Large Manufacturing Firms to Move Toward a Globally Integrated Business Model

Independent research and advisory firm, Manufacturing Insights, an IDC company, announced the release of its annual Top 10 Predictions report, Worldwide Manufacturing 2008 Top 10 Predictions, which examines macro industry trends, specific key process domains, and emerging business/technology initiatives for manufacturers in 2008. According to this new study, research shows larger manufacturing firms are deriving more than 60 percent of their profits from outside their home region. This revenue balance will help the industry offset any detrimental effects of an economic slowdown or potential recession within the US market.

"In last year's predictions report, we discussed how the industry was entering the year with high expectations mitigated by high uncertainty," said Bob Parker, Vice President of Research at Manufacturing Insights. "As we enter 2008, it seems that uncertainty has overtaken expectations as the industry girds against the prospects of a recession."

Several factors are creating uncertainty, the Manufacturing Insights report reveals. These include the subprime lending crisis, oil prices teasing the $100 per barrel level, and continued geopolitical instability and conflict. However, there are several reasons to believe that the pall of uncertainty will not entirely eclipse expectations for business success in manufacturing. A recession in the United States no longer guarantees worldwide trouble, and many of the largest manufacturing firms in the United States now earn more than half of their revenue and profit from outside the home market. In addition, a weak dollar means that goods manufactured in the United States are price competitive in foreign markets.

"The hope is that continued global growth will lift the performance of large manufacturing firms in the United States, Western Europe, and Japan," continued Parker. "This growth will allow these companies, and the smaller ones that depend on them, to expand the employment base and restore consumer confidence and spending. The most likely source of pain in the manufacturing segment will be in the midmarket, especially for those companies in mature economies that depend on local markets. For the larger firms, expectations don’t have to be completely muted as long as management is willing to understand that their business models must match the new economic realities."

The top 10 predictions presented and analyzed in the study include:

Large manufacturing firms will move toward a globally integrated business model;

IT organizations will accelerate spending on collaborative decision environments and incubate multi-enterprise business networks;

IT spending in the supply chain area will focus on fulfillment execution;

Product management software investments will be geared to integrating processes, not automating tasks;

Manufacturing firms will tackle the challenges of aging/emerging workforces with investment in organic knowledge management and;

Machine to Machine (M2M) technology will emerge as a key enabler to enhanced service delivery.

Manufacturing Insights believes that manufacturers must continue to look for ways to drive down the cost of information and must accelerate investments that will improve the speed of decision making related to product life cycle, supply chain, and demand management. In addition, creating a program office to devise – and later implement – a strategy for hosting and participating in business networks as well as assuring that information technology investments are sufficient to support the organization’s needs are vital strategies for the coming year.

www.manufacturing-insights.com