Introduction
The contemporary market requires a fresh strategy to compete.
Building on its momentum from the epidemic and outperforming predictions from the previous two years, manufacturing has seen strong strength in 2022. Although the total demand and production capacity have reached recent highs, there are signs that the picture may not be as favourable in the near future.
Concerns about inflation and the state of the economy are currently present in the sector. Additionally, manufacturers are still struggling with the talent shortage, which could slow the industry’s expansion. Additionally, in 2023, supply chain problems like bottlenecks in sourcing, backlogs in global logistics, cost pressures, and cyberattacks will probably still be major obstacles. As leaders, we must rethink our strategy and move beyond leading in a disruptive environment.
The manufacturing sector for 2023 covers the following important risks to take into account for manufacturing playbooks in the coming year.
Global Supply Chain Disruption
Raw materials and other supplies are needed by manufacturers in order to create their goods. It could halt the production of certain goods and effectively stop their businesses from functioning if their supply chain is disrupted. Russia’s invasion of Ukraine is one of the most significant disruptions to note. In addition, growing political tensions have placed many supply chains on alert. The COVID – 19 pandemic led to the shutting of many Chinese factories and also caused significant shortages of certain raw materials and products. A severe reduction in employee numbers causes logistical delays due to the disease outbreak.
Employee Risks
Manufacturing Industries are struggling to recruit enough skilled and unskilled staff to operate at full capacity. This is creating real competition amongst employers. This has been caused by a number of factors: –
- Misconceptions about manufacturing jobs often dissuade people from working in the industry as opposed to taking white–collars.
- There is a major skill shortage, making it difficult to find qualified and talented local workers.
- Qualified manufacturing staff aren’t paid enough to convince them to relocate, meaning manufacturers only have the local talent to draw from.
- The manufacturing workforce is ageing, leaving gaps that are challenging to fill.
- As advanced manufacturing technologies are introduced, it creates higher skill requirements that simply aren’t being met.
In addition to better pay and working conditions, the most resilient manufacturers are refocusing on ‘soft’ employee benefits and employee training to supplement their attraction/retention strategy.
Managing Sales Lead
Another risk often faced by manufacturers is losing potential leads because of not being able to manage and prioritize them. Many of them treat their leads in the same way, but this is not the right way. Every sales lead has different preferences, characters and needs. Therefore, manufacturers should treat them specifically. Firstly, manufacturers also often find it difficult to identify high-potential leads, so they often focus on unpromising opportunities and then forget to follow up with high-potential leads.
Making a website and hoping it gains attraction isn’t an option anymore due to the ridiculously huge amount of competition. Rising above the noise of the internet is a tricky job, and if you want to drive traffic to your sales point, it will take an intensive effort on your part.
Inflation Risks
A variety of reasons contribute to an inflationary climate, which implies that insured replacement costs and re-build values are not keeping up. Issues include rising expenses for things like fuel, labour, transportation and logistics, and materials. In addition, these issues impact plant, machinery, and equipment costs resulting in increased lead times. This means that manufacturers might be paying 20% more for essential equipment versus two years ago, with significantly extended delivery times.
Technology Risks
The COVID-19 pandemic altered the corporate strategies, operational procedures, and technological and informational landscape of numerous enterprises. As with all periods of significant change, business leaders were required to act quickly to respond to the uncertainty unleashed by the pandemic. As decisions were made at pace, many of them used technology at the heart of the business. The following challenges were faced by them later: –
Complex Software & Technology
Enterprise software is inherently complex. New technologies can be intimidating. This is a significant barrier for businesses going through a digital transformation, both in terms of implementation and data integration as well as end-user experience.
Leaders should consider this in the early stages of a transformation project and seek out the most intuitive, integrated systems.
Driving Adoption of New Tools & Processes
New processes and technology frequently face resistance to change from established personnel who believe there is nothing wrong with the way things are currently done.
Organizations must provide comprehensive onboarding training as well as continuous employee performance support for new software implementations to help employees become productive and proficient with a tool quickly, allowing them to understand the value of these new processes.
Lack of Proper IT Skills
To be successful in your transformation efforts, you’ll need a skilled, high-performing IT team. And that is difficult to put together, especially given the current shortage of tech workers. According to an enterprise survey, 54% of organisations are unable to achieve their digital transformation goals due to a lack of technically skilled employees. Organizations face challenges such as a lack of skill sets in cybersecurity, application architecture, software integrations, data analytics, and data migration.
By outsourcing this work to outside consultants and digital transformation specialists, businesses that lack IT personnel can overcome this difficulty and close the implementation and migration gap
Budget Constraints
Investment in digital transformation is expensive. Scope creep can gradually start to delay deadlines and add new work for firms with a less-than-stellar transformation plan, all of which raises the cost of a project.
Recognize your long-term objectives and the return on investment you expect from your transformation strategy. You will be better able to determine what expenditure is excessive and where there is room to raise your budget as a result of this.
Culture Mindset
Organizations with manual procedures and older systems frequently have an old mindset. Things evolve slowly, automation is despised, and it’s challenging to adapt to new technologies. The cultural aspect of digital transformation is a major barrier.
Everyone – from leadership to new employees – must be on the same page. Everyone should be willing to make significant changes in their daily lives and not be afraid to learn new things.
Conclusion
There are so many risk factors that manufacturing companies must learn how to evaluate each one and comprehend how it will affect their operations. Understanding the specific risks that your company faces allows you to better prepare for and avoid them. Because every business is unique, an assessment can assist you in identifying the risks that are most relevant and impactful to your business so that you can prepare accordingly.
We can assist if you’re unsure about the risks that affect your company the most or if you want to make sure you’re ready for the unexpected. To determine your risk in each of the above-mentioned areas and beyond, kindly get in touch with our team. Identify potential risks and create an ERM strategy to mitigate any vulnerabilities. Your company is well-protected, and disruption risk is reduced.
Authors:
Umesh Vishwakarma
Manager | Email: umesh.vishwakarma@masd.co.in | LinkedIn
Smit Rambhia
Associate Consultant | Email: smit.rambhia@masd.co.in | LinkedIn
