Pandemics, climate change and geopolitical events are leading manufacturing executives worldwide to focus more than ever on a double transformation: smart digitization and the goals of the Environment, Society and Governance (ESG), according to its research. KPMG.
The findings are based on global research. “Global Manufacturing Propects 2022KPMG International has 150 CEOs of processing companies in 11 countries in Europe, North America and the Asia-Pacific region. Three-quarters of them come from companies with annual revenues of $ 1 billion or more.
Manufacturing CEOs 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 enhance resilience, both avoiding disruptions to business and leveraging them. If manufacturing companies take timely action to ensure a sound supply chain, this can strengthen companies to withstand future shocks and improve their competitiveness.
“The need for resilience forces companies to be more flexible and to make better and faster decisions. Digitization plays a vital role in this,” said Grant McDonald, Global Sector Leader, Aerospace & Defense at KPMG International.
“Undoubtedly, a healthy and resilient supply chain contributes, among other things, to a healthy environment of a processing company as it shields it against difficult economic conditions,” he said. Alexandros Veldekis, General Manager, Auditing Services, KPMG in Greece on the results of the research and adds: “It is also a fact that the successful implementation of digital transformation, which concerns not only the adoption and application of new technologies, but also the successful change in corporate culture, combined with the integration of strategy and The gradual implementation of a comprehensive ESG agenda ensures a sustainable future for manufacturing companies, while it is clear that the interest of all consumers, authorities, employees, shareholders and investors is increasingly harmonized with digital technologies and sustainability criteria, elements that are expected to create value and contribute to long-term profitability. ”
Among the main findings of the research:
-The supply chain risk is considered the most important risk for the development of the business. More than two-thirds (68%) of CEOs say they aim to ensure the resilience of their supply chain in the event of a major global disruption sometime in the future.
-The main way to reduce the pressure on the supply chain is the deeper control of the supply chain by the company in order to anticipate the changes before their effects become significant.
-The main operational priority for achieving the development goals in the next three years is to invest in the digitization and interconnection of all operational sectors.
The pandemic has led CEOs to ask deeper questions: 77% say they feel a stronger emotional connection to their company after the pandemic begins. In addition, 67% of CEOs state that the overall purpose of their business is to provide long-term value to shareholders, almost five times as much as those who focus on financial returns.
-The ESG goals, however, are not treated primarily as a development tool by the CEOs interviewed. A significant minority (31%) report that adherence to the ESG improves financial performance, but 54% say it has a neutral effect. First of all, 92% believe that communicating a sense of purpose will have the greatest impact on customer relationships.
-On environment, society and governance issues, CEOs focus more on the second factor regarding the pandemic. However, they are also unaware of environmental goals: 71% face “global challenges” such as income equality and climate change as the biggest threats to long-term growth.
In summary, the combination of pandemic and climate change is accelerating the digital transformation as companies seek tools to reduce new risks and maximize new opportunities. Research shows that CEOs have not yet had time to fully evaluate the relationship between digital transformation and ESG.
“Manufacturing companies will now have to focus on a twofold transformation: smart digitization and ambitious ESG goals. “, supports Stéphane Souchet, Global Head of Industrial Manufacturing of KPMG International.
You can find the survey here
Source: Capital

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