New Research Identifies Path to Transformation for Manufacturing Industry

Oxford Economics Study Shows How Adjusting Priorities Can Enable Large Manufacturers to Increase Revenue by up to $200M, Reduce Costs by up to $100M

ANAHEIM, Calif. & NEEDHAM, Mass. — (BUSINESS WIRE) — June 10, 2013 — At PTC Live Global 2013, PTC (Nasdaq: PMTC) today released the findings of a ground-breaking study by Oxford Economics that explores the factors driving a strategic transformation in the global manufacturing industry. The research, which involved both qualitative and quantitative inputs from 300 executives from around the world, also identifies the strategies that manufacturers are adopting to transform their businesses and differentiate themselves for competitive advantage.

Global manufacturers are at an important industry inflection point, the study found. Market and technological forces are upending many time-honored assumptions within the manufacturing industry. As a result, more than two-thirds (68%) of manufacturing executives surveyed expect their firms to undergo significant business process transformation over the next three years.

“Our survey and interviews with market leaders show that manufacturing companies are transforming their businesses in many fundamental ways to respond to market shifts and technology trends,” said Lou Celi, president of Oxford Economics Americas. “The priority for manufacturers today is to make better things – creating innovative and distinct products and services that meet customer needs – while continuing to make things better. True competitive advantage can only be achieved by tightly coupling the engineering, service planning and execution, management, and production processes through which innovation can evolve from conception to execution, and by creating a closed feedback loop to ensure continual improvement and alignment across the business.”

Key Transformation Initiatives

The research found that successful transformation initiatives were grounded on three broad themes:

  • Rethinking strategy and planning: The importance of the decisions on how a company engineers, sources, manufactures, and services its products, and coordinates these processes eclipses operational execution as a competitive driver for most industry sectors. For example, the study found that manufacturing executives are placing an increasing importance on the coordination of strategy and planning between engineering and service divisions, growing from 54% of respondents today to 73% in three years.
  • Adopting the service imperative: Historically, the service dimension of manufacturing focused on repair and maintenance. Market leaders are now blending their products and service capabilities into new performance-based offerings. This will be the key to true differentiation, as well as providing a significant revenue boost and a guaranteed annuity stream. In fact, 77% of C-Level respondents indicated that they will enhance services as a key way to differentiate their products in the marketplace.
  • Fostering innovation everywhere: The emphasis on innovation will grow even more during the next three years with increased efforts in product strategy and engineering. Reverse innovation is a specific aspect that is growing more popular, as firms design products for emerging markets and bring them to developed ones (35% of surveyed manufacturers practice this today, vs. 50% in three years).

Based upon the research, Oxford Economics concludes that well-executed transformation efforts can produce significant business results. To quantify those results for manufacturers, the report includes a business-impact model that estimates how changing transformation priorities—rethinking strategy and planning, greater emphasis on service, and innovating everywhere, including in the area of manufacturing operations—might affect revenue and costs. The model assumes a “prioritization curve” that tracks the emphasis placed on each of these three transformation activities and estimates financial results. For example, a manufacturing firm with $5 billion in annual revenue and a 20% profit margin could increase revenue by as much as $195 million and reduce costs by $96 million by increasing its prioritization of strategy and planning activities from moderate to high.

“The Oxford Economics study provides valuable insights into how the manufacturing industry is responding to the need for new sources of competitive advantage,” said James E. Heppelmann, President and CEO, PTC. “This research is consistent with PTC’s mission of helping manufacturing companies prioritize their strategy, planning and service activities. By delivering technology solutions that transform the way that products are created and serviced, we enable customers to transform their businesses to achieve ongoing product and service advantage.”

According to the study, manufacturers will choose a variety of approaches to transform their businesses, and may adopt multiple strategies in response to market shifts. Among the more compelling findings are that:

  • The concept of ‘design anywhere, build anywhere, service anywhere’ will grow 125% in three years.
  • Products get smarter. Smart products, which consist of mechanical components, electronics, and software, will see a 38% growth on the world’s stage.
  • New service business models come of age. By 2015, the use of performance-based service contracts will be used by 65% of manufacturing. Additionally, in the next two years, 56% of firms will embrace remote diagnostics.
  • 3D printing and additive manufacturing will grow 123% in use.
  • The supply chain becomes a key strategic asset. The number of manufacturers increasingly leveraging their supply chains will nearly double to 57% in three years.

1 | 2  Next Page »



Review Article Be the first to review this article

Featured Video
Editorial
Jeff RoweJeff's MCAD Blogging
by Jeff Rowe
Re-Use Your CAD: The ModelCHECK Handbook
Jobs
Senior Structural Engineer for Design Everest at San Francisco, CA
Business Partner Manager for Cityworks - Azteca Systems, LLC at Sandy, UT
GIS Analyst II for Air Worldwide at Boston, MA
Upcoming Events
Design & Manufacturing, Feb 7 - 9, 2017 Anaheim Convention Center, Anaheim, CA at Anaheim Convention Center Anaheim CA - Feb 7 - 9, 2017
Innorobo 2017 at Docks de Paris Paris France - May 16 - 18, 2017
Display Week 2017 at Los Angeles Convention Center 1201 S Figueroa St Los Angeles CA - May 21 - 26, 2017



Internet Business Systems © 2016 Internet Business Systems, Inc.
595 Millich Dr., Suite 216, Campbell, CA 95008
+1 (408)-337-6870 — Contact Us, or visit our other sites:
AECCafe - Architectural Design and Engineering EDACafe - Electronic Design Automation GISCafe - Geographical Information Services TechJobsCafe - Technical Jobs and Resumes ShareCG - Share Computer Graphic (CG) Animation, 3D Art and 3D Models
  Privacy Policy Advertise