Companies in the manufacturing industry see the current geopolitical changes as the biggest risk to their business operations. At this very moment, many companies are looking for customers abroad and new markets to enter, but geopolitical barriers stand in their way. In some parts of the world, governments are operating in an increasingly nationalistic manner, creating more difficulties for many companies to do business with these countries.
KPMG's Global Manufacturing Outlook shows that over half of companies see a return to territorialism as the biggest threat to future business growth. The survey was conducted among three hundred CEOs of companies in the manufacturing industry. "The consequence of uncertainty in a number of countries is that companies are seriously rethinking their global investment strategy at the moment," said Ricardo Tülkens, partner at KPMG, in a press release.
Tülkens: "While the changing geopolitical landscape is not an obstacle for companies to expand globally, it does make them critical when it comes to the investments they make. Expansion in areas such as Asia where the growth of the middle class is creating increasing demand for products is high on companies' agendas. This means that companies in general face a considerable dilemma. On the one hand, they want to be able to do business safely under all circumstances; on the other, they want to be able to deal flexibly with changing circumstances, such as Brexit but also sanctions being imposed."
Cooperation in the chain
KPMG's survey shows that over a third of manufacturing CEOs are struggling to keep up with the pace of digitalisation. "Companies recognise that technological innovation is necessary to manage the increasing complexity in the supply chain, especially as companies do business further and further away from home," Tülkens said. The digital networks of suppliers that are emerging require complex alliances, partnerships that one in three CEOs say will be decisive for achieving growth targets in the coming years.
But collaborating with other companies poses a huge challenge for many companies. According to companies, transparency and visibility in the chain as well as secure data sharing with companies in this chain are the main hurdles to gain maximum benefit from suppliers. Major players in the manufacturing industry are therefore becoming increasingly selective in their choice of cooperation with other parties."
Cybercrime
Expansion into other parts of the world and increasing connectivity with other ecosystems is making companies in the sector increasingly vulnerable to cybercrime. Almost 40% therefore see the risk of cybercrime as the main threat to growth. Half of companies say they are well prepared for future cyber attacks.
Tülkens: "Yet for 50% of CEOs, the question is not whether they will fall victim to cybercrime, but when. The technologies used continue to change at a rapid pace, making companies extra vulnerable. When production systems are hacked, the consequences are far-reaching.
But digital transformation is inevitable and giving in to this kind of crime is therefore not an option. On the contrary, there are increasing opportunities to parry potential threats. For instance, the arrival of the 5G chip next year is going to help enterprises better secure their network with double encryption. And companies should look for parties in the chain that can certify that they are resistant to cyber attacks."
Source: KPMG
Photo: Unsplash/Samuel Zeller
