Top Risks for Manufacturing in 2023
It’s 2023 – several challenges that will be faced by the global manufacturing industry have already been forecasted since last year.
Due to on-going global issues such as economic instability, supply chain disruptions, and lack of skilled workers, manufacturers will be very much affected and need to execute new plans to overcome these challenges.
#1: Global Supply Chain Instability
The supply chain all around the world is currently disrupted, making it difficult for manufacturers to have enough stock to create their products. Prolonged supply chain disruption could halt or stop productions.
The strict Zero-COVID policy in China (which was recently eased by their government), political tensions between Russia & Ukraine, and energy shortage across Europe largely contribute to the global supply chain instability today. Many factories are not operating and the supply of raw materials such as rare earth minerals decreased dramatically.
To overcome this challenge, many manufacturers have started reshoring or near-sourcing – which means obtaining their stock and raw materials locally or from suppliers located in the same region. This depends on the material or stock availability in a reshored location, as well as the location of suppliers’ factories and warehouses. By reshoring or near-sourcing, manufacturers can speed up productions and reduce logistics cost.
#2: Shortage of Workforce or Skilled Labour
In 2022, the Great Resignation happened – and it quickly became a global workforce trend. Also contributing to the trend is the number of retirees, leaving many vacant positions that require skilled labour.
Many manufacturers are turning to automation, programmable machineries, and artificial intelligence (AI) to reduce the impact of not having enough skilled workers. By doing this, productions will be moving at a faster pace and more business costs can be saved as they do not have to spend on high wages.
#3: Inflation and Margin Pressure
The global inflation rate is still very high. According to FitchRatings, “inflation has exceeded forecasts – recently hitting 11% in the Eurozone and UK – and core inflation is rising,”. This affects the price of goods including raw materials required by manufacturers to create their goods.
To combat this issue, manufacturers have been forced to increase their product prices to maintain margins, which in turn gives negative impact towards distributors, retailers, and finally – consumers.
One way for manufacturers to address this issue is by redesigning products with more cost-effective materials and manufacturing processes. By doing so, manufacturers can still maximise or maintain their profit margins, while not compromising the quality of their products.
Manufacturers can also get the data of regional or local resources such as labour, tools, raw materials, and stock. This allows manufacturers to analyse and evaluate country-specific manufacturing costs accurately.
#4: Cybersecurity Threats
Finally, cybersecurity threats are on the rise, and it’s happening across the globe, in multiple industries. To avoid data breaches, network-related infrastructures must be protected.
Manufacturers that use old, legacy computer systems that are no longer receiving system updates face security vulnerabilities. These old systems are difficult to maintain and may not be able to provide modern solutions.
These cybersecurity issues then result in the collapse of the systems that a manufacturer uses and data breaches. Therefore, it is vital for manufacturers (and other businesses in general) to focus on digital transformations to have up-to-date systems on board and to use systems that are up to modern standards.
A cloud-based, all-in-one business management platform like Enterpryze can help manufacturers minimise risks in the manufacturing industry.
When manufacturing risks are reduced, manufacturers can focus on increasing their production speed and product quality, while having better visibility on the supply chain.
As the result, production efficiency increases – which in turn helps manufacturers save costs and maximise margins.
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