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UK manufacturers say digital spending is raising productivity

01 November, 2022

Almost 80% of UK manufacturers have increased their spending on digital technologies in the past two years, with a similar number planning to do so in the coming two, according to a new survey by the manufacturers’ association Make UK and the enterprise software specialist Infor.

This investment is already bringing benefits, with 40% saying it has improved their productivity, 27% saying it has boosted profitability, and 31% reporting that it has improved labour efficiency. Some 9% of those quizzed say their productivity has improved by more than 50%.

According to Make UK, more companies are moving to the “evolution” stage of digital adoption where they make changes to their processes – in particular, to product design, manufacturing systems, marketing and finance.

But there are growing concerns that a shortage of skills could hamper the drive to work smarter and greener. Almost a third (32%) of companies say that a lack of skills to implement digital technologies is a barrier, with a similar number reporting that a lack of technical skills is holding them back from maximising their investments.

Amid speculation that the Government is planning swingeing spending cuts, Make UK is urging it to protect support schemes such as Made Smarter and Help to Grow Digital. The organisation is calling on the Government to :
• roll out Made Smarter across all regions and to widen the scheme to include industrial decarbonisation;
• expand the R&D tax credit to include capital expenditure to spur further digitalisation R&D;
• enhance the Help to Grow Digital scheme to support manufacturers wanting to adopt packages of systems and software; and
• establish a regional SME advisory service for digital adoption and appoint a lead delivery partner in each region.

A report based on the survey – called Digital Adoption: the Missing Link in Productivity Growth – reveals that while manufacturers’ main investments are in well-established areas such as e-commerce, finance and manufacturing processes, they are also increasing their efforts to digitise supply chain management. Almost a third are now using digital technologies to manage their supply chains and a further 40% are considering it.

This is improving their ability to respond rapidly to supply chain changes. More than a third of companies (35%) plan to have up to a quarter of their processes automated in the next two years, with a further quarter planning to have up to half their processes automated.

These investments are also helping companies to achieve net-zero ambitions with a third (34%) saying they have improved energy efficiency as a result of digital adoption and a similar number saying they have reduced emissions. The increased use of digital technologies is creating jobs, increasingly with higher skills. Some 37% of companies report that job opportunities have increased in their business, with 42% reporting that they need higher level skills as a result.

More than 80% of UK manufacturers that have adopted digital technologies expect the investment to pay for itself in less than five years
Source: Innovation Monitor (2022), Make UK/Infor

“Our economy is undergoing a profound digital transformation with the potential to transform our lives and economy, making it more productive, resilient, and sustainable,” says Verity Davidge, Make UK’s director of policy. “Those countries that are better prepared for these changes will benefit the most, with the companies increasing their investment powering through the challenges that lie ahead with greater productivity, better skill levels and reduced emissions.

“The key now is for manufacturers to unlock their potential on digital adoption which will be key if we want to invest and grow,” she adds. “To aid this process, Government must protect vital support programmes which are key to enabling SMEs in particular along their digital journey.”

Make UK:  Twitter  LinkedIn

Infor:  Twitter  LinkedIn  Facebook

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