Breaking the mould in manufacturing consulting

Consulting in the manufacturing sector has traditionally either been big business or virtually no business depending on the country you work in.  A hugely important part of the German economy, the sector accounts for more than a quarter of all consulting there,  it’s only about a tenth of the UK market where it’s dwarfed by financial services.  It’s a substantial market in India but negligible in the Middle East.

But the winds of change are blowing through the sector.  Old assumptions (China equals cheap labour) and strategies (selling products designed for Western markets to consumers in emerging ones) are being challenged and even the largest, most global companies can’t always marshal the intimate knowledge of different markets needed to develop a new generation of ideas.  The results have shown up in some of our recently-completed research: clients are more likely to increase their expenditure on consulting in this sector than any other.

But who will they spend it with?   While more, bigger projects suggest there is a significant opportunity for large, broad-based consulting firms, manufacturing has traditionally been a highly specialised market: almost a third of the work is done by niche firms.  However, one of the main reasons why companies in the sector are turning to consultants now is because they want to tap into the latter’s knowledge of different international markets, which puts smaller firms, operating in one country, at a disadvantage.

So the race is on: big firms need to build up credible industry skills and smaller ones that all-important global mindset.  But the real challenge here is to counter a deeply held assumption.  “If I want information on different markets, then I have no choice but to go to a big firm,” said one client we spoke to recently (we’re speaking to hundreds at the moment, but more of that later in the month), “but if I want specialist expertise, I’ll go to a niche firm.”  Clients often want to have their cake and to eat it (high quality at low prices), but this is not one of those occasions.  Instead, they think they have to choose between the two, which in practice often means they end up buying both.

So the real opportunity here is not just about tapping into a spike in demand but to find a way of combining the global with the expert.  Manufacturing, the source of so much innovation in the economy, could be the crucible of change for consultants too.