It’s an exciting time for small manufacturers, with automation and new technologies changing the way that things are made and offering new opportunities to compete. In this article, we’ll explore three challenges facing small manufacturers today – and ideas for overcoming them.
Challenge 1: Adopting Industry 4.0
Industry 4.0 is a term describing the fourth industrial revolution, brought on by a wave of cloud computing, automation, 3-D printing, AI, robotization, and the internet of things (IoT). While larger manufacturers have already embraced this trend, many small manufacturers have been held back by constraints of resources and time. But ignoring Industry 4.0 is a mistake, according to Darryn Jones, vice president of emerging technologies at the Greater Phoenix Economic Council. Manufacturers “using automation and robotic infrastructures are seeing a 25% increase in operational capacity,” he says. “It is so much more efficient.”
Suggestion: The sheer number of new technologies can feel overwhelming, but don’t feel like you have to adopt everything all at once. Instead, focus on updating one critical piece of your business – and then commit yourself to making it work. Also, look for manufacturing grants or subsidies from both state and federal entities.
Challenge 2: Labor Shortages
With fewer young people pursuing skilled trades and the majority of manufacturer workers getting close to retirement, the U.S. manufacturing industry is facing a shortage of skilled workers.
Suggestion: Industry 4.0 also helps address staffing issues. First, adopting new technologies is a way to help streamline production and make do with less staff. For instance, one U.S. aircraft manufacturer was able to increase engineering productivity, reduce design time, and cut design rework by 20% by using a rapid-simulation platform. Second, it also attracts younger workers, who are excited about learning and using new technologies. To find young workers, look to tap into existing partnerships in your state between colleges and trade organizations, which work closely to foster a pipeline of young workers for manufacturers.
Challenge 3: Cyber Security
Don’t assume that being small will protect you from being hacked. In fact, more than half of all small businesses were victims of a data breach or cyber-attack within the past year, with the average incident costing a whopping $200,000. And with more and more manufacturers moving critical elements of their businesses online – including automation systems – putting protections in place is a must.
Suggestion: The best way to avoid getting hacked is to make it as difficult as possible for potential hackers. Creating a policy for common-sense security practices, such as mandatory password updates, is an easy first step. Restrict access to sensitive information to a “need-to-know basis,” and make sure that you always understand who has access to what. Also, consider adding cyber insurance. It can help cover the costs to:
- Restore or recreate your data and/or systems damaged, lost, or corrupted by a computer attack.
- Replace lost business income.
- Resolve an extortion or ransom demand from someone threatening your computer network, including costs to hire a negotiator.
- Protect your business from damages, judgments, defense costs, and more.
Small manufacturers who embrace Industry 4.0 are working to set themselves up for growth and competitiveness in the coming decades. But it can be hard to understand how to navigate the risks that come with such change. Talk to your independent insurance agent to understand where your gaps might be – and how to help protect your business as you move forward.
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