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Study: U.S. Manufacturers Trail Offshore Competitors on Innovation, Strategic Planning

Posted By Jeff Moad, July 28, 2015 at 11:37 AM, in Category: The Innovative Enterprise

6d8d5ac7e1e5160c6986e54dada163bb.jpgU.S. manufacturers are falling behind offshore competitors when it comes to the breadth and formality of their innovation initiatives, according to a recent survey by accounting and consulting firm McGladrey.

Eighty-three percent of U.S.-based manufacturers told McGladrey that they have a formalized process to drive innovation. By comparison, 91% of manufacturers in Latin America, 90% of manufacturers in Asia-Pacific, and 86% of manufacturers in Europe reported having a formalized process to drive innovation.

At the same time, the company’s 2015 Manufacturing and Distribution Monitor Survey of 1,660 manufacturers found that non-U.S. companies—particularly those in Asia-Pacific—are applying their innovation investments much more broadly than their U.S. competitors. At least 30% of Asia-Pacific manufacturers said they are taking a ‘growth through investment’ approach to innovation across 11 different functional areas and business processes. In addition to new product research and development, those areas included operations improvements, logistics, customer service, supply chain management, and financial strategy and execution.

On the other hand, at least 30% of U.S. manufacturers said they are taking a ‘growth through investment’ approach to innovation in only five functional areas and business processes. Besides new product R&D, they included marketing strategy, operations improvements, customer service, and sales practices and lead generation.

The study found that non-U.S. manufacturers are much more likely to use new services as an innovative tactic (34% as compared to 25% of U.S. manufacturers.)

At the same time, the study indicated that non-U.S. manufacturers tend to have stronger strategic planning processes than their U.S. counterparts. While only 40% of U.S. manufacturers said they have strong strategic planning processes, 55% of non-U.S. manufacturers said they did.

Authors of the McGladrey study said manufacturers in Asia-Pacific in particular may approach innovation and planning more strategically because, as relatively younger companies, they are less burdened by legacy infrastructure and thinking and are able to respond more nimbly. At the same time, the study said, the outsourcing work many of these Asia-Pacific manufacturers have taken on has forced them to emphasize innovation and agility.

The report recommends that all manufacturers accelerate innovation by driving a culture of innovation from the top of the organization; emphasizing accountability, deadlines, and metrics; and putting into place processes to engage and reward employees for enhancing innovation.

Written by Jeff Moad

Jeff Moad is Research Director and Executive Editor with the Manufacturing Leadership Community. He also directs the Manufacturing Leadership Awards Program. Follow our LinkedIn Groups: Manufacturing Leadership Council and Manufacturing Leadership Summit


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