ANNUAL MANUFACTURING REPORT 2016

FINANCE & INVESTMENT
ANNUAL
MANUFACTURING
REPORT2016
13
To what extent can your company assess its return on major
capital projects?
60%
50%
40%
30%
20%
10%
0%
2009
2010
2011
2012
2013
2014
2015
Part of manufacturers’ relationship with
their financial partners is in their own hands.
Banks expect businesses to have clear and
consistent monitoring and management
measures in place and for them to have
realistic strategies and approaches. The
indication is that both are increasingly in place
and it is worth highlighting that the number
of companies seeking ROI within 12 months
has declined to zero. This is evidence that
manufacturers are adopting a more realistic
and strategic approach.
The companies who said that they can
achieve full financial ROI quantification is at
the highest recorded level since 2009. The
quality of assessment can be perceived to
have risen since then, with increased and
wider adoption of relevant ISO standards, so
this year’s 28% mark may in fact be the highest
level ever recorded.
Full financial ROI (return on investment) quantification on all investments
Most benefits are quantified financially, but not all
Some ROI quantification
Mainly operate qualitative assessments
We have no process for monitoring ROI
“Manufacturers are adopting
a more realistic and strategic
approach”
14
What is your company’s typical required payback (ROI)
period for a major investment?
80%
70%
60%
The second highest level - most benefits
quantified financially but not all - is at the
lowest percentage (32%) since 2009 but the
total of the top two, at 70%, should give banks
and lending organisations confidence that
manufacturers understand the importance of
financial discipline and can deliver it.
50%
40%
30%
Those who do not have a process for
monitoring ROI seem to be declining
in number, which suggests that a more
structured approach is being taken.
20%
10%
0%
2009 2010 2011
No such targets usually set
12 months or less
2012
2013
2014
2015
When it comes to expected ROI,
manufacturers are clearly adopting realistic
positions. None expect full return within 12
months. The bulk of respondents - 64% - look
for ROI within two to four years, which is
consistent with findings elsewhere in the
Report. This is also in keeping with lifecycles
in, for example, the auto industry. Fifteen per
cent have longer horizons and nine per cent
set no ROI targets at all, which could make
it hard to present a credible case to their
financial partners.
1 - 2 years
2 - 4 years
4 - 7 years
More than 7 years
“64% look for ROI within 2-4
years”