Unparalleled pressures

It’s a tough time to be an industrial manufacturer.

From aerospace to automotive, the sector faces epic labor costs, rising raw-material prices, and a widening gap in overall competitiveness, as many customers relocate their supply chains for more favorable economics, productivity, or innovation.

To offset these challenges, manufacturers increasingly use managed services, which can reduce total operational costs by as much as 15 to 45 percent, without prohibitive upfront investments.

Indeed, in the recent KPMG and HFS Research Managed Services Outlook Survey, 90 percent of executives in industrial manufacturing — more than any other sector — said the enterprise-wide deployment of managed services will provide a long-term cost advantage.

Going beyond cost savings

However, when it comes to managed services outcomes in industrial manufacturing, cost is just the beginning, as 89 percent of respondents also expect a long-term advantage from value creation.

Organizations use managed services to accelerate digital transformation, with sustained outcomes ranging from operational resilience to regulatory agility and stakeholder trust. The top areas of adoption are cybersecurity, compliance, data management, and core operations, where about 70 percent of manufacturers use managed services for a business function or at scale across the enterprise.

Managed services for managing risk

To help them better compete amid market volatility, industrial manufacturers say risk is the area where managed services are expected to deliver the greatest value in the next three years. Accordingly, the survey found that:

• Nearly a third of industrial manufacturing respondents use managed services for 76 percent to 99 percent of their risk activities.
• More than 73 percent plan to increase risk-related managed services in the next two years.
• Nearly half say managed services will play a central role in the world-class delivery of risk-related services.

These services can range from cyber detection & response to transaction monitoring, regulatory reporting, third-party risk management, and more.

A model for ongoing transformation

At a time of extraordinary costs and pressure to become more digital and data-driven, industrial manufacturing organizations are seeking nimble, cost-effective operating models that enable sustained advantage while limiting disruption and risk. In response, many are embracing managed services.

For more on managed services in industrial manufacturing, see this industry snapshot.

Learn more about KPMG Managed Services. For an archive of past blogs, please visit Going Beyond: Managed Services.