Annual Manufacturing Report 2019

The Manufacturer’s Annual Manufacturing Report is the barometer for the UK manufacturing industry. Are manufacturers unlocking the full benefits of digital transformation?

About the findings

Manufacturing plays an important part of the UK economy, with the industry making up 11% of GVA, 44% of total UK exports, 70% of business R&D, and directly employing 2.6 million people*.

The Manufacturer’s Annual Manufacturing Report 2019, in association with PwC, surveyed UK manufacturers to understand the mood of the sector during a time of unrivalled disruption. It remains an exciting time for organisations to capitalise on the opportunities technologies offer, so we’ve taken the opportunity to drill into the detail around manufacturers adopting digital smart factories technologies.

Transformational digital technologies can help organisations improve efficiency, reduce cost or create new business models that can drive competitive advantage. The opportunity is huge but for manufacturers to capitalise on it requires a clear strategy and strong leadership.

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Key themes emerging

Technology

Manufacturers face the perennial challenge to drive efficiencies in their businesses. Embracing digital technologies to transform their operations will enable them to operate in a more effective and efficient way and, in turn, drive growth and profitability. Something 74% of UK manufacturers surveyed agreed with - recognising that they needed to adopt digital technologies to enable them to prosper.

When manufacturers were asked how the technologies would be used, the most popular answer (77%) was to improve design and production processes, while 74% see benefits in streamlining internal company processes. Almost 50% of manufacturers said it would help them to communicate better with their supply chain and to deliver a better customer purchasing experience

Investment

Although manufacturers see the benefits of adopting technologies, when it comes to actually adopting, a few hurdles persist: 26% of manufacturers who have digital technology adoption on their radar are unsure how to implement it and 1 in 4 manufacturers have no plans at all.

The main blockers appear to be a lack of coherent digital strategies and the inability for organisations to understand what practical applications some of these technologies offer within their organisation. Indeed the Made Smarter Review 2017, cites an inability to understand what ‘good’ looks like as one reason for low adoption rates among UK businesses.

For many organisations, the adoption of these technologies involves breaking the traditional boundaries between the different functions, the recruitment of new skills and transforming activities into more flexible, continuous processes.

If UK manufacturers are to capitalise on the benefits of smart factories, a clear strategy and strong leadership from top management is vital.

People

When we talk about companies investing in technologies, the discussion around people often navigates towards robots stealing jobs. This fear is common in popular culture, having been exacerbated by Hollywood films and written fiction - but is this just unfounded rhetoric and misdirection?  

From our experience, and based on the survey results, there is no need to panic. The vast majority of manufacturers surveyed (89%) agreed that there may be some loss of headcount, but, vitally, digitalisation will allow them to do more without increasing headcount.

Reassuringly 91% of manufacturers said they thought the workforce becomes much more engaged when they work alongside machines rather than operating them. And furthermore 90% of manufacturers said data from connected machines and people will inform decision-making and reduce costs.

It’s clear that adoption needs to be accelerated, but to be successful this will require clear leadership and a desire and culture for manufacturers to be braver in disrupting their existing business models. Whether it’s digitalising some processes or full scale transformational projects businesses need to embrace the technologies.

Contact us

Cara Haffey

Automotive and Manufacturing Leader, PwC United Kingdom

Tel: +44 (0) 7809 551 517

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