Manufacturing CEOs focusing on resilient supply chains and tech transformation in response to COVID-19: report

According to a report conducted by KPMG, the pandemic, climate change and geopolitics are driving global manufacturing executives to focus more than before on a twin transformation: smart digitization and a focus on environmental, social and governance (ESG) goals.

The findings of the Global Manufacturing Prospects 2022 report are based on a global survey of almost 150 CEOs in manufacturing companies in 11 countries in Europe, North America and Asia-Pacific. Three quarters are at companies with annual revenue of $1 billion or more.

CEOs at manufacturers have learned two important lessons from the pandemic: the vital importance of a resilient supply chain and the need to invest in new technologies to strengthen resilience, by avoiding business disruptions, and taking advantage of them.

“Manufacturers should now focus on a twin transformation: intelligent digitization and ambitious ESG goal-setting. If they are executed effectively, they are likely to reinforce each other to create a more competitive enterprise and a more habitable planet,” said Stéphane Souchet, Global Head of Industrial Manufacturing, KPMG International.

Among the main findings of the survey:

• Supply chain risk is seen as the greatest threat to the organization’s growth. More than two thirds (68 per cent) of CEOs say they aim to ensure their supply chain is resilient in the event of a major global disruption at some point in the future.
• The pandemic caused CEOs to ponder deeper questions: 77 per cent say they feel a stronger emotional connection to the purpose of their company since the pandemic began. In addition, 67 per cent say the overall objective of their organization is the long-term value for shareholders, almost five times more than the number focused on economic returns.
• ESG goals, however, are not seen primarily as a tool for growth by the CEOs surveyed. A sizeable minority (31 per cent) says a focus on ESG improves financial performance, but 54 percent say it has a neutral effect. Above all, 92 per cent believe that conveying a sense of purpose will have the greatest impact on customer relationships.
• Of ESG issues, CEOs are focusing more on the second of these, in response to the pandemic. But they are not ignoring environmental goals; 71 per cent do see “global challenges,” such as income equality and climate change, as the biggest threat to long-term growth.