Survey shows manufacturers fail to take full advantage of technology

While manufacturers remain optimistic about the U.S. economy, a majority fail to either implement or leverage important technological advancements that can help them capitalize on the recovery, according to a new survey from Sikich LLP, a professional services firm.

Sikich surveyed 116 manufacturers and distributors—almost 75 percent of which have annual revenue of $1 million to more than $100 million—for its 2015 Manufacturing Survey and found that 53 percent of respondents still rely on spreadsheets and other manual processes to prepare key performance indicators (KPIs) such as productivity, utilization, and availability. According to the survey, which examines industry trends as well as the strategic and economic issues companies face, only 26 percent said they use a financial application module, such as an enterprise resource planning (ERP) system, for KPIs.

Though many companies lag on technology when it comes to KPIs, they do turn to technology to support business growth and improve customer service, according to the survey. The top ways respondents said they use technology are to improve manufacturing processes and business intelligence and reporting.

Beyond technology, the Sikich survey reveals manufacturing and distribution companies’ priorities, expectations for the future, as well as ongoing challenges.

About half of survey respondents are more optimistic about the U.S. economy compared to 2014. A majority (54 percent) expect their revenue to increase by more than 5 percent this year, and 96 percent said they anticipate their hiring to increase or stay constant in 2015.

Still, in the wake of the financial crisis, many companies remain hesitant to move into new markets or expand product offerings. Nearly 40 percent of survey respondents view increased share in existing markets as their top opportunity for gains in the next 12 to 18 months. Meanwhile, almost a third of respondents spend less than 1 percent of sales on research and development for new products.

Additional challenges manufacturers and distributors face include the need to both cut costs and make needed capital investments in equipment and technology. More than 90 percent of respondents expect taxation and labor costs to either increase or remain the same in the next 12 months, while 86 percent said the same about the cost of raw materials. Meanwhile, 32 percent plan capital expenditures on equipment, while 42 percent expect to spend on computer hardware and software.

As they seek to square the need for more investment with ongoing cost pressures, manufacturers point to the supply chain as a key. A majority (59 percent) of respondents identified supply chain management as either important or highly important to their companies’ success over the next five years.

For more information about the 2015 Manufacturing Survey, download a copy of the findings here: bit.ly/MFGReport2015.