As Per Steven Odzer, global market volatility poses a number of challenges for manufacturing organizations. Sudden changes in raw material costs, energy prices, and transport may disrupt supply chains and cause backlogs. Moreover, rising production costs can result from disruptions to supply chains. In 2022, 83 percent of manufacturers cited this risk. In addition, they were concerned about quality issues relating to their suppliers. Lastly, 88 percent noted the risk of natural disasters, which could disrupt transport and result in production delays.
The manufacturing industry is undergoing a transformation phase characterized by technological innovation and data-driven processes. The challenges facing businesses are numerous, and many of these risks overlap. In addition to addressing these challenges, companies must also evaluate their current situation to determine which risks are most important and which are not. Here are 20 risks that affect manufacturing organizations:
Pandemic: While the manufacturing industry is poised for growth in 2022, several risks will continue to affect it. The global economy has weakened following the recent pandemic, but financial analysts are drawing parallels to the post-World War II economic recovery. Financial analysts predict a long period of economic growth, which will affect raw materials demand. Companies will be forced to make their assets sweat even harder. This rapid growth will require strong support for the Control of Work and Management of Change processes.
Steven Odzer explains, supply chain disruptions: Managing supply chain disruptions is an ongoing risk that is more prominent in recent years due to the coronavirus pandemic and the escalating trade wars. Manufacturers were unable to procure key components from suppliers, which negatively affected operations. The substitution of components created a critical risk exposure in the form of product liability. If a product is recalled for any reason, a manufacturer could face significant regulatory penalties as well as legal claims from unhappy consumers. Product liability is an important risk exposure for manufacturers, and Utah manufacturers insurance has excellent product liability protection for the manufacturing industry.
A growing reliance on the Internet of Things devices increases the risk of cyberattacks. A manufacturing company may be vulnerable to malware infection in its industrial control systems, which can shut down processes, corrupt data, or even cause physical damage to vital production equipment. As the demand for manufactured goods rises, manufacturers must invest in their workers' health and safety programs and implement the necessary measures to ensure their safety. So, how should manufacturers respond to these challenges?
The world's trade agreements affect the industry and business continuity. Export controls impose strict restrictions on what goods can be sold overseas. Improperly complying with these restrictions may trigger costly sanctions from export regulators. Furthermore, export rules are always changing. Brexit could change this dynamic in export laws. If the United Kingdom exits the European Union, then export laws could change significantly. The manufacturing industry needs to ensure that its processes and partnerships remain secure and efficient.
In Steven Odzer's opinion, in the current climate, cyber-security is a growing concern for manufacturers. According to the report, the number of ransomware attacks jumped ninety percent in 2022. A security breach can shut down an entire production line. Therefore, manufacturers need to implement a comprehensive risk management strategy to prepare for the unexpected. Using Riskonnect can help them achieve this by providing real-time data, streamlined workflows, and a 360-degree view of risk.
Competition among manufacturers is fierce and changing, and there are multiple risks to keep track of. For example, mergers among big brands can create monopolies and make it harder for smaller companies to survive. In addition, the environmental impact of manufacturing activities is increasingly being scrutinized by consumers. If the manufacturing process has a negative impact on the environment, it may lead to legal action or costly fines. As consumers become more socially aware, they may boycott a company that is not environmentally conscious.
While global trade is continuing to drive manufacturing orders, new technologies and talent shortages will continue to present challenges. The manufacturing industry continues to experience a strong demand for goods, and its share of GDP is predicted to reach twenty percent in the top sixty economies by 2020. However, the manufacturing industry will also be affected by political changes, rapid technology evolution, and a dearth of new talent. While these challenges may seem daunting, they are not insurmountable.
In addition to the risks associated with emerging technologies, the manufacturing industry also faces workforce shortages. Experiencing a talent shortage, manufacturers are still struggling to staff their plants and businesses to pre-pandemic levels. Deloitte and Institute reported that by 2030, two million manufacturing jobs will go unfilled, costing the U.S. economy up to $1 trillion. Manufacturers must engage a new generation of potential workers and improve work-life balance.