Accenture: Concerns Growing Over Geopolitical Tension

Accenture’s most recent Pulse of Change survey has revealed how the priorities and expectations of manufacturing executives are shifting.

The Pulse of Change is a quarterly survey targeting C-suite executives, examining the influence of business, talent and technology trends on organisational change. 

The findings indicate a mood of cautious optimism, particularly concerning revenue prospects. As of May 2024, 60% of executives expect faster revenue growth, a notable decrease from 75% in March.

Conversely, 12% now predict a slowdown in revenue growth, a figure that has doubled from the 6% who held this view in March.

Conducting these surveys in the manufacturing sector is crucial as it helps industry leaders understand shifting dynamics and make informed decisions in a rapidly changing environment.

This shift reflects growing uncertainty among executives navigating the evolving business landscape and geopolitical tension. 

As 2024 progresses, primary concerns have not fundamentally shifted, but there have been notable changes. 

AI and automation concerns relax

Although advancements in AI and automation continue to be a significant concern for 50% of executives, this worry has eased slightly compared to previous months, down from 57% in March and 62% in September 2023.

Automation is playing an increasingly transformative role in manufacturing, streamlining operations, enhancing efficiency and reducing costs. However, while the benefits are clear, the rapid pace of technological change presents challenges in workforce adaptation and skill development.

Concerns about adapting to shifts in consumer behaviour have also lessened, with 43% of respondents in May 2024 expressing this worry, a decrease from 49% in March and 54% in September 2023.

This decline suggests that executives are becoming more confident in their ability to respond to consumer demands. Nonetheless, the ongoing evolution in both technology and consumer expectations continues to require careful attention from industry leaders to ensure sustained growth and competitiveness in the sector.

Fears rise over geopolitical tensions & talent shortages

Increased geopolitical tensions have emerged as a significant concern for 36% of executives, reflecting a rise from 31% in March and 27% in September 2023.

These growing tensions affect global supply chains, causing disruptions and uncertainty in the manufacturing sector. The increased complexity of trade restrictions, tariffs and political instability forces companies to reconsider their strategies, potentially leading to shifts in production locations and sourcing practices.

Apprehension over talent scarcity and workforce changes has also intensified, with 48% of executives now citing this issue, up from 43% in March and 40% in September of the previous year.

As automation and AI continue to reshape manufacturing, the demand for skilled workers who can manage and maintain these advanced technologies is increasing.

The combination of geopolitical instability and talent shortages is prompting industry leaders to invest in workforce development and risk mitigation strategies to maintain competitiveness in a challenging global environment.

“Supply chain and manufacturing executives are increasingly focusing on geopolitical tensions and talent scarcity, and what these issues mean for the business,” says Patty Riedl, Accenture’s North America lead for supply chain and operations.

“They are expecting revenue growth to slow. On the other hand, they are becoming less concerned with adapting to changing consumer behaviour and technology advancements, which have less imminent impact on the business," Patty continues. 

“Nonetheless, they should keep upgrading the tech side of supply chains which determines the future-readiness of their supply and production networks.

“Digital capabilities are key to reinventing supply chains, so they become sustainable, resilient, and competitive long-term despite geopolitical uncertainties.”

Staying steady: Areas with little change

Concerns about climate change and sustainability have remained steady among manufacturing executives, with 48% expressing these worries in May 2024, closely aligned with figures from March (45%) and September 2023 (45%).

In the manufacturing sector, sustainability is increasingly intertwined with operational efficiency, as companies strive to reduce their environmental impact while maintaining competitiveness. The pressure to adopt greener practices is constant, driven by regulatory demands, consumer expectations and the need for long-term resilience.

Worries over cyberattacks and data breaches also remain consistent, with 42% of executives citing this concern in May, compared to 45% in March and September 2023.

As manufacturing becomes more digitised, the risk of cyber threats grows, potentially disrupting production lines and compromising sensitive data.

Despite these challenges, economic uncertainty ranks lowest among executive concerns, with 33% expressing this worry in May, slightly up from 31% in March and 27% in September 2023.

However, a recent Accenture report from July revealed that supply chains are, on average, only 36% mature. It indicates that many manufacturers lack the ability to adapt their supply chains to real-time changes through autonomous decision-making and advanced simulations powered by technologies like generative AI.

Companies more advanced in integrating AI into their supply chains are found to be 23% more profitable, highlighting the critical importance of technological adaptation in the sector.

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