Innovation critical in low growth economy, say manufacturers

That much is an unsurprising top finding in analyst IDC Manufacturing Insights' latest white paper, dubbed 'In Pursuit of Operational Excellence: Accelerating Business Change Through Next Generation ERP'. Sponsored by manufacturing ERP software conglomerate Infor, it suggests that while cost containment remains important in a low growth economy, it is taking a back seat to initiatives likely ot help manufacturers differentiate their offerings and drive competitiveness. However, IDC's world-wide research also suggests that innovation is currently being hampered at too many manufacturing sites due to inadequate business processes and hamstrung ERP and associated systems. Criteria for innovation, according to the research, include faster business processes (85% of respondents), access to real-time information (60%) and improved collaboration (60%) as critical in this quest. However, 60% of manufacturers state that their ERP systems fail to support the fast, informed decision-making necessary to innovate, with 35% heralding mobile and social networking as crucial to transforming the way manufacturers work. Indeed, top of manufacturers' wish lists for improved systems are social networking-style features within ERP to facilitate the all-important timely, accurate, informed decisions necessary for operational excellence. "While active cost management remains crucial, companies can only truly differentiate themselves through innovating with products and services," observes Pierfrancesco Manenti, head of IDC Manufacturing Insights for EMEA. "Smarter processes and IT systems represent a substantial source of savings, differentiation and agility – helping to make informed decisions and establish a strong foundation to encouraging innovation where the company meets the customer," he adds. Meanwhile, looking ahead to the next three years, it's more of the same, with speed seen as a critical component to underpin manufacturers' growth strategies, according to the majority of respondents. Reacting faster to business changes, particularly in aerospace (71%) and high-tech electronics (78%), and streamlining processes (72%) are the top manufacturers' must-haves. More detailed insight (58%) and improved collaboration (42%) also dominate short to medium term ERP requirements. "With a large proportion of manufacturing costs having already been stripped out in the last three years, manufacturers must now really embrace product and process innovation as a means to compete," comments Andrew Kinder, director of product marketing at Infor. "This renewed focus on innovation requires a change in the way manufacturers work, and demands innovation at a process and technology level to drive fast, collaborative access to data, and instil the agility necessary to deliver the right products and services in a timely manner," he concludes. The research was conducted in October last year (2011) among 378 manufacturers in the automotive, industrial machinery, high-tech electronics, and aerospace industries across the US, UK, France, Germany, Italy, Brazil, Australia, China, India, Japan, Qatar, Saudi Arabia, UAE and Russia.