What will the manufacturing industries look like in 2020? First, the big picture: The forces of globalization that are already well established in the sector are set to continue. Accelerated competition at home and the growing sophistication of developing markets will have driven manufacturers increasingly to source, manufacture and sell internationally. By 2020, around 80% of manufacturers expect to have multi-country operations whereas currently just over half do.

Ten years from now manufacturing will have become more collaborative in nature, with companies involving suppliers and customers to a greater degree at all stages of the manufacturing process. The majority expects suppliers and customers to be involved earlier, although for some, notably UK companies, co-design with suppliers is already the norm for over 90%.

Supply chains will have adapted by changing shape: half the companies surveyed said they will be using fewer suppliers by 2020, and 40% expect to be using more distributors as increased competition drives them to reach new markets.

In the developed nations, supply chains will be more complex according to the majority of respondents, so as to cope with input from customers and suppliers at all stages of the product lifecycle from R&D to end-of-life disposal.

Supply chain systems will be called on to provide more accurate information on costs and logistics planning. However, companies from emerging nations expect their supply chains to simplify as they consolidate suppliers. On emission reduction, the survey shows that manufacturers will not have done as much as might be expected to mitigate the risks of climate change and to exploit the opportunities by providing products and services that minimize the impact on society.
 
Beyond the big picture, regional differences will persist in 2020 between manufacturing industries in the developed and emerging economies.

For example, companies from developed nations believe they will have moved away from mass production towards greater specialization as they seek to find more profitable ground higher up the value chain. Whereas companies from emerging economies will have moved from low-profit localized manufacture to become the new masters of standardization.

Additional differences will exist from one developed market to another. For example, answers from French companies often stand distinct from their neighbors in UK, Germany and Sweden. This is especially true when it comes to supplier and customer collaboration, where French respondents see less collaboration with suppliers and customers, and more reliance on their domestic market. And there are marked differences between the responses given by Chinese and Indian companies as to where they expect to be by 2020, with Chinese companies seeing themselves moving closer to the manufacture of finished goods, but Indian companies moving towards raw material production.

While this top line review provides a summary of key findings from the study, the sections that follow offer more in-depth data and analysis. We urge you to read the full report to evaluate what actions you may need to take now to ensure that your company is ready for the challenges and opportunities for 2020.
CapGemini