establishment of a culture of continuous improvement and change through alignment of culture. to sustain those results over time. Accenture Management Consulting Our study revealed that manufacturing leaders are twice as likely as other companies to extensively use modular and consistent capabilities that enable them to quickly and dynamically allocate manufacturing capabilities across the facility network in response to changes in its markets. gather data on the performance of key process steps. There are myriad ways it can help a company achieve its objectives. training and performance support. project management office or system. but believed it wasn’t possible because of a host of reasons they thought were beyond their control—historical performance. or a manufacturing or supply chain operations optimization system. • Governance – a process and framework for managing value realization and the continuous improvement lifecycle.DriviNg CoNSiStENcY aND FlEXibilitY Through “ProDuctioN SYStEmS” By Saurabh Bhatnagar. In today’s volatile global economy. Indeed. process standardization and waste elimination across the operation. One example is the experience of a large drug company. the company’s plant employees see themselves as problem solvers who have an opportunity on a daily basis to improve the way the lines operate. regulatory constraints. drives flexibility and agility across the business. production systems have become increasingly critical to enabling manufacturers to operate more consistently and efficiently.

Capturing Growth 12 .

skills and other capabilities. Since 2011. Figure 6: Percentage of manufacturers believing it is a priority to improve their operating model. growing markets. and capabilities Information technology infrastructure Information technology applications Organization structure and incentives system Production facility network None 4% 23% 34% 34% 38% 47% 56% 13 Capturing Growth . as well as in their IT infrastructure and IT applications (which are critical to manufacturers’ efforts to become a more digital business (Figure 7). policies. The relocation trend looks to continue in the next 12 months. is indicative of a greater focus by manufacturers on emerging. policies and capabilities. policies. manufacturers should be mindful of the important role that consistency can play in fostering flexibility in their operating model. perhaps. helps explain the increased popularity of Africa in this year’s study—reducing labor costs. with 37 percent of executives surveyed also saying their companies are considering relocating operations during that time—mostly to reduce labor costs and enter a new market. of those relocating operations. Without a high degree of global consistency and standardization across their business processes. about four in 10 manufacturers surveyed reported having relocated production facilities to new locations— primarily to enter a new market.The good news is that executives recognize their companies could do better and plan to take action. followed by Germany (19 percent). Reducing transportation costs appears to be less of a driving factor for future relocations than they were with previous initiatives In addition to moving existing facilities. Production facility network: Plants are being relocated or built to support new market entry and reduce costs As the pattern of demand continues to change. Such assessments can often result in the decision to relocate production facilities from one country to another or start up a new facility in a new market. the most prevalent reasons for starting a new facility were entering a new market—which. nearly half of the manufacturers in our study said they started new production facilities since 2011—with the overwhelming favorite site being China (45 percent). or reduce labor costs (Figure 8). although the United States also was a popular landing spot for relocated facilities for 13 percent of respondents. For instance. Conversely. the United States (25 percent). And about one-third said they anticipate investing in their organization structure and incentive systems. the biggest beneficiaries of manufacturers’ moves were China (34 percent) and Brazil (23 percent). was located in the United States (26 percent). at a global level. the largest percentage said the facility they shut down to make the move 44% Neither significant nor insignificant Insignificant 24% 2% 1% 2013 Global Very insignificant Figure 7: Aspects of the operating model in which manufacturers plan to invest in 2013-14. reduce transportation costs. More than half said their companies are planning to invest in strengthening their talent and skills base in the next 12 months and nearly half indicated they are doing the same for their business processes. Very significant 29% Significant As they make such investments. Seven in 10 said improving their company’s operating model is a priority in the next 12 months (Figure 6). and reducing transportation costs (Figure 9). manufacturers face the ongoing need to evaluate where and how they make their products to improve responsiveness to customers while reducing overall operational costs. Talent/skills base Business processes. manufacturers may find it difficult to easily move production within or across facilities when market developments demand it. The relocation of facilities. Again. followed by Brazil (30 percent). and Africa (16 percent).

Have you relocated manufacturing operations to new locations since 2011? Which three factors are most important when selecting the locations of your manufacturing operations? Select one Entering a new market Reducing transportation costs Reducing labor costs 42% Increasing responsiveness / reducing lead time to customers Capitalizing on currency or tax advantages Desiring more favorable government regulations Gaining access to needed workforce skills Taking advantage of needed skills in that location Capitalizing on government incentives 54% Reducing the impact of volatile or rising oil prices Desiring to improve quality Yes No 4% 2013 Global Not sure Developing a new product that needed specialized operations Minimizing intellectual property theft Other 1% 12% 11% 10% 9% 16% 25% 24% 23% 21% 19% 30% 29% 29% Figure 9: Starting new manufacturing operations. Have you started new manufacturing operations since 2011? Which three factors were the most important in your decision to start operations there? Entering a new market Reducing labor costs Reducing transportation costs 49% Increasing responsiveness / reducing lead time to customers Taking advantage of needed skills in that location Capitalizing on government incentives Desiring to improve quality Capitalizing on currency or tax advantages Minimizing intellectual property theft 49% Gaining access to needed workforce skills Desiring more favorable government regulations Yes No 2% 2013 Global Not sure Developing a new product that needed specialized operations Reducing the impact of volatile or rising oil prices 17% 17% 16% 16% 14% 12% 11% 9% 26% 25% 23% 30% 33% Capturing Growth 14 .Figure 8: Relocation of manufacturing facilities.

which can lead them to spend too much time defining the project structure (including the project approach.AvoiDiNg thE PitfallS of FacilitY RElocatioN or Startup By Michael Heilala. By considering at the outset of any project these three dimensions—and how they play out across the “design. training and competency management program. increase responsiveness to customers. can be extremely challenging and fraught with risk—especially if they involve facilities in countries where the company has little to no experience or if the company lacks the capabilities needed to effectively execute the changes. manufacturers continue to make changes to their global production network in response to a variety of factors—such as the need to support entry into a new market. Manufacturers often find it difficult to navigate through the maze of unfamiliar government regulations. Since 2011 about four in 10 manufacturers surveyed reported having relocated production facilities to new locations and nearly half started new ones. guides the build-out of the requisite technology infrastructure and network. The change operations dimension targets the “people” aspects of the initiative. reduce costs. and facilitates the implementation of the necessary physical and corporate support services. or improve overall operational efficiency. Such moves. Accenture Management Consulting As we noted elsewhere in our report. The business operations dimension is associated with the process and functional support the new facility will require. developing a recruiting. The technology operations dimension involves the technology required to support the facility’s operational processes. as well as the subsequent staffing of the facility (including identifying the talent needed. companies can more effectively manage their facility relocation or startup project by carefully addressing three dimensions of the initiative. legal practices. Senior Principal. factory design and construction management. and overseeing ongoing skills development and workforce management initiatives). customs and habits when setting up shop in a new country. Doing so can help manufacturers avoid overlooking “critical-path” requirements and identify potential capability shortcomings that could derail the effort. about 40 percent said they are planning to relocate facilities in the next 12 months. a lack of knowledge of local markets can have serious implications for a project. Many organizations lack experience in facility development. As they make significant changes to their production footprint to support their growth agenda. systems configuration and data clean-up and conversion activities. and the production start-up activities needed to launch the facility. manufacturers will undoubtedly encounter their share of challenges. reports. Indeed. hiring and training experience). Manufacturers also can have a shortage of key internal competencies. and key metrics). 15 Capturing Growth . companies looking to relocate or open new facilities often face a number of major issues that can lead to project delays. lean factory layout design. team composition. or plants that ultimately fail to meet the production and cost targets initially set for them. in equipment capability and capacity modeling)—as well as some critical internal competencies that may not be fully available throughout the project (including global operating model development. companies typically struggle with managing project complexity— especially coordinating the myriad work streams involved throughout the phases of a factory development project and integrating the new facility with the company’s existing infrastructure. hiring. For example. while beneficial if done right. Furthermore. local region/country sourcing and local recruiting. build and operate” lifecycle of a facility—manufacturers can better position a relocated or new facility to live up to its promise. major cost overruns. processes and local environment. consolidate facilities after a merger or acquisition. This includes driving the overall change program and communication strategy associated with the facility’s launch. This includes spelling out the new factory’s design (and how the design aligns with the company’s overall supplier and manufacturing network strategy). the operational processes and back-office support (such as HR and finance) required to run the facility. Furthermore. and not fully recognize the major factors that can make or break the project. Developing one or more new facilities can require skills that are materially different from those needed to effectively operate a plant— including competencies in large-scale project management and specific technical competences (for example. fail to accurately identify critical project risks. In our experience.

or part-time contractors. extensively 24% Yes. Total cost analysis of options Skills and knowledge of staff Improved understanding of local market capabilities A comprehensive manufacturing location strategy Changing internal mindset to a longer-term. manufacturers also are planning to increase their use of contract manufacturing. determining where to locate production facilities can be a complex endeavor. Companies that excel in getting the right talent on board and developing critical skills in the workforce typically are better positioned for sustained high performance over time. Since 2011. with 54 percent doing so to relieve short-term capacity constraints and 46 percent considering contract manufacturing a part of their long-term strategy (Figure 10). Do you anticipate increasing your use of contract manufacturing in 2013-14? Why are you increasing the use of contract manufacturing? 26% 54% 50% Yes. manufacturers in our survey appear to be confident they have what it takes to build the right workforce for their business.Figure 10: Use of contract manufacturing. moderately No 2013 Global 46% It will help us relieve short-term capacity constraints Use of contract manufacturing is part of our long-term strategy 2013 Global Figure 11: Capabilities manufacturers could strengthen to improve facility location decisions. and those eliminated were most likely to be full. Eighty-three percent of executives surveyed agreed their company’s talent strategy Capturing Growth 16 . Manufacturers also have been active in bringing new people aboard. Of course. Among the small minority of manufacturers that actually decreased their workforce since 2011. develop and retain the skills they need to compete effectively in a today’s economic environment. Talent: Manufacturers continue to hire and improve labor efficiency. total value view 21% 40% 48% 46% 55% As part of their production network. reductions tended to be centered in countries where demand was weakest. but many face major talent gaps in key workforces It’s a given that people are the key to a company’s success. manufacturers were most commonly adding skills that are strategically important and in countries where demand was strongest. enables them to hire. Executives in our survey indicated they could make more effective location decisions by improving several key capabilities within their organizations—especially their ability to conduct total cost analyses of the location options when considering where to move or startup a facility—which is significant given that cost is the primary driver of location decisions among a large majority of manufacturers (Figure 11). especially when opening plants in new markets. Overall. Of those. Workers hired were more likely to be fullor part-time salaried workers as opposed to hourly workers or contractors. more than three-quarters of companies surveyed have increased their manufacturing workforce (Figure 12). Threefourths of those in our study said they will increase moderately or extensively their use of contract manufacturing in the next 12 months.

17 Capturing Growth .

Lesscore items. For example. as well as those that can be more effectively made by a third party. a company should decide which kind of relationships it wants to have with a partner—a highly strategic. Accenture Management Consulting According to our survey. However. are good candidates for outsourcing to a contract manufacturer. acquiring equipment. Senior Manager. collaborative one in which the partner may bring new capabilities to the table or even co-invest in a product. Contract manufacturing can be a powerful way for companies to extend their capacity and add important flexibility to their production network—something that can be critical in today’s highly volatile business environment. contract manufacturing should be seen as not simply a capacity lever. For example.GEttiNg thE MoSt From CoNtract MaNufacturiNg By David Douthit. A trusted third party can help a company quickly establish a presence. a large majority of manufacturers are planning to increase their use of contract manufacturing in the coming year. and securing trained resources with local market knowledge can be time consuming and expensive. But companies may not realize the true benefits of contract manufacturing unless they make it part of their overall manufacturing strategy and manage as a key element of its production network. or a more transactional one in which the partner is solely focused on supplying “standard” goods at the lowest cost of ownership. companies can significantly enhance the flexibility of their operations while avoiding the substantial costs associated with building or buying new facilities and investing in new equipment and personnel. as an integral part of a company’s long-term global manufacturing strategy and an important component of its broader production facility network—which is how the vast majority of the manufacturing leaders in our survey view it. and Capturing Growth 18 . but rather. processes and tools in place to ensure partners are delivering what they have committed to deliver. Next. do so with a variable-cost operating model (people. production involving items that are highly differentiating for the company—those that make it unique in the marketplace—should remain in house. where demand is difficult to predict and building new facilities. and that potential issues are identified and addressed well before they become problems. a contract manufacturer can be used at the end of the manufacturing process to add features or functions to a standard product that make the product more relevant to local market needs. more than half said they are doing so to relieve short-term capacity constraints. plant and equipment) tied to demand. A strategic approach involves four basic actions The first is to carefully consider what the company should outsource and what it should keep in house—and under what conditions. a company may want to be intimately involved in all aspects of the relationship and have deep visibility into where things stand at any given point in the supply chain. Finally. Of those. It may prefer the opposite—a “hands-off” approach in which the company assumes the parts or materials will be available when it needs them. And in some cases. in our experience. Or it might be comfortable somewhere in the middle. an enterprise should implement the tools and capabilities that can enable it to effectively manage its contract manufacturing network. By approaching contract manufacturing more strategically. Contract manufacturers also can be good options when entering a new market. It is critical for a company to have the right people. Then a company needs to determine the level of control it wants to exert on those relationships.

How have you changed your manufacturing workforce since 2011? 2013 Global 14% We decreased it substantially 35% We decreased it moderately We decreased it slightly It remained the same 28% We increased it slightly We increased it moderately 14% 8% 2% 1% We increased it substantially Please indicate how each of the following describes your approach to increasing your manufacturing workforce. 51% 39% 33% 29% 55% 42% 34% 47% 15% Full-time employees 19% 12% Contractors Part-time employees 24% Increase No change Decrease Consultants 19 Capturing Growth . We added workers whose skills were determined to be strategically important to the company Our increases tended to be centered in countries where demand was strongest We tended to eliminate workers in the lowest tier of performance Workers added were more likely to be full. totals may not equal 100% 9% 11% 16% 13% 15% 17% Somewhat disagree 21% 16% 29% 23% 34% 29% Neither agree nor disagree 34% 38% 29% 38% 27% 32% Somewhat agree 30% 29% 21% 19% 16% 15% Strongly agree Figure 13: Plans for change in use of various types of workers in 2013-14.or part-time hourly employees Workers added were more likely to be temporary or full-time contractors 6% 5% 5% 7% 8% 8% Strongly disagree Note: Due to rounding.Figure 12: Manufacturers’ changes to their workforce since 2011.or part-time salaried employees Workers added were more likely to be full.

and 35 percent said the same about their general labor workforce.Extensive skills gap Figure 15: Levers manufacturers use to close skills gaps and improve workforce performance. career levels and appropriate curriculum Individuals are encouraged to proactively seek training on new topics and technologies Career advancement includes rotations through various roles and assignments to different countries or facilities Well-defined talent sourcing and selection strategy is in place Employee satisfaction surveys are conducted regularly and results are shared Global and local communities of practices. Performance rewards tie to both individual success and enterprise profitability Competitive salaries and benefits are offered Leadership encourages innovation and provides employees with opportunities to share ideas Training is used to keep the workforce current and re-training is used rather than hiring/firing Formal competency models are in place defining required skills. to a lesser extent. The increase will largely be driven by boosts in the number of predominantly full-time employees and. and formal competency models that define required skills. encouragement from leadership to pursue innovation and share ideas.This hiring trend appears poised to continue in the near future. most manufacturers rely on a few key levers to close them and improve overall workforce performance (Figure15): performance rewards tied to both individual success and enterprise profitability. mostly in the blue-collar workforce (Figure 14) where they struggle to attract the needed skills because they cannot pay what the talent demands. however. contractors (Figure 13). Nearly four in 10 respondents said their company has a sizable skills gap in their skilled trades labor workforce. Regardless of where the gaps are. career levels and appropriate curriculum. many manufacturers still have several skills gaps. Figure 14: Skills gaps in various manufacturing workforces. Skilled Trades Labor General Labor Maintenance Operations Management Supervisors Executives 8% 7% 9% 13% 11% 20% 1 . The smallest gaps across all companies were seen at the top of the management hierarchy— supervisors and executives. with two-thirds of executives saying their companies plan to increase their overall manufacturing workforce by at least 5 percent between 2013 and 2014. effective at sharing knowledge Full participation in coaching and mentoring activities Real-time critical feedback is provided and is an embedded part of the company's culture 12% 19% 22% 29% 28% 28% 32% 37% 40% 39% 46% 45% Capturing Growth 20 . Despite their vigorous hiring.Minimal skills gap 19% 25% 2 3 21% 23% 23% 28% 40% 25% 4 33% 35% 36% 28% 24% 22% 24% 23% 18% 19% 14% 13% 8% 8% 12% 11% 5 . competitive salaries and benefits. training to keep the workforce current.

21 Capturing Growth .

To minimize skills gaps. focusing primarily on bringing in full. one-third are acceptable performers. Redouble employee learning and development efforts It was surprising that only 39 percent of manufacturers said they use training to keep the workforce current. A good starting point are the high performers in one’s organization. contract. and that just 32 percent encourage individuals to proactively seek training on new topics and technologies. one-third of employees are high performers. since 2011. especially in the trades labor and general labor workforces. a company can better Rethink employee incentives The environment within many manufacturers today is much less hierarchical than in days past and more collaborative. understand what it should look for in new recruits. especially people with the technical skills that are still critically important to a manufacturer’s business. all working Capturing Growth 22 . A large majority of executives surveyed agreed their company’s talent strategy enables them to hire. the following have proven very effective. as well.SolviNg thE MaNufacturEr’S SkillS DilEmma By David C. and one-third perform below standards and generally are unable or unwilling to make the transition to one of the other groups. Develop a broader definition of “workforce” Manufacturers in our study are focused on hiring what could be considered a more traditional workforce: “owned. trade schools and community colleges to build curricula that can expose students to the skills manufacturers need. That way. on the success of the broader enterprise. develop and retain the skills they need to compete effectively in a today’s economic environment. more than threequarters of companies surveyed have increased their manufacturing workforce. Learning academies. In such an environment.or part-time salaried workers with skills that are strategically important and in countries where demand was strongest. when students do come on board. For instance. integrated and cross-functional. they have a head start on the skills that companies can mold and develop further. new types of rewards and incentives are important to encourage the desired behaviors outcomes. Yet many manufacturers remain plagued by skills gaps. ultimately. and the need to continue building a robust workforce to achieve their growth goals. manufacturers should consider investing in training their employees—especially those in key workforces—so employees have access to the latest approaches to developing the skills they need to be successful in their jobs. To help fill that void. manufacturers should consider how they can partner with high schools. less-traditional workforces. Often. retain and build the skills they need? In our experience. including contractors. Accenture Management Consulting Although manufacturers in our study continue to hire workers and are confident in their talent strategy. often the digitalization of manufacturing roles (even on the shop floor) have made previous role descriptions obsolete. channel partners. For instance. Managing Director. and union employees as well as people representing channel partners and even customers. but also gives them greater flexibility to scale labor up and down as business conditions and skill requirements demand. Work with institutions further back in the talent supply chain to build the needed skills. have proven highly effective in identifying and delivering targeted training and development for employees based on their roles and competencies. Indeed. Shaw. Formal competency models also can help manufacturers define required skills and career levels (something that only 37 percent of manufacturers in our survey have in place). For instance. Indeed. together on common initiatives. and consultants. global and local communities of practices that encourage the sharing knowledge can burnish employees’ skills (yet only 22 percent of manufacturers in our study have them in place). needed skills can and should be found in other. As they continue to look for ways to fill their skills gaps. which not only gives them a broader and deeper pool from which to find desired skills. Perhaps one reason is that just 28 percent of manufacturers said they had a well-defined talent sourcing and selection strategy in place. it’s common to encounter work teams comprising salaried. a majority of the manufacturing leaders in our study indicated they capitalize on all types of workers. Manufacturers in many industries are finding it increasingly difficult to find qualified talent. Given these gaps. Revisit job descriptions and roles Many manufacturers today still rely on outdated job and role descriptions when recruiting new talent. many face major talent gaps in key workforces that could constrain their growth and make it difficult for them to keep pace with market demands. However. manufacturers should keep in mind a simple rule of thumb In a typical organization. By studying those individuals and identifying the traits and attributes that make them effective. Manufacturers should look to update their job and role descriptions to help better reflect their business and what kind of talent drives success today. How effectively a company addresses these three different segments has a major impact on an organization’s overall skills base and. what steps should manufacturers take to attract.” salaried employees. those descriptions don’t match the skills a company truly needs or the essence of the job it’s trying to fill.

Figure 16: Change in manufacturers’ labor efficiency since 2011. Have you made manufacturing capital investments since 2011? What was the nature of the investments that you made? Manufacturing equipment / machine 75% Yes No 22% 2013 Global Note: Due to rounding. Since 2011. These include capital investments in new plants and manufacturing equipment and technologies. manufacturers will be in a better position to justify future investments that can substantially improve operational and financial performance. To help support their efforts to improve their operating model. Of course. and analytics (Figure 19). 66 percent of manufacturers also said they will be focused on extending the life and contributions of existing assets. manufacturers are redoubling their efforts to “clean up their shop” and become more efficient. But many executives also said spending on new equipment and technology will be tempered by efforts to get more out of what they already have. Since 2011. manufacturers are continuing to make targeted investments in key areas of their business. followed by quality assurance. as they increase their investments in key areas of their business. However. as these companies continue their quest to digitalize a wider range of their businesses: Nearly eight in 10 said they are planning initiatives in the next 12 months to strengthen their IT applications.While these initiatives may have fallen short in helping manufacturers close their skills gaps. 23% Figure 17: Manufacturers’ capital investments since 2011. optimize their facility network and enhance their workforce. and in the next 12 months. three-quarters of manufacturers have made manufacturing capital investments—mostly in manufacturing equipment and machines and in existing manufacturing plant infrastructure (Figure 17). Finally. they are looking to life-extending initiatives such as applying lean principles to reduce waste. as well as investments in information technology and efficiency initiatives. automation technology. By formally measuring and monitoring the value those investments deliver. they appear to have contributed to an increase in overall workforce efficiency. plant operations analytics. total productive maintenance. manufacturers must feel confident that they have a disciplined approach in place in order to get the return on those investments. manufacturing planning and scheduling. In other words. In doing so. about one-half of manufacturers said their labor efficiency has increased between 1 percent and 5 percent. information technology also is on the investment horizon for a large majority of manufacturers. totals may not equal 100% 4% Not sure Manufacturing technology New manufacturing plant construction 49% 45% Existing manufacturing plant infrastructure 60% 59% 23 Capturing Growth . and enterprise asset management solutions (Figure 20). 11% Increased by more than 10% Increased by 6% to 10% Increased by 1% to 5% Was unchanged 49% Decreased by 1% to 10% Decreased by more than 10% 13% 3% 2013 Global Note: Due to rounding. manufacturing execution systems. totals may not equal 100% Don't track / don't measure Investments: Manufacturers are striving to strike a balance between investments in new and existing assets. and one-tenth said it improved by more than 10 percent (Figure 16). ERP solutions. Such gains can help manufacturers increase existing assets’ capacity and are a key driver of broader operational efficiency across a manufacturer’s facility network. onefourth said it rose between 6 percent and 10 percent. The largest percentage indicated those initiatives would focus on performance management tools such as dashboards and metrics. capital investment is expected to continue (Figure 18).

Figure 18: Manufacturers’ capital investments for 2013-14. Manufacturing technology Manufacturing equipment/machine Existing manufacturing plant infrastructure New manufacturing plant construction None 4% 30% 44% 50% 59% Figure 19: Initiatives manufacturers are pursuing to extend the life and contributions of existing assets. Are you planning any initiatives in the next 12 months to invest in/strengthen your information technology applications? What type of initiatives are you planning? Performance Management (Dashboard & Metrics) Quality Assurance (QA) ERP Solutions Manufacturing Planning and Scheduling (MPS) 77% Manufacturing Execution Systems (MES) Plant Operations Analytics Enterprise Asset Management (EAM) Computerized Maintenance Management Systems (CMMS) Training and Collaboration Software 23% Yes No 2013 Global Lab Information Management Systems (LIMS) Other 1% 30% 29% 26% 23% 21% 16% 16% 39% 38% 53% Capturing Growth 24 . Applying lean principles to reduce waste Applying total productive maintenance (TPM) Applying automation technology Applying analytics 21% 49% 48% 67% Figure 20: Manufacturers’ information technology investment plans for the next 12 months.

The companies with the most productive. costly breakdowns and delays that can negatively impact balance sheets. Successful manufacturers also consider reliability a shared responsibility between production and maintenance. The maintenance line item in a manufacturing budget is an easy target when a company is faced with cost-cutting pressures. the companies can take the appropriate steps to prevent the events from happening and. These successful companies tend to have a highly structured understanding of their critical assets and what’s needed to optimize those assets’ performance. CollaborativE Approach to ASSEt REliabilitY By Jeff McKinney. successful manufacturers are analytically driven. have been squeezing even more out of older assets that are more prone to problems due to the accumulation of wear and tear. And third. By developing and using a formal capability to proactively and collaboratively manage asset maintenance and reliability. For instance. deserve the most attention). 25 Capturing Growth . it’s even more vital for manufacturers. tools. thus. tools and investments that help complex and expensive assets continue to run at peak operating performance—has always been important for manufacturers that operate in asset-intensive environments. not just the maintenance function’s. instead. the ability to make assets run more efficiently and reliably so they consume less energy is increasingly attractive. assets will likely fail to produce what is expected of them if they are not maintained properly. assets have become very sophisticated and complex which. In some manufacturers. Finally. No matter their cost or quality.A Formal. thus. efficient and reliable assets typically eschew this “We run. techniques and supplies to keep them running. For starters. in which the production team. manufacturers can learn from some of the world’s most successful manufacturers. with about half of those companies indicating they plan to deploy comprehensive preventive maintenance programs in support of that pursuit. many companies have been unable or unwilling to invest in new assets and. neglects preventive maintenance schedules and essentially runs the asset until it fails—at which time they call in the maintenance staff to repair it. which have adopted leading reliability and maintenance practices that help enable them to avoid the inefficiencies. But saving a little in preventive maintenance can have a negative effect on product cost and quality and ultimately can end up costing a company significantly more when the asset fails. Using such insights. successful manufacturers can create models that highlight the likelihood of various events and the impact those events could have on an asset’s performance. Accenture Management Consulting Reliability and maintenance—the processes. because of recent economic conditions. predictive analytics— can be extremely valuable. The importance of reliability and maintenance is evident in our survey: Two-thirds of manufacturers said they are focusing on extending the life and contributions of existing assets. Furthermore. As they seek to improve their assets’ performance and longevity. This can lead to a dangerous situation. also means there is much more to go wrong. These organizations understand that maximizing asset uptime is everybody’s job. Second. successful manufacturers don’t shortcut maintenance during times of austerity. reputations and customer relationships. They understand that a key to keeping assets running is to understand the conditions that cause them to fail and avoid them. Today. you fix” mentality in favor of a more collaborative approach that results in a more globally reliable network. for a number of reasons. with sustainability assuming greater importance among manufacturers. That’s where analytics—particularly. Managing Director. the typical large production facility has tens of thousands of production and automation assets. Using predictive analytics. But the time and cost associated with bringing an asset back online when it reaches this point can be far greater than what the company would have incurred had it simply followed its preventive maintenance routines. Companies that excel in optimizing these assets are highly adept at knowing what each asset needs and determining which assets are the most critical to the company’s performance (and. manufacturers can optimize their assets’ contribution to the company’s overall business performance. the production team sees keeping assets running as strictly the purview of the maintenance function. while boosting functionality. each of which requires different skills. minimize issues that could negatively affect asset performance. seeking to maximize uptime and drive down cost per unit.

Capturing Growth 26 .

27 Manufacturing Leaders .

And as a result. a closer look at our data revealed that leaders tend to differ substantially from other manufacturers in a number of key areas. suggesting leaders’ performance advantage is due not so much from where they get their sales. As mentioned earlier.Manufacturing Leaders While most manufacturers in our study have made varying degrees of progress in strengthening their operating model. Facility location According to our analysis. these companies are better positioned to manage through volatility and uncertainty and mitigate operational risk. to be highly optimistic that the economies of their top revenue markets will grow in the next year (80 percent versus 41 percent). and core talent and technology capabilities. it is perhaps not surprising that three-fourths of leaders (versus onefourth of others) increased their capacity by at least 20 percent during that time. For instance. 90 percent or more of companies overall indicated their production levels and profitability have increased since 2011. leaders’ top revenue markets did not differ dramatically from those of other manufacturers. and did so for two primary reasons: to enter a new market and to improve quality. Interestingly. a small group of manufacturers have excelled in building truly flexible and dynamic operations. Yes No Not sure 10% 5% 2% Leaders Others 46% 52% 85% Manufacturing Leaders 28 . In fact. combined with greater operational efficiency resulting from initiatives they are undertaking to improve the reliability and productivity of existing assets. Similarly. We call this elite group of companies manufacturing leaders. as well as to strongly agree that the ability to flexibly and dynamically alter production to match demand is critical to achieving their growth goals (80 percent versus 30 percent). leaders were about twice as likely as others to have started new operations since 2011 (Figure 22). they have grown more strongly in the past few years. but how they operate. Furthermore. plant location network. However. Yes No Not sure 5% 15% 39% 57% 80% 4% Others Leaders Figure 22: Percentage of companies having started new manufacturing operations since 2011. leaders were much more likely to indicate they plan to grow entirely through organic means in 2013 (70 percent versus 17 percent). However. and to anticipate revenue growth of more than 10 percent in 2013 (95 percent versus 15 percent). Given leaders’ strong growth since 2011. were far more likely than other companies in our study to report having grown revenue by more than 10 percent since 2011 (90 percent versus 13 percent). has been responsible for creating additional capacity in facilities already on line. with 70 percent of the former versus 34 percent of the latter indicating they are considering relocating manufacturing operations in 2013 and 2014. Leaders also favored North America for new operations. leaders are twice as likely (Figure 21) to have relocated manufacturing operations since 2011. it’s reasonable to surmise that leaders’ significant boost in labor efficiency. leaders are more active in making changes to their production facility network—whether it is in relocating plants or starting new ones. reported the highest level of performance—an increase of more than 10 percent on all three metrics. Conversely. which spanned the spectrum of organization size. and 83 percent said their labor efficiency rose during that period. and they are better positioned to capitalize on growth opportunities in the future. a small group of companies. leaders appear likely to outpace non-leaders in relocations as well. Manufacturing leaders. Figure 21: Percentage of companies having relocated manufacturing operations since 2011. non-leaders’ decisions were driven primarily by cost factors—a desire to reduce transportation and labor costs—which were far less a concern for leaders. about 8 percent of those participating in our study. In the coming year. with Brazil and China also the most popular locations for these new facilities among leaders. Some of that increase can be attributed to leaders’ opening of new facilities (discussed below).

. inventory. and the difficulty and high cost associated with maintaining the capability (especially. Accenture Management Consulting Global manufacturers today face a number of significant challenges in managing their supply chains. However. initiate appropriate action. • Sufficient organizational “weight” to be able to influence execution across both long-term and short-term horizons While many companies have used control towers in a more focused way. leading organizations are embracing the concept of a “control tower” to help them more effectively leverage their network and.How a CoNtrol TowEr CaN HElp MaNufacturErS MakE BEttEr ProDuctioN NEtwork DEciSioNS By Jose Bleda. Control towers can take different forms (depending. as advances in technology (such as cloud and SaaS models) can make integration efforts easier and a growing number of providers delivering some or all control tower functions as a service can substantially reduce the time and cost associated with deploying and maintaining the capability. increase competitiveness. and distribution). called the Global Command Center. As our survey found. orders/shipments in transit. However. It also can use the control tower to conduct predictive analytics to make sense of the data it collects to trigger alerts. capacity (supplier. ultimately. reduce costs. and logistics partners. the large amounts of data manufacturers must sort through. increasingly control towers are being used to help orchestrate the work of shared service centers—enabling a “super back office” to optomize business process. the traditional supply chain integration/optimization approach is not enough. Managing Director. optimize working capital. detect “tipping points. The challenge is especially difficult given three factors: manufacturers’ large. on functional footprint or scope of control). And. all control towers generally need a few key common elements to be successful: • Connection to suppliers and other trading partners (and their suppliers) to eliminate visibility gaps that create blind spots and can undermine the quality of the insights generated • Built-for-purpose technology that complements. One of the biggest is deciding how to best leverage resources across their production network to help meet changing demand. The concept of a control tower is not new: A number of influential organizations have implemented control towers to help improve transportation and distribution. specifically.e. These include a high initial investment for the necessary technologies and facilities. Recognizing their challenges. By extending the control tower concept to the entire supply chain—and. manufacturing—a company can gain integrated visibility across all dimensions of the network. Perhaps the biggest impediment to making such resource-balancing decisions is a lack of visibility into the state of the network. manufacturing. typical transactional systems—i. 29 Manufacturing Leaders . IT investment and execution skills synergies across businesses and geographies. and the economic and market volatility that require manufacturers to react more quickly or even anticipate problems before they occur. and alert one part of the supply chain when it will be impacted by another—for example. that is changing quickly. while a leading consumer goods manufacturer relies on a control tower to help it manage logistics in emerging markets by providing visibility into inbound and outbound distribution flows. in turn. which typically requires an industrialized master data management capability to ensure all systems are in synch • An analytical capability to be able to identify potential issues (predictively) by modeling “what if?” scenarios and facilitating decision making. for instance. predicting raw material shortages and reallocating production and inventory accordingly. to coordinate parts logistics and field technicians to respond swiftly to customers’ requests. has used its version of a control tower. A major technology company. technology upgrades and attracting and retaining the people to run it). and mitigate the risks of manufacturing network disruptions. including demand. and support the company’s growth agenda. rather than replaces. historically the barriers to establishing a broader manufacturing network control tower have been high and difficult to overcome.” run “what if” analyses of scenarios to model the outcome of potential decisions and. complex networks that often include many external entities such as contract manufacturers and logistics services providers. only 29 percent of executives strongly agreed that their company has full visibility into its network’s operations that enables it to effectively manage the network and make appropriate decisions to balance demand and capacity. a complex integration effort to tie into all relevant systems. long lead times to operationalize. systems of engagement versus systems of record • High-quality data. A control tower can also help enable a manufacturer to monitor the execution of supply chain activities. With manufacturers continuing to expand their operations around the world and increasing the complexity of their production networks. A control tower is fast becoming an indispensible capability in the pursuit of growth in a volatile global economy. improve product availability. for example.

Manufacturing Leaders 30 .

and extensively employs modular and consistent business processes and policies that enable it to quickly and dynamically allocate product design and manufacturing capacity across the facility network (including contract manufacturers) in response to changes in its markets. Brazil and the United States were also the top three locations for new plants. Operating model As mentioned earlier. They are about twice as likely to strongly agree their company has a good understanding of the local cultural differences and needs in its most important revenue markets. Contract manufacturing also appears set to play a greater role among leaders than nonleaders. just the opposite is true: Eighty-five percent of leaders—and just 24 percent of nonleaders—consider improving their operating model a very significant priority. is highly adept at accurately sensing market changes or opportunities before competitors do. 31 Manufacturing Leaders . but the desire to reduce transportation costs was seen as nearly equally important. In Accenture’s experience. leaders are far more likely than non-leaders to be convinced of the value of flexible operations to achieving their growth goals. has full visibility into its network’s operations that enables it to effectively manage the network and make appropriate decisions to balance demand and capacity. leaders are not complacent. Leaders are more likely than non-leaders to be investing in improving all six dimensions of their operating model in 2013 and 2014. In fact.with 35 percent reporting having opened new facilities in the United States and 24 percent in Canada. In fact. And it also appears that leaders’ operating model is better suited to supporting such flexibility: Leaders were more likely than others to say that all six dimensions of their operating model very effectively accommodate the dynamic shifting of production within a facility or across the facility network in response to demand (Figures 23 and 24). Leaders are more likely than others to view contract manufacturing as part of their long-term strategy rather than as a way to relieve shortterm capacity constraints (the reason that was cited by a majority of non-leaders). For non-leaders. Leaders also appear to be more advanced than others in key capabilities that are critical to operating more flexibly and dynamically (Figure 25). 70 percent of leaders (and just 22 percent of non-leaders) said they plan to extensively increase their use of contract manufacturing in 2013 and 2014. Non-leaders’ efforts to start new facilities were largely driven by the need to reduce labor costs and to support the entrance into a new market. However. Entrance into a new market was also leaders’ top reason for starting a new facility. that means leaders typically have a high degree of consistency and standardization across their operating model. which can help enable leaders to quickly and easily move production within and across any of its plants when necessary. especially talent and organization structure. China.

We extensively employ modular and consistent business processes and policies that enable us to quickly and dynamically allocate product design and manufacturing capacity across our facility network We have full visibility into out network’s operations that enables us to effectively manage the network and make appropriate decisions to balance demand and capacity We are highly adept at accurately sensing market changes or opportunities before competitors do 23% 55% 28% 40% 22% 50% We have a good understanding of local cultural differences and needs in our most important revenue markets 37% Leaders Others 80% Manufacturing Leaders 32 . and capabilities Talent / skills base Organization structure and incentives system Leaders 17% 22% 23% 24% 17% 26% Others 50% 45% 50% 50% 50% 60% Figure 25: Extent to which manufacturers agree with the following statements.Figure 23: How effectively manufacturers’ operating model accommodates the dynamic shifting of production across the facility network. Production facility network Information technology applications Information technology infrastructure Business processes. and capabilities Talent / skills base Organization structure and incentives system Leaders 16% 21% 17% 23% 18% 24% Others 35% 60% 25% 50% 50% 50% Figure 24: How effectively manufacturers’ operating model accommodates the dynamic shifting of production within a location. Production facility network Information technology applications Information technology infrastructure Business processes. policies. policies.

and can also generate significant improvements in MRO part inventory and sourcing strategies. operations and specialized areas like FMEA quality control activities. But the data also demonstrates that leaders are at the forefront of becoming digital businesses. Additionally. more productive and profitable. more quickly uncover and address field failures. driving reduced lead time and improved quality. our research found that the manufacturers we identified as leaders are more likely to be applying analytics to extend the life of existing assets and to improve the efficiency and productivity of individual manufacturing facilities. Several pending breakthroughs may enable 3D printing to ultimately meet its lofty goals. layout. Global Managing Director Operations Management Consulting As noted elsewhere in this report. They are giving rise to disruptors that drive much of the volatility in which global businesses operate today. Two emerging themes. indeed. In fact. And we discovered leaders were more likely to report that their IT applications and infrastructure effectively accommodate the dynamic shifting of production within and across facilities to respond to demand. Additional mobile-mounted apps in company vehicles enable Marathon to monitor the conditions to which employees are exposed as they visit remote locations such as water wells. an alarm is automatically sent to the dashboard. digital technologies also often represent a solution to the challenges they help create. Computer Aided Process Planning and Shop Order Control Modules further streamline production by empowering planning organizations to electronically author and update work instructions for real-time availability. Digital technologies. let alone thrive. analytics and telemetry data are revolutionizing the way manufacturers manage their assets by enabling manufacturers to monitor and predict asset reliability. Closed-Loop Digital Product Lifecycle Digital technologies enable companies to continuously monitor the performance of products in the field and automatically feed that data back to manufacturing and engineering in real time. Manufacturers should consider how the leaders in our study have embraced digital technologies to make their operations more flexible and responsive and. We also found they are more likely to be planning a wide variety of initiatives in the next 12 months to invest in or strengthen their IT applications. By leveraging simulation technology. as well as more effectively balancing manufacturing across the plant’s production line. for instance. is using an innovative solution developed by Accenture and three other partners to automate gas exposure reporting and remove the human factor of managing safety risk at one of Marathon’s biggest refineries. the combination of which enable companies to gain insights as never before into their customers. This. in the process. quality and troubleshooting. prototype creation. buffer requirements. helps companies more easily spot and correct quality defects in products. and leading organizations are closely following these developments. New technologies also are being used to dramatically enhance plant safety. are transforming the world around us. leading companies are deploying technology solutions that support the plant’s manufacturing process. illustrate the positive impact digital technologies can have on a manufacturer’s operations. For instance. two of the driving forces of digital business are big data and analytics. Today. Digital Factory Digital technologies are transforming the ways in which manufacturers design and operate their plants and the assets within them to drive efficiencies. The solution includes monitors worn by employees that detect the presence of multiple types of hazardous gases. businesses must become more dynamic simply to survive. Marathon Petroleum. Data on each employee is sent wirelessly in real time to a dashboard monitored by managers and. 33 Manufacturing Leaders . in turn. production rates and lead times. Furthermore. and spare parts provisioning. and identify promising new designs. This data indicates leaders are taking a much more aggressive approach to technology than most other manufacturers. For example. In the future. Yet ironically. With economic and market volatility now the norm for virtually all global enterprises. in an emergency. 3D printing technologies already are helping manufacturers such as GE. technology is greatly enhancing the integration point between engineering and manufacturing. companies are more accurately planning resources. digital technologies hold tremendous promise to revolutionize the integration between engineering and manufacturing processes through 3D printing. These manufacturers can now structure and schedule proactive maintenance activities that will result in the least production downtime. in particular.ThE BENEfitS of BEcomiNg a Digital BuSiNESS By Mark Pearson. suppliers and their own operations—and use those insights to make decisions that drive higher overall performance. including direct parts production. Many leading manufacturers are extracting this value with digital capabilities that include 3D design modules and video work instructions for the assembly floor that help ensure proper installation. tooling. Mattel and Ford improve several dimensions of their manufacturing process. electronic feedback of design issues from the assembly floor back into design and engineering helps manufacturers incorporate such data into next-generation products and the larger innovation lifecycle on a timely basis. which has long been an area of lost value within most manufacturers.

Manufacturing Leaders 34 .

but also in manufacturing equipment and existing plant infrastructure (Figure 28). Leaders also are twice as likely as others to say they are investing in operations analytics to help improve the efficiency and productivity of individual manufacturing facilities (Figure 30). contractors and consultants (Figure 27). compared with 21 percent of non-leaders. and threefourths of the non-leaders. leaders appear more focused on strengthening their information technology base in the coming year as they intensify their efforts to become a digital business. For example. while 47 percent plan to invest in computerized maintenance management systems. and they were more than twice as likely (35 percent versus 13 percent) to cite the aging workforce or shortage of talent as a factor that could impede their ability to achieve their growth goals. leaders also have major concerns about talent. which in turn can boost labor efficiency and support a more flexible and dynamic facility network that helps enable leaders to more easily adapt to changing market conditions. That is why leaders are intent to remain voracious acquirers of talent. Finally. All but one said they are planning to invest in IT applications in the next 12 months.Talent Leaders are focused on building a strong talent base to help them succeed yet. Leaders also signaled a greater interest in getting more out of what they already have. preferred means for extending asset life (Figure 29). Going forward. And regardless of what type of worker they are hiring. The majority of leaders expect to direct those IT investments toward ERP solutions (58 percent) and performance management tools (58 percent). and nine times more likely to say they increased their manufacturing workforce substantially since 2011 (75 percent versus 8 percent)—with most leaders saying people hired were in countries where demand is strongest (79 percent) or have skills that are strategically important to the company (68 percent). Investments All of the leaders in our study. in doing so. said they are concerned with extending the life and contribution of existing assets—with the vast majority of leaders citing total productive maintenance as their Figure 26: Percentage of manufacturers reporting they have significant skills gaps in these workforces. a large majority anticipate capitalizing on all types of workers: full. They were consistently more likely than other manufacturers to say they have extensive skills gaps across all workforce roles (Figure 26). said they made manufacturing capital investments since 2011. because the performance bar—as well as the need—among leaders is high. The clear message is that manufacturing leaders are increasingly focusing on making their assets more reliable and responsive. they have to pay for it. compared with 76 percent of non-leaders. while leaders were similar to others in most of the major skills challenges they said they encounter across all workforce roles. leaders recognize that if they want quality. they are more likely to be critical of the skills they have in house and wary of possible talent shortages that could hamper their efforts to grow. Half of leaders. Furthermore.and part-time employees. because they value talent so highly. On the other hand. leaders are twice as likely as other manufacturers to strongly agree that their talent strategy enables them to acquire or build the skills they need to compete effectively (70 percent versus 35 percent). leaders appear to be more focused on making capital investment in new plants and technology once again. they did differ substantially in one area: Leaders were consistently far less likely than other manufacturers to say they lacked skills in a particular workforce because they couldn’t pay what workers demand. leaders were more than twice as likely as others to say they offer competitive salaries and benefits to close their skills gaps. For instance. They are 12 times more likely than other companies in our study to say they will increase their overall manufacturing workforce by more than 20 percent in 2013 and 2014 (60 percent versus 5 percent) and. Leaders were somewhat more likely than others to direct those investments toward new plant construction and manufacturing technology. Maintenance Skilled trades labor General labor Supervisors Operations management Executives Leaders 6% 12% 12% 10% 7% 10% Others 20% 30% 25% 35% 32% 35% 35 Manufacturing Leaders .

Figure 27: Percentage of manufacturers planning to increase various types of workforces in 2013-14. Operations analytics Lean transformation Factory flow optimization Inventory management & control Quality management Plant asset reliability Production planning Energy management Environmental health & safety Leaders 10% 10% Others 20% 18% 18% 15% 20% 25% 20% 26% 25% 37% 40% 32% 45% 45% 43% 50% Manufacturing Leaders 36 . Applying total productive maintenance (TPM) Applying lean principles to reduce waste Applying automation technology Applying analytic Leaders 38% Others 46% 54% 54% 68% 92% 48% 19% Figure 30: Initiatives in which manufacturers plan to invest to improve plant efficiency and productivity. Manufacturing technology Manufacturing equipment/machine Existing manufacturing plant infrastructure New manufacturing plant construction None 0% 4% Leaders Others 58% 48% 43% 27% 50% 60% 70% 75% Figure 29: Initiatives manufacturers are pursuing to extend the life and contributions of existing assets. Full-time employees Part-time employees Contractors Consultants Leaders 47% 30% 37% 26% Others 65% 70% 70% 90% Figure 28: Manufacturers’ plans for capital investments in 2013-14.

37 Manufacturing Leaders .

Top 10 Manufacturing Leaders 38 .ThiNgS MaNufacturiNg LEaDErS Do DiffErENtlY Manufacturers in our survey that excel in production output. profitability and labor efficiency are more likely than other manufacturers to: 1 Have built an operating model that very effectively accommodates the dynamic shifting of production within a facility or across the facility network in response to demand 2 Have relocated or opened new manufacturing operations since 2011 to support their entry into a new market 3 Extensively employ modular and consistent business processes and policies that enable them to quickly and dynamically allocate manufacturing capacity across the facility network (including contract manufacturers) in response to changes in its markets 4 Plan to extensively increase their use of contract manufacturing and view contract manufacturing as part of their long-term strategy 5 Achieve the right balance between new capital investments and extending the life and contribution of existing assets 6 Plan to strengthen their information technology base in the coming year 7 Have full visibility into their network’s operations so they can effectively manage the network and make appropriate decisions to balance demand and capacity 8 Have a talent strategy that enables them to acquire or build the skills they need to compete effectively 9 Be highly adept at accurately sensing market changes or opportunities before competitors do 10 Have a good understanding of the local cultural differences and needs in its most important revenue markets.

mitigate risk. they 39 Manufacturing Leaders are thinking about sustainability in a much broader way. The decision to pursue a sustainability agenda should flow from the top. Manufacturers can make one-off decisions based on the data they collect. while the cost of regulations is still a concern for manufacturers. Accenture Management Consulting Among the data generated in our survey are three very interesting findings: that increasing operational efficiency is the most popular lever for maintaining or improving profitability. These results aren’t surprising. . and competition for natural resources. energy. while it’s operating. What do these results have in common? Besides demonstrating that manufacturers continue to look for ways to boost their margins. Key drivers shaping these trends include the changing regulatory landscape. brand enhancement. heating. and define the right metrics that will gauge progress and return on investment (which. because sustainability has a strong business case and. tracking and reporting of progress. The most innovative manufacturers recognize that the best sustainability initiatives typically involve four dimensions: cost reduction. and that manufacturers are increasingly looking to get more out of their existing assets through efficiency and maintenance programs. Thus. They know that customers value it and are often willing to pay more for products that are sustainably produced. construction methods. eliminating from product designs or packaging certain components or materials that can’t be recycled or are harmful to the environment. and are now thinking about all things operational being inherently valuable to the sustainability agenda. rather. They recognize that sustainability can actually help increase revenue. and water that could help them offset the cost of a new plant to effectively make the facility cost neutral? Many manufacturers also have become huge advocates and practitioners of recycling—not only to support their efficiency push. sustainability has matured as manufacturers progressed in their sustainability journey—from seeing sustainability primarily as a “nice to have” or a matter of compliance to. thus. For these companies. They see the impact sustainability can have on their ability to enhance their brand and image. With that data. clearly defined responsibilities and accountability for “making sustainability happen. increase revenue and burnish their brand. ultimately. They are making conscious choices and are implementing green policies that help enable innovation through initiatives such as resource efficiency. closed-loop processes. For instance. but also for commodity assurance. something that is especially important as prices rise on key commodities or as competition increases and causes supply shortages. sustainable practices should become part of the fabric of how the company does business. improving efficiency is a sustainability play because it is based on consuming less to produce more. set desired targets for its sustainability initiative. As they continue their sustainability journey.” and ongoing monitoring. they all contain an underlying sustainability message. should they pursue LEED certification or create a “living building”? What options do they have in terms of lighting. Change management is the key here. And getting more out of existing assets can mean that equipment won’t be reduced to scrap and.to 18-month payback). and robust EHS systems. manufacturers should keep in mind three elements that can be critical to help position a sustainability agenda for success. They proactively look at how to design sustainability into their products from the beginning—for instance. Moving production facilities closer to customers certainly can help improve responsiveness. and recruit and keep the best and brightest talent. and risk reduction. The companies on the leading edge of sustainability have gone even further. has truly become a business imperative. revenue generation. For instance. engage with customers. a manufacturer can determine the extent of the opportunity possible. the company can’t count on repeating its results year after year.ThE SuStaiNabilitY JourNEY: From CompliaNcE ASSuraNcE to PErformaNcE ASSuraNcE By Gary Hanifan. has consistently been a six. The second element is process. Manufacturers must collect the right data on sustainability initiatives (both internal and among suppliers). that manufacturers are making changes to their global footprint by moving production facilities closer to customers. which typically requires the creation of multiple cross-functional processes. will consume less energy and generate less waste. but it also can reduce the impact on the environment through fewer emissions and less fuel consumed to ship products. manufacturers would focus on impending regulations that might negatively affect their business. by definition. In the past decade. increasing customer demands. in our experience. When they used to talk about sustainability. A company should must have formal sustainability policies and procedures. They see that every operational efficiency play or risk mitigation initiative can have a sustainability impact. The first is data. Finally. Managing Director. as a business imperative that can help them reduce costs. or look to begin it. and be a part of the formal objectives of employees. but until those decisions are institutionalized. Today. if they are building a greenfield plant. sustainability is no longer just something to pursue because regulations require it or “it’s the right thing to do” but. effective sustainability practices typically require governance.

Manufacturing Leaders 40 .

manufacturers should actively consider ways to improve the reliability and productivity of the assets they already have to help boost capacity. Furthermore. Finally. improvement certainly has not been geographically equitable. And that can mean infusing greater flexibility into their operating model. post higher margins. dynamically shift production within a facility or across the facility network in response to demand. And that typically can require not only paying the going rate for top talent. In summary. increase production (often without buying or building new facilities). confidently and cost-effectively to capture growth opportunities that present themselves in an unpredictable global economy. favored by the manufacturers in our study. such flexibility can help position manufacturers to grow more strongly. Most European economies are still struggling to find their footing. as the manufacturing leaders we profiled in our study have demonstrated. but also using innovative approaches such as learning academies to close skills gaps in critical workforces. Indeed. these leaders are less vulnerable to downward swings in some markets and better positioned to capitalize on new opportunities in others. 41 Conclusion . Yet even in the face of hard facts. can help them put even more distance from less-able competitors that are left scrambling to figure out how to align their operations with unforeseen changes. By being able to. in turn. This. While it’s tempting to put the brakes on hiring during uncertain times. for instance. can help extend the life of facilities and equipment and make them more responsive to the needs of the business. people remain key to competitive advantage. leaders maintain their focus on attracting and cultivating the skills they need to stay ahead of the game. as leaders demonstrated. while demand in emerging markets continues to expand (albeit more slowly than their blistering pace of recent times) and North America seems to have finally turned the corner. manufacturers must be ready for whatever is thrown at them. let alone the next 10 or 15. production network and talent base to better enable them to respond to the sudden swings in marketplace and economic conditions that are the hallmark of the business environment today. and improve the efficiency of their workforce. instead of defaulting to buying or building new. Tools such as total productive maintenance and operations analytics. the overriding message from our research is clear: Manufacturers that plan to grow this year and in the years ahead must be able to move quickly.CoNcluSioN While it’s true that the global economy overall has improved in the years since the recession. Given the ongoing uncertainty and volatility inherent in today’s economic conditions. many observers still find it difficult to come to a consensus of where the global economy is headed in the next few years.

electronics and high tech. South America and Asia.g. CTO. or Vice President Total Count 107 91 Percent 43% 36% 52 250 21% 100% Figure 32: Participating companies’ industry. CFO. CRO) Senior Vice President. as well as how manufacturers are refining their manufacturing strategy and operations to remain successful. Job Title Managing Director. Participating companies represented six main industry sectors: automotive. or Director C-Level executive (e. oil and gas. Senior Director. Europe.AppENDiX Methodology and Demographics In May and June 2013. CMO. industrial equipment. Figure 31: Participating executives’ titles. The study consisted of a web-based survey of 250 senior manufacturing executives (Figure 31) in companies headquartered in North America. These companies have global operations and annual revenues that range from $500 million to more than $50 billion. Accenture embarked on a research initiative designed to shed light on the factors shaping manufacturing in today’s environment. consumer products. and chemicals and natural resources (Figure 32). Executive Vice President. COO. Industry Industrial Equipment Electronics and High Technology Consumer Products Automotive Chemicals and Natural Resources Oil and Gas Total Count 49 48 44 39 36 34 250 Percent 20% 19% 18% 16% 14% 14% 100% Appendix 42 . CEO.

com Kristine Renker Chicago.m.com About Accenture Accenture is a global management consulting.For More Information To learn more about how Accenture can help you develop more dynamic manufacturing operations go to www. The company generated net revenues of US$28. 31. 13-3080_lc .renker@accenture. and extensive research on the world’s most successful companies. Combining unparalleled experience. audit. its logo. Kansas russell.000 people serving clients in more than 120 countries. to the fullest extent permitted by applicable law. any and all liability for the accuracy and completeness of the information in this document and for any acts or omissions made based on such information. with approximately 275. Accenture collaborates with clients to help them become high-performance businesses and governments.com.6 billion for the fiscal year ended Aug. Accenture disclaims.rasmus@accenture.com/manufacturing. Copyright © 2013 Accenture All rights reserved. Accenture. and may not reflect the most current developments. Its home page is www. Accenture does not provide legal. and High Performance Delivered are trademarks of Accenture. This document is intended for general informational purposes only and does not take into account the reader’s specific circumstances. technology services and outsourcing company. comprehensive capabilities across all industries and business functions. Illinois kristine. or contact: Russell Rasmus Overland Park. regulatory. or tax advice. Readers are responsible for obtaining such advice from their own legal counsel or other licensed professionals.accenture.accenture. 2013.