CHICAGO (PRWEB) October 26, 2017
Prime Advantage, the leading group purchasing organization for mid-market manufacturers, announced the findings from the 16th annual Purchasing and Manufacturing (PM) Survey. This benchmarked study reveals financial projections and top procurement insights of more than 750 U.S. manufacturing companies. The results show sustained optimism about revenues and employment growth, as well as heightened awareness of cybersecurity risks.
- 88 percent of manufacturers project revenues will increase or stay at the same level in the next 12 months
- 40 percent find the challenges of filling open positions a key barrier to growth
- 91 percent of manufacturers expect headcount to grow or remain steady through the end of the year
- 34 percent of manufacturers experienced a cybersecurity breach within the past year; theft of intellectual property is one of the top threats identified for 2018.
Optimism for Healthy Revenues
Eighty-eight percent of Member companies expect revenue to either rise (20 percent) or remain consistent (68 percent) in the next year. Thus, 88 percent of Prime Advantage Members predict that their sales in the coming year will meet or beat the past year. Twelve percent predicted a decrease in revenue for the coming year. These numbers represent an overall uptick in confidence from 2016’s survey, when only 15 percent were expecting an increase in revenues for 2017 and 69 percent expected revenues to remain steady, with 16 percent predicting a revenue decline.
These numbers are comparable to the business confidence viewpoint presented in the third quarter 2017 NAM Manufacturers’ Outlook Survey, where 85 percent of small manufacturers and nearly 90 percent of mid-sized manufacturers reported a positive outlook for their own companies.
The survey also shows that optimism in revenue growth has gradually declined since 2013, when 56 percent predicted an increase in revenues, while 41 percent were predicting a boost in sales, and just three percent were predicting a sales decline.
Capital Expenditures Remain Strong
In response to the question about projecting capital spend for the remainder of 2017, Prime Advantage Members have shown this to be a priority, with 83 percent saying they would increase (27 percent) or stay the same (56 percent) from last year. This is a slight increase from 2016’s Prime Advantage PM Survey, when 81 percent believed their capital spending would increase (28 percent) or remain steady (53 percent) for the year.
Employment Outlook on the Rise
A survey record high of 65 percent of respondents predicted to add headcount in 2017, and 50 percent have already done so. This surpasses last year’s projections, where 57 percent predicted new hires for the year. It is even stronger than the PwC Manufacturing Barometer, which saw 35 percent of industrial manufacturers predict new hires for the year.
Barriers to Growth: Most Sought-After Employees are Hardest to Find
For the fourth year in a row, a lack of qualified workers is the biggest potential external barrier to business growth, according to 40 percent of respondents to the latest Prime Advantage PM Survey. And 29 percent said a lack of demand was also hampering business prospects.
While these were again the highest-rated potential business barriers, it is encouraging to note that all decreased from the 2016 PM Survey. And the top five potential business barriers have all dropped steadily since 2015.
Cost Pressures: Procurement Insights
Procurement teams continue to identify raw materials as the top cost pressure at 94 percent, with logistics and transportation as the second biggest cost pressure at 62 percent, followed by component parts at 61 percent. Raw material costs have been identified as the top cost pressure in every Prime Advantage PM Survey since its inception.
Outside of the three core supplier measures (price, quality and on-time delivery), which are metrics used by more than 90 percent of all survey respondents, small and mid-sized industrial manufacturing professionals are also searching for added value from their supplier partnerships. Among the value improvements sought from suppliers are responsiveness to change requests (87 percent), flexibility to respond to unexpected demand (84 percent), and communication (78 percent).
Related to this, time pressures remain the biggest challenges facing procurement operations in 2017, according to 40 percent of the Prime Advantage PM Survey respondents. This represents an eight percent increase from 2016.
Cybersecurity a Critical Issue
Thirty-four percent of survey respondents said their companies had experienced a digital security breach in the past year, while 38 percent said they have increased their intellectual property (IP) protection efforts. Thirty-three percent reported that they perform regular security vulnerability tests, and 16 percent said they had improved their cyber-risk teams in 2017.
The top cybersecurity threats in 2017 for small and mid-sized industrial manufacturers were identified as phishing attacks, IP theft and third-party security breaches.
“Small and mid-sized industrial manufacturers have come a long way in the past few years, and the Prime Advantage PM Survey shows that these organizations should be optimistic about future growth opportunities,” said Dan Grant, president, Prime Advantage. “We are proud to support these remarkable organizations through our innovative procurement solutions.”
Methodology: Prime Advantage surveys a cross-section of purchasing executives and professionals from its Member companies for its annual Purchasing & Manufacturing Survey. The latest survey data was collected in July and August 2017 from representatives of Prime Advantage Member companies in durable goods manufacturing, with annual revenues ranging between $10 million and $10 billion, of which the majority range between $20 million and $500 million. This survey had more than 100 supply chain professionals participating, representing U.S.-based manufacturers in more than 25 different industries, including commercial food service equipment, packaging, truck and trailer, material handling, food processing, and construction equipment. Prime Advantage has polled its membership for their impressions of current economic conditions since February 2008.
About Prime Advantage
Founded in 1997, Prime Advantage is dedicated to bringing its clients reduced costs on raw materials, components, and supplies through leveraged sourcing agreements, and strategic services. By combining the purchasing power of more than 750 industrial manufacturers, Prime Advantage negotiates volume rebates and discounts with an exclusive group of world-class global Endorsed Suppliers. For more information, visit http://www.primeadvantage.com.