2023 Canadian Manufacturing Outlook Report: Is your company ready?

Our Canadian SAP Concur team works closely with manufacturing businesses of all sizes to support their growth through spend management automation. These partnerships have given us the benefit of a broad perspective on the digitization challenges facing finance and IT leaders. Yes, for us it’s not just all about expenses and invoices Case in point, our sponsorship of the 2023 Advanced Manufacturing Outlook Report by Canadian Manufacturing Magazine and Plant Magazine.

The survey measured the adoption of advanced manufacturing technologies, including the use AI in finance workflows, as reported by 174 senior decision-makers in the Canadian manufacturing industry. An industry expert panel discussion further rounded out the findings by unpacking specific insights and stories behind the survey results. 

The full report is a worthwhile read, but here are some key takeaways.

IIoT adoption still lacks momentum

Advanced manufacturing, IIoT (industrial internet of things), Industry 4.0—these terms encapsulate technologies that are an industry unto themselves. And while the pandemic certainly fast-tracked discussions around how, where, and why to integrate IIoT, many Canadian manufacturers have yet to make significant strides in transforming their operations with these newer technologies.

More than two-thirds of survey respondents said that despite being a great concept, IIoT is challenging to implement for the following reasons:

1. Lack of skilled talent
2. Challenges integrating with legacy technology
3. Resistance to change within a company
4. Funding challenges

This doesn’t mean, however, that Canadian manufacturers are resigned to stick with the status quo.

In fact, 71% of survey respondents said they are concerned for their companies if they don’t invest in IIoT.

What keeps these business leaders up at night? Worries include falling behind the competition, losing customers, potential disruption by industry outsiders, pricing pressure because of commoditization, and more.

Hussam Malek, a partner at MNP, explains:

“In the Canadian market, when we’re talking about these manufacturers, the vast majority are considered small with under 100 employees. As a result, it is difficult for them to go through the pandemic and supply chain issues, and then not have the skill sets they need in-house to develop an advanced manufacturing plan or even figure out who to ask to help plan these things.”

How can Canadian manufacturers build more momentum behind adopting advanced manufacturing solutions? Industry experts agree that thoughtful preparation is essential—and partnering with a solution provider like SAP Concur doesn’t hurt either.

Preparation is the key for unlocking the advantages of automation

Market uncertainty, rising inflation, and supply chain issues are likely with us for the foreseeable future. As a result, customer, supplier, and employee expectations are quickly evolving, much like process automation solutions are. Getting ahead of the curve, however, means starting with a strong footing through insight-based planning.

Implementing a process and a plan is essential so you get the right answers to the right questions. “In my experience where I’ve seen technology projects fail,” shares Krishan Chauhan, Director of Business Operations at SAP Concur Canada, “is where there is a lack of plan and a lack of prioritization amongst the things that they want to accomplish within their organizations. It’s important for organizations to sit down and understand what’s most important to their business, and just take it step-by-step.”

When it comes to evaluating your spend management processes in particular, ask the following three questions:

1. Can your current travel, expense, and invoice management solutions scale and adapt with your business?
2. Do they seamlessly integrate with your other finance, ERP, CRM, and HR systems?
3. Do your current solutions provide the business the intelligence we need to increase efficiencies, improve compliance, and better manage risk?

If any of the answers are “We don’t know”, make sure to download our guide on Running the numbers: the key to improve your spend control. It provides simple calculations you can use to reveal the strength (or weakness) of your current travel and expense program.

AI is a competitive advantage. Don’t be left behind

AI and ML are increasingly becoming tools for IT, finance, accounts payable teams, security, travel managers, and all kinds of business decision-makers. This means that your biggest competitors are likely already using intelligent technologies to streamline processes, drive down costs, and free their people from cumbersome manual tasks.

So, what are Canadian manufacturers looking for AI to improve over the next 12 months? The most in-need processes cited by survey respondents included:

• Managing cash flow (25%)
• Mitigating risk and compliance in invoice management (25%)
• Auditing expense reports (23%)
• Mitigating risk and compliance in employee spend (21%)
• Invoice payment authorization processes (21%)
• Managing taxes and identifying reclaim opportunities (18%)
• Employee expense reimbursement process (16%)

Many of these same companies have already put their plans into motion, with 28% currently applying AI, 14%planning to start in the 12 months, and 23% in the initial steps of evaluating solutions.

Granted there’s a natural, human fear that AI and machine learning technologies will replace people in the workforce. The opposite, however, is closer to the truth. When AI is doing all the heavy lifting with how data is captured, validated, and integrated, employees can focus on bring more strategic value to their roles.

“AI makes humans more human by allowing us to do the things we are really good at,” says A.G. Lambert, SVP of product management at SAP Concur solutions.

If you want to find out more about how AI can enhance your internal processes, take a look at our ebook on How AI and ML Automation Solutions Solve Business Problems.

Connected data empowers decision-makers

As part of the survey, respondents were asked how they are collecting and using data. The less-good news: spreadsheets are still the number one option at 60%. This stat, however, is down from 70% in the 2020 survey, along with a drop by nearly a half for manual paperwork (from 43% in 2020 to 22% in 2022).

What’s even more encouraging is the number of Canadian manufacturers who are

looking to monetize their data in some way—nearly 9 out of 10 survey respondents, in fact.

When asked how or why they are monetizing data, the top responses were:

• Improve operational efficiencies (66%)
• Developing new business models (41%)
• Adding new services to existing offerings (33%)
• Leveraging supply chain/customers (31%)
• Developing analytics capabilities for external sale (22%)
• Partnering with similar companies (11%)

Manufacturers need smarter, AI-enabled business systems that can connect data in real-time so that stakeholders can take the right actions quickly in order to provide a great customer experience.

As Dennis Dussin, President of Alps Welding, notes:

“It’s great to have the data, but it’s also about distributing the data, distributing decision making, empowering decision-makers… People are now investing in technology that facilitates that kind of inter-departmental or inter-functional data transfer and decision making.”

Not to be overlooked is the critical capability of spotting and mitigating fraud and compliance risks. In a global study by another SAP Concur partner, the Institute of Financial Operations & Leadership, 44% of global finance teams said they know of someone who has been a victim of accounts payable fraud in the last three years.

Even well-meaning employees can fall out of compliance when they don’t understand the rules and when spending policies suddenly shift. By leveraging AI-powered spend management solutions, however, you can proactively manage risk while building a culture of compliance in which employees thrive.

Learn more about 5 ways to assess your audit efficiency.

Cybersecurity requires a human solution

Nearly two-thirds of survey respondents said their companies have “somewhat” done all it can to protect against a cyberattack. The value of that finding, however, is a matter of interpretation. If you evaluate your cybersecurity in terms of technology infrastructure alone or by the frequency of security audits, you may be missing the forest for the trees.

As Scott McNeil-Smith (VP of Manufacturing Sector Performance, EMC) points out:

“With employees, it’s not just a technical vulnerability, but potentially socially engineered ones, manufacturers should look out for. This is where attackers are using technology to gather sophisticated information on companies and individuals, then using that information to engineer access by contacting the company directly and fooling people into opening the gates.”

Granted, the right cybersecurity strategies, technologies, protocols, and response plans need to be in place and continually evaluated. However, when you consider that phishing is cited as the most common type of cyberattack experienced (41%), employee education on cybersecurity needs to move further up the priority list.

There’s another upside to such training. A cyber-aware employee is also a happier employee.

The employee experience matters

When the expert panel reviewed the report findings, they highlighted the need for manufacturers to understand how technology impacts the quality of an employee’s work experience. Younger people, in particular, are coming into the advanced manufacturing workforce with expectations that their company will be up to date in terms of the technologies being used.

Understandably, employee retention becomes a significant challenge when millennials raised on mobile apps are asked to file an expense excel spreadsheet manually. This viewpoint is echoed in a recent article in Forbes Magazine, which noted that “getting ahead of burnout and talent shortages, while embracing new technology, can help manufacturers rethink and rebuild their businesses so they’re optimized for the new normal and able to ride out the crises ahead without slipping back into crisis mode.”¹

Next steps

If there can be said to be one principal message from the 2023 Advanced Manufacturing Outlook Report, it’s that automation and the IIoT have become must-haves for success in manufacturing.

As Rory Macleod (Area Vice-President of Manufacturing, Automotive and Energy at Salesforce Technologies) so succinctly summarizes, “Technologies such as the IIoT are never simply expenditures. They are the steps you take on a journey to long-term business transformation – where you are capitalizing on data to inform the smartest decisions you’ll ever make.”

Ready to take the next step forward? With SAP Concur solutions, building momentum for what’s next is easier than you may think. Talk to us today.

¹ Here’s How Manufacturers Can Dig Themselves Out Of “Crisis Mode”, Forbes Magazine, August 2022