What is R&D in the manufacturing industry?

As the manufacturing industry adopts Industry 4.0 with the integration of automation and the increased use of technology, research and development (R&D) work has contributed significantly to improving product quality, operational efficiency and productivity.

Since the manufacturing sector is research and development intensive, for many R&D tax incentives are nothing new. However, as industry and technological advancements continue to evolve, it can be increasingly difficult to classify R&D activities and those which apply to tax incentives such as the R&D tax credits scheme.

Defining qualifying R&D activities in the manufacturing industry

R&D is about seeking technological advances to overcome obstacles and resolve uncertainty. More specifically, manufacturing innovation could be identified by the research and development of technologies that are aimed at increasing the competitive capability of manufacturing concerns. Broadly speaking, manufacturing-related R&D encompasses improvements in existing methods or processes, or new processes, machines, or systems.

In addition, manufacturers are often presented with unique circumstances in which only a bespoke solution will meet stringent performance standards or legislative requirements and so R&D is essential to develop a solution.

Modern examples of qualifying R&D activity in the manufacturing industry include:

• design, development and testing of new processing and handling techniques;
• the development, testing and trialling of new products;
• the digitisation of previously manual machining processes;
• developing, testing and adoption of new materials that provide better quality, efficiency, and are environment friendly;
• developing specialised tools to meet high-specification product designs;
• integrating new technologies with existing systems and processes;
• making mechanical or digital modifications to previously manual production lines to increase productivity; and
• integration of complex manufacturing processes into one fully-automated process.

Benefits of innovation in manufacturing

Manufacturing businesses conducting R&D stand to gain a lot through innovation, and such advancements can help businesses succeed and gain a competitive edge. Common benefits can include:

• adapting and meeting changing customer demands more quickly;
• quicker turnaround times and reduced downtime;
• reduced reliance on manual operations;
• reduction in human errors which could be costly;
• improved product quality and efficiency;
• reduced wastage; and
• increased technological growth, employee satisfaction and capabilities.