UK's SME manufacturers losing their creative spark

Small and medium sized manufacturing businesses in the UK are finding it increasingly difficult to design new products for their customers, citing innovation as a key challenge for the industry as a whole. This is the key finding of this year's 'SME Barometer Research' commissioned by Exact, an annual survey of 2,500 respondents across Europe and the USA.

It is not surprising that SME manufacturers are struggling to keep pace when the past year has seen the sector grow at one of its fastest rates and companies are under continued pressure to stay ahead of the curve.

Last year's barometer revealed that – after finding new customers (43%) and reducing costs (55%) - the need to design new products at an ever-increasing pace was a relatively low priority for manufacturers (27%), but now, at 41%, it has morphed into the third most pressing business challenge they face.

On the upside, it appears that customers across Europe are becoming more forgiving of issues such as late deliveries. Last year 27% of respondents cited that there was a chance of customers terminating the partnership following a late delivery, and this year that had reduced to 24%.

This increase in goodwill has not gone unnoticed by UK manufacturers - 77% of whom do not now consider improving customer satisfaction a key business challenge, up from 64% in 2015. Manufacturers in France however, are taking a more proactive approach than the UK. Despite the leniency in customer attitude, improving customer satisfaction remains a key priority for France, placing that in third place behind finding new customers and cost reduction.

As to the continued cost pressure SME manufacturers are under, it's clear from the research that they are looking to technology for a solution. Storing real-time price data and historic quotations in one single location (30%); real-time insight into prices for materials from suppliers (30%); and acquiring intuitive tools that speed up calculations (14%) are top of the list, with automated updating of cost data and automated cost-rollup processing not too far behind at 9% and 7% respectively.

Gavin Fell, General Manager of Exact Cloud Solutions UK, said: "Last year's study painted quite a bleak picture for UK manufacturers. The determination of businesses to innovate combined with the loyalty of UK customers has helped the sector to bounce back. Technology adoption can lessen the burden of many repetitive, time-consuming but necessary tasks, leaving space for manufacturers to think outside of the box. It's great to see that manufacturers have experienced an influx of talent in the last year, which we expect will support this innovative mindset."

The study found that there has been a complete transformation in the sector when it comes to recruitment. The 2015 Barometer found that recruiting talent was the biggest hurdle to business success (45%). This year, the skills gap has narrowed, with only 23% reporting the same difficulty. This may be due to the recent manufacturing education reforms, created to enable more students to easily pursue STEM subjects.