Why Manufacturing Collaboration is Key to Growth
We’re a few weeks into 2023, but it’s not too late for manufacturers to make one very important New Year’s resolution: improve company-wide collaboration. That message was brought home by a recent 3DS Innovation and Collaboration Study conducted by The MPI Group.
For example, 70% of manufacturing firms with excellent collaboration between leadership and all other functions reported that they increased their profits by more than 10%. By contrast, only 29% of other manufacturers claimed similar gains. Despite the clear benefits, The MPI Group found that less than half of the companies in their research had excellent collaboration between their leadership functions and other functions within the organization.
The findings are based on The MPI Group’s survey of 155 companies across North America; Europe, the Middle East, Africa (EMEA); and Asia-Pacific. And it looks at six functional areas: leadership, manufacturing, research and development (R&D)/product development, customer-facing, supply chain/procurement, and support services. Across all areas, the survey reveals gaps in business best practices.
However, the survey also shows that many manufacturers lack the technology to support collaborative business practices. In fact, only 50% of the manufacturers surveyed have developed and deployed strategies to align technologies across functions, and 16% have no strategy at all. Meanwhile, 34% have strategies that are developed and partially deployed.
Let’s look closer at each of the functional areas covered by the survey and some of the most notable differences between manufacturers with excellent collaboration versus others.
Leadership
As noted earlier, manufacturers with excellent collaboration were more than twice as likely to increase their profits by more than 10%. One of the biggest differences in business practices was the use of one-on-one meetings with other function leaders—a strategy employed by 70% of manufacturers with excellent collaboration versus 50% of others.
Across survey respondents, the technology solutions most widely used by leadership are customer relationship management (CRM) at 61% and business analytics at 54%. However, 60% of those with excellent collaboration also rely on supply chain management (SCM) versus just 33% of others.
R&D/Product Development
Fully half of the manufacturers with excellent R&D collaboration see more than 30% of their R&D projects turn into sellable products or services versus just 27% of other companies. Across all respondents, analysis of product data is cited as the top collaborative R&D practice at 56%. However, 73% of companies with excellent collaboration apply this business practice versus 53% of others.
Across all manufacturers, the top 3 technologies for R&D collaboration listed by respondents are business analytics (42%), CRM (42%), and quality management systems (41%). Among those with excellent R&D collaboration, product data management is a priority for 50% compared to just 23% of other companies.
Manufacturing
Among companies with excellent manufacturing collaboration, 63% achieve on-time delivery of more than 95%, a success rate achieved by just 32% of other manufacturers. The top three best practices identified by respondents here are performance management systems (43%), quality certifications (42%), and continuous improvement programs (40%). Meanwhile, 53% of those with excellent collaboration use visual management boards versus 32% of others.
Looking at all respondents, the top technology for manufacturing collaboration is business analytics (53%). But among those with excellent collaboration, 53% report that they use manufacturing execution systems versus just 23% of other companies.
Supply Chain/Procurement
Over 56% of manufacturers with excellent supply chain collaboration report supplier on-time delivery of more than 95%, while only 32% see similar results. Across all respondents, continuous improvement programs tied with waste elimination were the most widely adopted practices at 34% each. But adoption of a continuous improvement program rises significantly to 56% among companies with excellent collaboration, whereas it is only applied by 30% of other companies.
There is a similar gap in technology solutions used: 52% of manufacturers with excellent collaboration rely on enterprise resource planning (ERP) versus 33% of other companies. Across all respondents, the two top technologies to support supply chain collaboration are business analytics and CRM at 45% each.
Customer-Facing
Customer-facing functions identified in the survey include sales, marketing, and customer support. Among survey respondents, 85% of those with excellent customer-facing collaboration have achieved customer retention rates of more than 90% compared to just 28% of other companies. Here value-stream mapping is a top business practice among 63% of manufacturers with excellent collaboration compared to 29% of others. Across all companies, sales and marketing alignment is the most widely adopted practice, but it is only being applied by 45% of respondents.
Product data management is widely used by companies with excellent customer-facing collaboration (63%) versus others (30%). As with supply chain/procurement, the two most widely used technologies for customer-facing collaboration among all manufacturers are business analytics and CRM at 45% each.
Support Services
Support services include finance, human resources (HR), and administration. Across those manufacturers with excellent support services collaboration, 36% have cash-to-cash cycles of less than 30 days versus just 13% of other respondents. Over half of the organizations with excellent collaboration rely on daily huddles/team meetings (57%) compared to others (28%). Meanwhile, the top practice among all respondents is having a performance management system in place (43%).
For technology adoption, the top responses among all respondents are again CRM (45%) and business analytics (45%), followed by ERP (39%). Notably, among companies with excellent support services collaboration, 57% rely on human resource management system (HRMS) technology versus 28% of other respondents.
Conclusion
As the survey shows, manufacturers can see tangible improvements in performance and profitability by improving collaboration across all major functions of the business. So, let’s make a new resolution today to improve cross-function collaboration and start seeing gains in 2023.
