During a recent virtual event hosted by MYOB, Professor Göran Roos, who is one of the world’s foremost observers of the manufacturing sector shared some sobering statistics into the Australian manufacturing industry. Despite the alarming statistics there is also plenty of opportunity for those willing to grasp it.
Professor Göran Roos indicated Australian’s manufacturing might be closer to third world countries, ranking last in economic sophistication among OECD countries of similar GDP/capita.
While Australia has a proud history of manufacturing, the stark reality is that where it matters – sophistication – we’re falling behind. Since the 1990s, our sophistication levels have slipped. Ranked against countries with similar GDP per capita, we come dead last.
He explained that sophisticated economies use their IP, innovation and technology to add value internally. This means they do not have to compete on price – they can offer something no one else can. Additionally, they can export the means by which they create these unique products or services.
Only 2.3% of Australia’s manufacturing is in this space. Therefore, it needs to improve all aspects of its manufacturing policy. The government’s new manufacturing strategy is a first, small step.
While that position can feel disheartening for Australia, as manufacturers, you can help improve our economy’s sophistication by beginning your journey towards digitisation. That can and should start with investment in cloud ERP and big data, which have been shown to have a positive and significant impact on operational and market performance. They streamline business operations, save money and decrease time to market. The outcome of all that improvement is a healthier bottom line and a competitive advantage. Cloud ERP also makes data more accessible and can feed into business decisions that help you modify operations, service delivery and the products themselves.
In one study, 126 firms in the US were compared – some adopted ERP and some hadn’t. Results showed that those with ERP had a significantly improved return on assets and investment and asset turnover in three years, compared to those who didn’t have ERP. Plus, firms without ERP saw financial performance deteriorate, while it held steady for firms who had ERP.