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Manufacturing consulting up 5% to $14bn in 2012, says Source

Global Manufacturing

London: Global manufacturing work for management consultants increased 5 percent in 2012 to $14bn.

This finding was published yesterday in a new report from specialist consulting research group Source Information Services.

Source notes that the recovery of the critical US market (over $5bn in size) has been highly influential in driving global growth and that the UK market is now worth almost $1bn.

The report, which draws on a survey of consulting clients, says that more than a third of those interviewed are open to spending more on consultants, and almost half say they expect their spending will increase in 2014.

Consulting clients in manufacturing are also far more likely than any other sector to say that results-based pricing would encourage them to buy significantly more consulting than they currently do. However, the report notes that clients tend to show a lot of interest in results-based pricing until they discover that it can be difficult to administer, and can set up a situation in which the client ends up paying significantly more for a successful project.

Estimated growth for 2013-14 — 5-10 percent

Source predicts that overall global growth in 2013-14 will be between 5-10 percent with operational improvement the service in greatest demand. The report found that over half (54 percent) of clients expect an increase in operational improvement — with more than a quarter saying this increase will be in the double digits. Next was technology consulting with 52 percent of respondents expecting spending to increase and almost half of those anticipating an increase above 10 percent. In contrast, marketing and selling and financial management services were in least demand but even here the news is still good, with more than a third of respondents saying they expect spending increases in these areas.

B.J. Richards, Senior Analyst from Source said, "The prospects for consulting in the manufacturing sector remain reasonably strong, principally because good levels of growth are expected to continue in some of the biggest geographic markets, including the US, China, Germany, Switzerland and Austria. But a weak market across much of Europe, with low growth predicted for most geographies, does weigh on the sector's overall global prospects."

UK demand is coming back

Whilst the overall growth of the sector was somewhat muted in the UK during 2012, consultants in the field saw robust demand for operational improvement in supply chain, one of their more traditional areas of expertise. From this, client work on operational excellence expanded into the front-office parts of the organisation. The report says that there are opportunities developing in the consumer products sub-sector, as clients strengthen their marketing and selling competencies, and after four years of recession, consumer product companies appear to be investing in growth and consultants once again.

The Big Four lead the way in the sector

The implementation of a project is key to manufacturing clients, and the report found that The Big Four take the top honours here with 79 percent of clients finding them somewhat or highly credible for implementation services. The Big Four were closely followed by technology firms as manufacturers hold IT in very high esteem, as the very nature of their work means they are more likely than most other types of clients to have sophisticated IT skills in house. Niche specialty firms and strategy firms are also regarded highly by manufacturers.

For more information on Source reports contact alice.noyelle@sourceforconsulting.com, telephone +44 (0)20 3178 6443, or go here.

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