Key Digital Risks in Manufacturing Industry

Manufacturing
Manufacturing
Image Credit: apics.org

Embracing digital transformation can have the manufacturing sector at the crossroads of potential digital risks.

We are living in a highly unpredictable digital age. To survive in the market, industries must constantly delve into looking for ideas and experiments of innovations with modern technologies like Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), 3D printing, and others. Even the manufacturing sector is on the leading end of massive disruption. Manufacturers continue to push through wide-ranging innovation in products, manufacturing process, and try to build relations in the industrial ecosystem to compete in a fluctuating global marketplace. From rapid prototyping and R&D to production and performance analytics, digital transformation in manufacturing is poised to impact all factors of the industry from the organizational structure of companies to how they generate revenue.

Surprisingly, in reality, manufacturers are often hesitant when it comes to adopting new and emerging technologies that can give them a competitive advantage. Hence they go for options that have minimal risks. This is justified since, in today’s ever-changing business environment is inclined towards suppliers, customers, and regulators, being prepared to mitigate potential risks. As a result, the manufacturing industry must have a well-defined digital transformation strategy for the overall success of AI and ML tools, IoT sensors’ implementation in a manufacturing setting. Here are some key digital risks to consider:

Risk of cyber-attack: The manufacturing industry has been prone to cyber-attacks by offenders looking to steal intellectual property or disrupt operations. As per, Make UK, a manufacturers’ organization, this industry is the third-most targeted sector by cybercriminals. The impact of it is that approximately half of the manufacturers report suffering financial or operational losses due to cyber-attacks. With the rapid race for digital transformation, the risk of facing cyber-attack rises too; especially with more IoT devices being included in the industry framework. Thus giving more potential entry points to exploit due to increased attack areas.

The solution to this is visibility. Though the attacks cannot be averted, they can be abated. For this, manufacturers have to plan on how the new technologies connect to their infrastructure and interact with critical processes and then take measures to monitor for and guard against possible cyber-attacks.

Risks introduced by third-parties: Manufacturers are always under the pressure of expanding their ecosystem. And thereby, they also are exposed to the digital risks brought by their partners to their products and units. So to handle this, they need to scrutinize and understand the magnitude of threats introduced by those third and nth parties. The least they can do is employ technologies like Blockchain, e-pedigree to keep an eye on these situations.

Risks around collecting and storing data: With the advent of IoT devices and other technology tools, data has boomed exponentially in the last decade. This data is invaluable as they help to understand the industry and consumers, monitor bugs, forecast trends, and much more. They allow manufacturers to provide personalized customer experiences, improves products, and helps create new ones. Meanwhile, data in the wrong hands can lead to issues like an infringement of privacy regulations.

Fortunately, we have regulations that state what companies can and can’t do with data and penalizes the offenders. Manufacturers need to make sure their digital strategies align with these policies. This may comprise up of giving consumers the right to be forgotten, obfuscating their data, disposing of it after some time, or questioning whether they need to keep it at all.

The roadmap for digital transformation for any industry includes several challenges. This is true for the manufacturing industry too. While innovation is a must, mitigating risk elements is also crucial, especially when attempting to augment customer experience by providing exemplary services and aiming to stand out from the competition through faster response times, better quality products.