Grant Thornton, an accounts and management consultant for American manufacturers, has published its Ninth Annual Survey of American Manufacturers Report. This report monitors the progression of change within midsize manufacturing companies and the challenges facing these manufacturers when planning for the future. In order to improve productivity and effectiveness, leverage resources, and better manage the supply chain from source to end consumer, midsize American manufacturers are adopting many of the same strategies employed by larger companies. For the Ninth Edition Survey, Grant Thornton focused on five key areas that are driving the growth strategies of both midsize manufacturers and their larger counterparts: information technology, electronic commerce, facilities growth strategies, international expansion, and integrated product development.
Midsize manufacturers are concentrating on and investing heavily in information technology (IT) as they plan for future growth. According to the report, only 11% of midsize manufacturers opt for a truly enterprise-wide technology backbone such as an enterprise resource planning (ERP) system. An ERP replaces stand-alone information systems and technology and automates many functions of a company's business, integrating every aspect from market research, engineering and purchasing to manufacturing, inventory, finance and distribution. The survey demonstrated that manufacturers with fully functional ERP systems report specific benefits: gaining a more competitive advantage, serving customers more effectively and delivery of better-quality products, at lower cost and in less time.
Internet growth has ushered in a new era of electronic commerce. This year's survey reports that almost one-third of midsize manufacturing companies are developing a corporate internal computer network, or "intranet" which facilitates greater knowledge, sharing and collaboration across the organization. Nearly a quarter of all midsize manufacturers have access to the similarly functioning "extranet," an external network that is used to extend a secure link to customers and suppliers as well as check on the price, availability or shipping status of suppliers' products or systems. This facilitates the processing of business transactions such as purchase orders, confirmations, shipping notices, billing, and payments instantaneously without generating paper.
Facilities growth strategies are needed by fast-growing and successful companies in order to manage growth effectively before they reach full capacity. The survey found that half of all midsize manufacturers are planning to physically expand a current site during the next year while almost half plan to build a new facility or relocate an existing one within the next five years. In many cases, corporate expansion affords the company the opportunity to implement new processes to improve efficiency and effectiveness.
International expansion is viewed by many midsized companies as an opportunity to take advantage of lower labor and materials costs, keep pace with competitors, or to make acquisitions or enter joint ventures within the region. The international expansion trend is predicted to accelerate in the coming years due to the continuous integration of world economies.
Nearly half of all midsize manufacturing companies utilize integrated product development (IPD), concurrent engineering where the product and its manufacturing process are designed simultaneously. This can also positively influence the working relationship with major customers as many companies today are working with customers by including them on design teams. The survey results show that 63% of midsize manufacturers take advantage of IPD and 53% of companies jointly design products with and for major customers.
The survey results were based upon a total of 500 telephone interviews with top-level executives of manufacturing companies in the US that met the following criteria: 1) are between Standard Industrial Classification codes 20 and 39 inclusive, 2) are not subsidiaries of other corporations, and 3) have annual sales between $20 million and $500 million.
For more information on the results of the Grant Thornton survey of management practices, visit Grant Thornton on-line at www.gt.com. If you would like a copy of the Ninth Annual Report entitled "Creating the Future", you can write for complimentary copies: Grant Thornton LLP, Market Research Development, 605 Third Avenue, New York, NY 10158 or fax a request to (212) 557-2764.
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