Women in Electronics: Advocates for Professional Development
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U.S. small-and-midsized manufacturers expect to end 2016 with increased revenue, moderate capex investments and more employees, according to the PrimeAdvantage 2016 annual Purchasing and Manufacturing survey. Overall, data points to strong and sustainable growth for the broader U.S. and North American economies.
Strength in mid-market manufacturing is yielding continued R&D investments for the high-tech sector, according to Mike McDonald, executive vice president for PrimeAdvantage, a buying consortium for small and midsized U.S. manufacturers. Additionally, this strength is supporting capital expenditures in business operations and additional hiring.
Highlights of the annual survey include:
- 97% of manufacturers’ project revenues will increase or stay at the same level in the next 12 months
- 95% of the procurement professionals responding to the survey said that raw materials price pressures were their top cost pressure concern
- 89% of manufacturers expect their headcount to grow or remain the same through the end of the year
- Savings on components in certain areas are eluding most manufacturers because of time and resource constraints in engineering departments
The survey demonstrates that the current business environment is one wherein money is relatively inexpensive and has been good for investments, R&D, and new risks, McDonald said. This solid position supports an appetite for measured risk such as innovation around modifications to equipment. While companies are staying within their core competencies, there is a favorable environment for taking measurable leaps to test out new operations, products, and markets, he said.
Still, some situations remain an uphill battle. For the third year in a row, 48 percent of respondents selected a lack of qualified workers as the biggest external barrier to business growth. The NAM/Industry Week and Manufacturing Barometer surveys, on the other hand, both indicate some relief in this area over the last three quarters.
Competition from foreign markets continues to be a significant worry, as indicated by 33 percent of those responding. Additionally, shortening product lifecycles are affecting and challenging the manufacturing supply chain, according to McDonald.
“Product lifecycle is huge,” said McDonald in an interview, “it is no longer unique to high-tech – supplier relationships used to be a long-term deal, but now lifecycles across the board are so much shorter. There is so much more movement and with that the constant need for new sources. Supply chain professionals are asking, ‘can I grow my existing source with me and the skillsets and abilities that supply chain professionals need to have?’”
Partnering will be key to managing this trend, he said. “If we think about the industrial space and product lifecycles, there is a shortening as innovative tech aspects of products grow and with that growth, the product lifecycle decreases and becomes more dynamic, just as we have seen across traditional high tech goods. IoT growth is wonderful, but it reverberates throughout the entire supply chain, calling into question if manufacturers have the right partners [to handle the new, more dynamic environment].”
Procurement professionals evaluate supplier success through price performance and partnership qualities, including flexibility to respond to unexpected demand (cited by 76 percent of manufacturers) and responsiveness to change requests (73 percent).
McDonald expanded on the issue of shortening product lifecycles that are affecting and challenging the manufacturing supply chain: “In our world today, product lifecycles are indeed shrinking throughout and this is directly affecting the supply chain, the supply chain professionals, and how those professionals will manage these challenges. Cost pressures are like cost mitigation, they are always there, always cyclical, you want to make sure you are paying a fair price, but that price must be balanced with quality, delivery, and the flexibility to respond to demand with agility.”
The survey indicates that companies are looking to technology to manage some of these challenges. Half of those participating indicated that they are using spend analytics and reporting tools. In addition, many have also incorporated E-procurement (25 percent) and EDI systems (14 percent) in their quest to manage the requirements. With an increased focus on product development synergy, over three-fourths of procurement professionals said that they currently play an active role in new product development. Even more encouraging, 45 percent said that they get involved in the process as early as the prototyping and idea developing stage.
The PrimeAdvantage annual survey underscores the real strengths in North American manufacturing, broadly speaking. Of importance is the continued growth, a critical element differentiating the North American manufacturing and procurement supply chains. Additionally, the continuity of this growth pattern across surveyed industries informs the positive business sentiment for the coming quarters, particularly as the U.S. enters the end of a turbulent political environment due to the contentious election. The survey respondents did note real unease with the political uncertainty, but not enough to shake the broader business view of strong revenue, continued hiring, and positive investment forecasts for business operations and capital expenditures to support continued growth through Q1 2017.
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