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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 .

total productive maintenance. However. 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. be highly adept at accurately sensing market changes or opportunities before competitors do. modular and consistent business processes and policies. manufacturers are striving to build a more flexible and dynamic operating model that enables them to quickly respond to changes in demand. while the remainder consider it a part of their long-term strategy. Eight in 10 executives overall agreed or strongly agreed that the ability to flexibly and dynamically move production from one existing facility to another. manufacturers in our survey appear to be confident they have a talent strategy that enables them to hire. Manufacturers are focused on improving their operating model to be more flexible. They are likely to have a good understanding of the local cultural differences and needs in its most important revenue markets. For example. Contract manufacturing is on the rise. profitability and labor efficiency by more than 10 percent since 2011. automation technology. 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. which we deemed 5 Introduction . Overall. 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. Leaders also appear to be more advanced than others in key capabilities that are critical to operating more flexibly and dynamically. In addition to the preceding. leaders are twice as likely than other manufacturers to have relocated manufacturing operations since 2011. While non-leaders view contract manufacturing as merely a way to relieve short-term capacity constraints. which helps enable manufacturers to seamlessly shift production from one facility to another. 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. and to be considering relocating manufacturing operations in 2013 and 2014. and in information technology solutions. unpredictable commodities costs. uncertainty about customer demand. as well as investments in initiatives to increase the efficiency and productivity of individual manufacturing facilities. and potential changes in government regulations. and analytics. seven in 10 said improving their company’s operating model to more effectively support such flexibility is a priority in the next 12 months. 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. While manufacturers’ performance in the past few years has been encouraging— and optimism runs high—possible storm clouds remain on the horizon. Yet many manufacturers are not confident in areas that are key to flexible and dynamic operations—such as market-sensing capabilities. To contend with an increasingly volatile and unpredictable global economy. 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. and visibility into the full network’s operations. Executives participating in our study cited a variety of volatility-related factors as potential impediments to their ability to grow— including global currency instability. Digitization of manufacturing is creating challenges in attracting and retaining the right talent. leaders see it as part of their long-term strategy and an important component of their broader production facility network. and more than three-quarters have increased their manufacturing workforce in the past few years. In fact. Manufacturers are striving to strike a balance between investments in new and existing assets. is critical to achieving their growth goals. A small group of companies in our survey—about 8 percent—reported having increased their production levels. One key to accommodating such flexibility is a high degree of consistency and standardization across all dimensions of the operating model. 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. our research also enabled us to identify some of the advanced practices that correlate strongly with superior business performance. or to change the product mix at an existing facility to match demand. develop and retain the skills they need to compete effectively. 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. Participating companies continue to make capital investments in new plants and manufacturing equipment and technologies. To support flexibility.Economic and market volatility is the overriding threat to manufacturers’ growth agenda. However. “manufacturing leaders. leaders continually make adjustments to their production facility network to help them meet demand and control operating costs.” 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. 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. For instance. to have started new operations during that time. This group.

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. and tend to build a diverse workforce that includes full. For instance. There’s no doubt that these remain challenging times for manufacturers. leaders increasingly are looking to make their current operations more reliable and responsive. But as the manufacturing leaders in our study suggest.manufacturing capacity across the facility network (including contract manufacturers) in response to changes in its markets. those that are able to infuse a high degree of flexibility in their operations. 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. are voracious acquirers of talent.and part-time employees. leaders have a talent strategy that enables them to acquire or build the skills they need to compete effectively. focus their hiring on people in countries where demand is strongest or who have skills that are strategically important to the company. Finally. squeeze more capacity and productivity out of the assets and infrastructure they already have.   Introduction 6 . contractors and consultants. even those that are optimistic about growth. When it comes to people. 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.

which believe growth will be primarily or entirely through inorganic means such as M&A. 7 Perspectives on Growth . boost production levels. is critical to achieving their growth goals. and 22 percent have boosted profits by more than 10 percent (Figure 1). Manufacturers’ output has increased as well. with China and Brazil expected to grow in importance. while just 15 percent said they were pessimistic about growth in their top markets. 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. 44 percent said they are highly optimistic these economies will grow in the next 12 months. joint ventures. uncertainty about customer demand. political or social unrest in key markets. Beyond next year. unpredictable commodities costs. with 94 percent reporting their company’s total production level has increased (Figure 1). confidence in these markets remains strong. 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 potential changes in government regulations (Figure 2). executives remain wary of marketplace and economic volatility and are taking steps to infuse greater flexibility into their operations in response. and that they expect to continue generating such positive results in the future. Perhaps most important is that margins are up. Perspectives on Growth While some countries’ economies continue to experience the lingering effects of the Great Recession. Regardless of which specific markets executives cited as their top three. 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. while manufacturers remain optimistic about their business and their markets. This is especially true of manufacturers that have performed most strongly in the past few years. manufacturers overall have rebounded. including global currency instability. 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. growth is expected to be mostly or entirely organic. especially those in mature markets. However. executives see changes afoot as emerging markets appeared poised to make gains at the top of the list. followed by China. For 60 percent of manufacturers. compared with 21 percent. or to change the product mix at an existing facility to match demand.KEY RESEarch FiNDiNgS In embarking on this research effort. Given these challenges. Forty-one percent indicated moderate optimism. Ninety percent of manufacturers have increased their overall profitability since 2011. Executives participating in our study cited a variety of volatility-related factors as potential threats to their growth agenda. with nearly three in 10 indicating the increase was more than 20 percent. Driving that output has been an increase in capacity: More than two-thirds of manufacturers overall said they increased capacity since 2011. the current environment is not without its challenges. and alliances. 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). Furthermore. Their responses suggest that more flexible and dynamic operations have helped them substantially increase revenues and margins. 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. and improve labor efficiency.

production level and profitability since 2011.Figure 1: Total revenue growth. 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 .

and operating model that can help support the operational flexibility executives see as critical to driving growth. 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. But again.Capturing Growth As they pursue growth. 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. Manufacturers also recognize that robust. manufacturers will rely on a number of levers to maintain or improve profitability. enabling them to effectively manage the network and make appropriate decisions to balance demand and capacity. The most popular lever by far is improving operational efficiency. The scenario is slightly better when it comes to supporting flexibility inside a single location. 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. 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 . but shortcomings in key aspects of their operations remain that could make it difficult for them to achieve their growth goals. sustainable growth is dependent on a solid base of operations—a base that includes the right production facility network. executives’ feedback indicated shortcomings in key capabilities that can be critical to operating more flexibly and dynamically. reducing labor costs. However. thus. • Only 29 percent of executives strongly agreed that their company has full visibility into its network’s operations. no dimension was named by more 28 percent as providing very effective support (Figure 5). help improve overall operational and financial performance. manufacturers have made solid progress in these areas. in no case was a specific dimension described by more than 27 percent of respondents as providing very effective support (Figure 4). followed by improving quality. According to executives participating in our survey. However. More specifically. reducing inventory levels. 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. in demand. switching over to producing a different product mix) in response to market developments or changes in demand. and reducing material costs (Figure 3). talent. • 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 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 capabilities Information technology applications Talent/skills base 3% 3% 4% 5% 3% 3% 6% 11% 9% 12% 12% 10% 1 . policies.Very ineffectively Note: Due to rounding. Organization structure and incentives system Information technology infrastructure Production facility network Business processes.Very ineffectively Note: Due to rounding. 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 . policies. 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 .Very effectively Figure 5: How effectively manufacturers’ operating model accommodates flexibly and dynamic shifting of production within a single location. Organization structure and incentives system Business processes. 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 . 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.

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

Capturing Growth 12 .

and Africa (16 percent). the most prevalent reasons for starting a new facility were entering a new market—which. skills and other capabilities. 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 good news is that executives recognize their companies could do better and plan to take action. 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. helps explain the increased popularity of Africa in this year’s study—reducing labor costs. 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. perhaps. And about one-third said they anticipate investing in their organization structure and incentive systems. Very significant 29% Significant As they make such investments. Talent/skills base Business processes. followed by Germany (19 percent). about four in 10 manufacturers surveyed reported having relocated production facilities to new locations— primarily to enter a new market. the United States (25 percent). 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). policies. policies. Conversely. manufacturers should be mindful of the important role that consistency can play in fostering flexibility in their operating model. reduce transportation costs. of those relocating operations. The relocation of facilities. For instance. as well as in their IT infrastructure and IT applications (which are critical to manufacturers’ efforts to become a more digital business (Figure 7). Seven in 10 said improving their company’s operating model is a priority in the next 12 months (Figure 6). followed by Brazil (30 percent). 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. Figure 6: Percentage of manufacturers believing it is a priority to improve their operating model. at a global level. growing markets. manufacturers may find it difficult to easily move production within or across facilities when market developments demand it. Since 2011. policies and capabilities. manufacturers face the ongoing need to evaluate where and how they make their products to improve responsiveness to customers while reducing overall operational costs. Without a high degree of global consistency and standardization across their business processes. The relocation trend looks to continue in the next 12 months. the biggest beneficiaries of manufacturers’ moves were China (34 percent) and Brazil (23 percent). is indicative of a greater focus by manufacturers on emerging. although the United States also was a popular landing spot for relocated facilities for 13 percent of respondents. or reduce labor costs (Figure 8). and reducing transportation costs (Figure 9). 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. Again. 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 . was located in the United States (26 percent). 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.

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.Figure 8: Relocation of manufacturing facilities. 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 .

systems configuration and data clean-up and conversion activities. 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. reports. The business operations dimension is associated with the process and functional support the new facility will require. fail to accurately identify critical project risks. As they make significant changes to their production footprint to support their growth agenda. Furthermore. 15 Capturing Growth . hiring. This includes spelling out the new factory’s design (and how the design aligns with the company’s overall supplier and manufacturing network strategy). For example. manufacturers will undoubtedly encounter their share of challenges. Many organizations lack experience in facility development. major cost overruns. 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. build and operate” lifecycle of a facility—manufacturers can better position a relocated or new facility to live up to its promise. team composition. or improve overall operational efficiency. hiring and training experience). The technology operations dimension involves the technology required to support the facility’s operational processes. Indeed. Doing so can help manufacturers avoid overlooking “critical-path” requirements and identify potential capability shortcomings that could derail the effort. 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. Manufacturers also can have a shortage of key internal competencies. This includes driving the overall change program and communication strategy associated with the facility’s launch.AvoiDiNg thE PitfallS of FacilitY RElocatioN or Startup By Michael Heilala. Accenture Management Consulting As we noted elsewhere in our report. 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. the operational processes and back-office support (such as HR and finance) required to run the facility. 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. and the production start-up activities needed to launch the facility. while beneficial if done right. In our experience. about 40 percent said they are planning to relocate facilities in the next 12 months. consolidate facilities after a merger or acquisition. companies can more effectively manage their facility relocation or startup project by carefully addressing three dimensions of the initiative. Such moves. customs and habits when setting up shop in a new country. The change operations dimension targets the “people” aspects of the initiative. 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. reduce costs. local region/country sourcing and local recruiting. Manufacturers often find it difficult to navigate through the maze of unfamiliar government regulations. which can lead them to spend too much time defining the project structure (including the project approach. Since 2011 about four in 10 manufacturers surveyed reported having relocated production facilities to new locations and nearly half started new ones. as well as the subsequent staffing of the facility (including identifying the talent needed. By considering at the outset of any project these three dimensions—and how they play out across the “design. Senior Principal. a lack of knowledge of local markets can have serious implications for a project. or plants that ultimately fail to meet the production and cost targets initially set for them. increase responsiveness to customers. and overseeing ongoing skills development and workforce management initiatives). processes and local environment. guides the build-out of the requisite technology infrastructure and network. legal practices. and key metrics). developing a recruiting. Furthermore. training and competency management program. factory design and construction management. and facilitates the implementation of the necessary physical and corporate support services.

but many face major talent gaps in key workforces It’s a given that people are the key to a company’s success. extensively 24% Yes. enables them to hire. 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). 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. Of course. Overall. Of those. 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. 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. especially when opening plants in new markets. Threefourths of those in our study said they will increase moderately or extensively their use of contract manufacturing in the next 12 months. more than three-quarters of companies surveyed have increased their manufacturing workforce (Figure 12). 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).Figure 10: Use of contract manufacturing. Eighty-three percent of executives surveyed agreed their company’s talent strategy Capturing Growth 16 . and those eliminated were most likely to be full. Talent: Manufacturers continue to hire and improve labor efficiency. manufacturers in our survey appear to be confident they have what it takes to build the right workforce for their business. 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.or part-time contractors. reductions tended to be centered in countries where demand was weakest. total value view 21% 40% 48% 46% 55% As part of their production network. manufacturers were most commonly adding skills that are strategically important and in countries where demand was strongest. Manufacturers also have been active in bringing new people aboard. 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. Workers hired were more likely to be fullor part-time salaried workers as opposed to hourly workers or contractors. manufacturers also are planning to increase their use of contract manufacturing. determining where to locate production facilities can be a complex endeavor. Since 2011.

17 Capturing Growth .

GEttiNg thE MoSt From CoNtract MaNufacturiNg By David Douthit. plant and equipment) tied to demand. 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. It is critical for a company to have the right people. acquiring equipment. do so with a variable-cost operating model (people. For example. collaborative one in which the partner may bring new capabilities to the table or even co-invest in a product. Next. Lesscore items. 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. 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. By approaching contract manufacturing more strategically. in our experience. and Capturing Growth 18 . A trusted third party can help a company quickly establish a presence. an enterprise should implement the tools and capabilities that can enable it to effectively manage its contract manufacturing network. 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. 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. contract manufacturing should be seen as not simply a capacity lever. Then a company needs to determine the level of control it wants to exert on those relationships. Senior Manager. more than half said they are doing so to relieve short-term capacity constraints. where demand is difficult to predict and building new facilities. However. Accenture Management Consulting According to our survey. and securing trained resources with local market knowledge can be time consuming and expensive. 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. production involving items that are highly differentiating for the company—those that make it unique in the marketplace—should remain in house. as well as those that can be more effectively made by a third party. Contract manufacturers also can be good options when entering a new market. are good candidates for outsourcing to a contract manufacturer. Or it might be comfortable somewhere in the middle. 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. a company should decide which kind of relationships it wants to have with a partner—a highly strategic. Of those. 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. For example. but rather. or a more transactional one in which the partner is solely focused on supplying “standard” goods at the lowest cost of ownership. And in some cases. and that potential issues are identified and addressed well before they become problems. Finally. a large majority of manufacturers are planning to increase their use of contract manufacturing in the coming year. processes and tools in place to ensure partners are delivering what they have committed to deliver.

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. 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.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. 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.or part-time salaried employees Workers added were more likely to be full. 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 .Figure 12: Manufacturers’ changes to their workforce since 2011.

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. contractors (Figure 13). with two-thirds of executives saying their companies plan to increase their overall manufacturing workforce by at least 5 percent between 2013 and 2014. career levels and appropriate curriculum. Despite their vigorous hiring. 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. mostly in the blue-collar workforce (Figure 14) where they struggle to attract the needed skills because they cannot pay what the talent demands.Extensive skills gap Figure 15: Levers manufacturers use to close skills gaps and improve workforce performance. Figure 14: Skills gaps in various manufacturing workforces. 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 . many manufacturers still have several skills gaps.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 . however. encouragement from leadership to pursue innovation and share ideas. Skilled Trades Labor General Labor Maintenance Operations Management Supervisors Executives 8% 7% 9% 13% 11% 20% 1 . and 35 percent said the same about their general labor workforce. and formal competency models that define required skills. The increase will largely be driven by boosts in the number of predominantly full-time employees and. Regardless of where the gaps are. 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.This hiring trend appears poised to continue in the near future. training to keep the workforce current. competitive salaries and benefits. to a lesser extent. Nearly four in 10 respondents said their company has a sizable skills gap in their skilled trades labor workforce. The smallest gaps across all companies were seen at the top of the management hierarchy— supervisors and executives.

21 Capturing Growth .

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

and analytics (Figure 19). 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. 23% Figure 17: Manufacturers’ capital investments since 2011. 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. In doing so. To help support their efforts to improve their operating model. as well as investments in information technology and efficiency initiatives. 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. 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. 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 . Figure 16: Change in manufacturers’ labor efficiency since 2011. about one-half of manufacturers said their labor efficiency has increased between 1 percent and 5 percent. 66 percent of manufacturers also said they will be focused on extending the life and contributions of existing assets. and one-tenth said it improved by more than 10 percent (Figure 16).While these initiatives may have fallen short in helping manufacturers close their skills gaps. manufacturers are continuing to make targeted investments in key areas of their business. automation technology. Such gains can help manufacturers increase existing assets’ capacity and are a key driver of broader operational efficiency across a manufacturer’s facility network. they appear to have contributed to an increase in overall workforce efficiency. Finally. Since 2011. These include capital investments in new plants and manufacturing equipment and technologies. However. and in the next 12 months. manufacturing planning and scheduling. they are looking to life-extending initiatives such as applying lean principles to reduce waste. followed by quality assurance. as they increase their investments in key areas of their business. Since 2011. The largest percentage indicated those initiatives would focus on performance management tools such as dashboards and metrics. optimize their facility network and enhance their workforce. manufacturers are redoubling their efforts to “clean up their shop” and become more efficient. 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. manufacturers will be in a better position to justify future investments that can substantially improve operational and financial performance. In other words. and enterprise asset management solutions (Figure 20). three-quarters of manufacturers have made manufacturing capital investments—mostly in manufacturing equipment and machines and in existing manufacturing plant infrastructure (Figure 17). Of course. capital investment is expected to continue (Figure 18). manufacturing execution systems. plant operations analytics. total productive maintenance. ERP solutions. By formally measuring and monitoring the value those investments deliver. manufacturers must feel confident that they have a disciplined approach in place in order to get the return on those investments. onefourth said it rose between 6 percent and 10 percent.

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. 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 . 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.Figure 18: Manufacturers’ capital investments for 2013-14.

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

Capturing Growth 26 .

27 Manufacturing Leaders .

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

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

Manufacturing Leaders 30 .

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. 31 Manufacturing Leaders . is highly adept at accurately sensing market changes or opportunities before competitors do. 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. leaders are far more likely than non-leaders to be convinced of the value of flexible operations to achieving their growth goals. China. 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. 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). that means leaders typically have a high degree of consistency and standardization across their operating model.with 35 percent reporting having opened new facilities in the United States and 24 percent in Canada. Contract manufacturing also appears set to play a greater role among leaders than nonleaders. 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 non-leaders to be investing in improving all six dimensions of their operating model in 2013 and 2014. Leaders also appear to be more advanced than others in key capabilities that are critical to operating more flexibly and dynamically (Figure 25). 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. For non-leaders. 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. Entrance into a new market was also leaders’ top reason for starting a new facility. In fact. 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. but the desire to reduce transportation costs was seen as nearly equally important. Brazil and the United States were also the top three locations for new plants. In fact. Operating model As mentioned earlier. which can help enable leaders to quickly and easily move production within and across any of its plants when necessary. However. In Accenture’s experience. especially talent and organization structure. leaders are not complacent.

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 . Production facility network Information technology applications Information technology infrastructure Business processes. 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. 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. policies. Production facility network Information technology applications Information technology infrastructure Business processes.Figure 23: How effectively manufacturers’ operating model accommodates the dynamic shifting of production across the facility network. policies.

Global Managing Director Operations Management Consulting As noted elsewhere in this report. layout. Mattel and Ford improve several dimensions of their manufacturing process. Furthermore. are transforming the world around us. suppliers and their own operations—and use those insights to make decisions that drive higher overall performance. 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. In fact. digital technologies also often represent a solution to the challenges they help create. and can also generate significant improvements in MRO part inventory and sourcing strategies. 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. two of the driving forces of digital business are big data and analytics. With economic and market volatility now the norm for virtually all global enterprises. indeed. companies are more accurately planning resources. in turn. the combination of which enable companies to gain insights as never before into their customers. buffer requirements. 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. and identify promising new designs. quality and troubleshooting. illustrate the positive impact digital technologies can have on a manufacturer’s operations. Manufacturers should consider how the leaders in our study have embraced digital technologies to make their operations more flexible and responsive and. for instance. analytics and telemetry data are revolutionizing the way manufacturers manage their assets by enabling manufacturers to monitor and predict asset reliability. Additionally. Two emerging themes. Data on each employee is sent wirelessly in real time to a dashboard monitored by managers and. digital technologies hold tremendous promise to revolutionize the integration between engineering and manufacturing processes through 3D printing. They are giving rise to disruptors that drive much of the volatility in which global businesses operate today. including direct parts production. and spare parts provisioning. By leveraging simulation technology. Yet ironically. an alarm is automatically sent to the dashboard. in particular. But the data also demonstrates that leaders are at the forefront of becoming digital businesses. For instance. Digital Factory Digital technologies are transforming the ways in which manufacturers design and operate their plants and the assets within them to drive efficiencies. This data indicates leaders are taking a much more aggressive approach to technology than most other manufacturers. as well as more effectively balancing manufacturing across the plant’s production line. operations and specialized areas like FMEA quality control activities.ThE BENEfitS of BEcomiNg a Digital BuSiNESS By Mark Pearson. leading companies are deploying technology solutions that support the plant’s manufacturing process. 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. 3D printing technologies already are helping manufacturers such as GE. which has long been an area of lost value within most manufacturers. in an emergency. 33 Manufacturing Leaders . in the process. tooling. These manufacturers can now structure and schedule proactive maintenance activities that will result in the least production downtime. 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. This. let alone thrive. helps companies more easily spot and correct quality defects in products. Marathon Petroleum. 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. technology is greatly enhancing the integration point between engineering and manufacturing. production rates and lead times. driving reduced lead time and improved quality. prototype creation. and leading organizations are closely following these developments. For example. 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. 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. more productive and profitable. Several pending breakthroughs may enable 3D printing to ultimately meet its lofty goals. In the future. Today. more quickly uncover and address field failures. Digital technologies. businesses must become more dynamic simply to survive. The solution includes monitors worn by employees that detect the presence of multiple types of hazardous gases. New technologies also are being used to dramatically enhance plant safety. 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.

Manufacturing Leaders 34 .

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). On the other hand. leaders also have major concerns about talent. 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). All but one said they are planning to invest in IT applications in the next 12 months. leaders were more than twice as likely as others to say they offer competitive salaries and benefits to close their skills gaps. contractors and consultants (Figure 27). leaders recognize that if they want quality. 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.and part-time employees. 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). 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. and threefourths of the non-leaders. 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. Half of leaders. The clear message is that manufacturing leaders are increasingly focusing on making their assets more reliable and responsive. preferred means for extending asset life (Figure 29). while leaders were similar to others in most of the major skills challenges they said they encounter across all workforce roles. 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 appear more focused on strengthening their information technology base in the coming year as they intensify their efforts to become a digital business. compared with 21 percent of non-leaders. Furthermore. The majority of leaders expect to direct those IT investments toward ERP solutions (58 percent) and performance management tools (58 percent). Going forward. For example. 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. but also in manufacturing equipment and existing plant infrastructure (Figure 28). because the performance bar—as well as the need—among leaders is high. That is why leaders are intent to remain voracious acquirers of talent. while 47 percent plan to invest in computerized maintenance management systems. Investments All of the leaders in our study. leaders appear to be more focused on making capital investment in new plants and technology once again. in doing so. 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 . they have to pay for it. 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. compared with 76 percent of non-leaders. Leaders also signaled a greater interest in getting more out of what they already have. because they value talent so highly. Finally.Talent Leaders are focused on building a strong talent base to help them succeed yet. For instance. 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. a large majority anticipate capitalizing on all types of workers: full. Leaders were somewhat more likely than others to direct those investments toward new plant construction and manufacturing technology. And regardless of what type of worker they are hiring.

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 . 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. 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. 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.Figure 27: Percentage of manufacturers planning to increase various types of workforces in 2013-14.

37 Manufacturing Leaders .

Top 10 Manufacturing Leaders 38 . 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.ThiNgS MaNufacturiNg LEaDErS Do DiffErENtlY Manufacturers in our survey that excel in production output.

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

Manufacturing Leaders 40 .

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

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

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