Digital Transformation • March 30, 2022

UK vs. U.S. Manufacturing: How Can the UK Close the Productivity Gap?

UK vs. U.S. Manufacturing: How Can the UK Close the Productivity Gap?

For the past decade, manufacturing productivity growth in the UK has stalled compared to the whole economy. With manufacturing accounting for 18% of UK GDP, now more than ever, UK manufacturers need to invest in digital technologies to move beyond COVID-19 and compete effectively on a global stage with rising material costs, inflation, and labour shortages all threatening to hamper future success. 

Global manufacturing has seen more disruption and transformation in the last two years than in the last two decades, fueling a productivity gap between U.S. manufacturers that have invested in digital transformation and UK manufacturers that have not. The full extent of this gap can be seen in research findings recently conducted by IDC as part of their Future of Operations Survey.

IDC asked companies to rate their performance last year compared to two years previously (before the pandemic had begun) across several critical metrics. This was benchmarked against digital maturity capability, with UK manufacturers compared against U.S. manufacturers. There were two clear takeaways from the data. Firstly, a strong correlation across all groups was observed between digital maturity and improved performance.​ Secondly, comparing U.S. and UK respondents, U.S. performance improvements were found to be significantly higher among digitally mature manufacturers.​ 

The U.S. companies that invested more heavily in digital – specifically data access capabilities – gained a clear competitive advantage. The largest performance gaps between the UK and U.S. were seen in the Productivity and Efficiency, Product Quality, and Agility and Resilience categories, with the UK significantly behind in all three of these critical areas.  

So how can the UK close the productivity gap? 

As the IDC data shows, the answer lies in harnessing the power of digital. Many UK companies still rely on manual, paper-based, or Excel spreadsheets to view and manage manufacturing operations performance, making it impossible to keep up in today’s fast-paced, complex world where decisions need to be made in a more connected and immediate way. 

In contrast, those organizations that implemented a Manufacturing Execution System (MES) have unlocked real-time visibility and intelligence, so can now operate with far greater levels of confidence and control. In addition, new cloud-native operations platforms can help create a new kind of workplace that is more mobile, more agile, and more productive than ever before. Further, these companies had greater success in accelerating new product introduction and other innovative approaches to improving performance across their operations. The result was to harness a faster return on investment from Industry 4.0 strategies. 

Digital transformation drives business transformation and fundamentally changes how a business operates and therefore investing in an MES should not be seen purely as an IT or manufacturing project but as a strategic imperative for business success. iBase-t has a long track record in helping U.S. manufacturers to digitally transform how they operate and drive high performance, and with our increased UK presence we are committed to helping UK manufacturers to capture the iBase-t digital productivity advantage too. 

Explore the full breakdown of figures from IDC’s Future of Operations survey here.

UK Digital Manufacturing Productivity Report