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    Manufacturers Failing to Take Advantage of Technology

    By
    Nathan Eddy
    -
    August 5, 2015
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      A majority of American manufacturers fail to either implement or leverage important technological advancements that can help them capitalize on the recovery, according to a survey of 116 manufacturers and distributors from Sikich, a professional services firm.

      The survey revealed that although many companies lag on technology when it comes to key performance indicators (KPIs), they do turn to technology to support business growth and improve customer service.

      The top ways manufacturers and distributors use technology is to improve manufacturing processes and for business intelligence and reporting, according to the report.

      “Technologies, such as 3D imaging, that accelerate the design and development of products will be increasingly important for manufacturers,” Jim Wagner, partner-in-charge of the manufacturing and distribution practice at Sikich, told eWEEK. “Further, technology that shares real-time information such as forecast plans, material requirements planning (MRP) needs and production schedules across the supply chain is critical.”

      Wagner noted other technologies that are important for manufacturers today include cloud-based content and transactional data management, product and sales configuration technologies, and robotics.

      “Advances in robotic designs and control software have matured to a point where the acquisition of robotic devices is more economical than ever before,” he explained.

      The majority (53 percent) of respondents said they still rely on spreadsheets and other manual processes to prepare KPIs such as productivity, utilization and availability, among others.

      Just over a quarter (26 percent) said they use a financial application module such as an enterprise resource planning (ERP) system for KPIs.

      Around half of survey respondents said they are more optimistic about the U.S. economy compared to 2014, with 54 percent expecting revenue to increase by more than 5 percent this year, and 96 percent saying they anticipate hiring to increase or stay constant in 2015.

      However, many companies remain hesitant to move into new markets or expand product offerings, with nearly 40 percent of survey respondents viewing increased share in existing markets as their top opportunity for gains in the next 12-18 months.

      Meanwhile, almost a third of respondents spend less than one percent of sales on research and development for new products.

      “The most surprising finding from the survey was manufacturers’ cautious approach to growth. They are focused on growing organically and taking market share instead of engaging in mergers and acquisitions,” Wagner said. “I believe this is a hangover from the Great Recession. During its depths, some companies reduced their workforce by a third and also saw their sales fall by a third. It is going to take a long time to fully recover.”

      More than 90 percent of respondents expect taxation and labor costs to either increase or remain the same in the next 12 months, while 86 percent said the same about the cost of raw materials.

      Meanwhile, 32 percent plan capital expenditures on equipment while 42 percent expect to spend on computer hardware and software.

      Nathan Eddy
      A graduate of Northwestern University's Medill School of Journalism, Nathan was perviously the editor of gaming industry newsletter FierceGameBiz and has written for various consumer and tech publications including Popular Mechanics, Popular Science, CRN, and The Times of London. Currently based in Berlin, he released his first documentary film, The Absent Column, in 2013.

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