Latest findings from PwC’s Pulse Survey
The single-location model for manufacturing is losing its hold on US operations leaders responsible for supply chains. Instead, as executives take in all of the lessons learned throughout the pandemic and trade policy shifts, different ideas about the optimal footprint for manufacturing are taking shape, findings from PwC’s survey of chief operating officers (COOs) show. Their outlooks for manufacturing models indicate:
Sixty operations leaders from Fortune 1000 and private companies, along with other C-suite executives, weighed in on policy-related issues in our latest PwC US Pulse Survey, fielded September 30, 2020 to October 6, 2020. Find these insights in our Road to Election 2020 report. In the ongoing survey, COOs also shared their perspectives on other top-of-mind issues, including strategies for supply chains.
The C-suite continues to look toward operations leaders to find ways to help contain costs and preserve cash for the organization. Most COOs (80%) say it’s important to make additional changes to supply chains over the next 12-24 months in order to improve profitability, with 40% saying this is “very important” to the company.
In all likelihood, these outlooks signal fresh rounds of cost actions related to procurement and/or production in the near term. This isn’t surprising, with 28% of CFOs PwC surveyed expecting revenue or profits to increase over the next 12 months. Responses could range from shuttering capacity to looking for ways to improve performance of existing assets to outsourcing. Here are two additional actions that some COOs are taking to help lower supply chain costs:
COOs place greater weight on supply chains that are optimized for favorable trade and tax rules. They also include finding ways to update existing facilities and opportunities to increase outsourcing or insourcing among top considerations in supply chain strategies. Many executives associate outsourcing with back office activities like payroll and IT services. But with over half of respondents from industrial products companies, many executives are also considering outsourcing parts of product manufacturing as a way to lower production costs.
In a sign of the times, the trade and tax policy environment was the only consideration that a majority of COOs ranked among their top three (51%). Companies are mindful of the impacts of tariffs and preferences and/or investment incentives given cost constraints, as well as the increase in the use of tariffs or other trade measures by the US. A recent PwC analysis suggests that US manufacturers are poised to capture supply chain-related cost savings and improved resilience by reconfiguring their global footprints in light of changed tariff environments, rising labor costs in China, and the ratification of the USMCA, among other factors.
The watchword for the moment is agility. How operations leaders plan to respond to the outcome of the US elections in November is a case in point. Some say they’re likely to alter course on China. If former Vice President Biden is elected, 42% of business leaders say they’re likely to increase investment and trade with China, while just 13% expect the same if President Trump is re-elected. To compare, close to half of respondents say that the outcome of the election isn’t likely to have an impact on their plans that relate to North America (USMCA).
Business leaders must anticipate policy and regulatory shifts and understand the potential impact on their businesses regardless of who wins the presidency in November. Listen in to our recorded October 14 webcast for the results of the next PwC Pulse survey.
To view data and insights from previous PwC Pulse Surveys, please see below.
Dr. Deniz Caglar
Principal, Financial Services, Strategy&, PwC US
Partner, PwC US
PwC's Strategy&, Principal, PwC US
Principal, Industrial Products, Chemicals and Energy, PwC US