Abstract: This paper presents the findings of an investigation of the challenges Australian manufacturers are currently facing. A comprehensive questionnaire survey was conducted among leading Australian manufacturers. This paper reports the main findings of this study. Evidence indicates that product quality and reliability (Q & R) are the main challenges for Australian manufacturers. Design capability and time to market came second. Results show that there is no effective information exchange between the parties involved in production and quality control. Learning from the past mistakes is not proving to have significant effects on improving product quality. The technological innovation speed is high and companies are introducing as many as 5 new products in a year. This technological speed has pressure on the Q & R of new products. To overcome the new challenges, companies need a Q & R improvement model.