For Singapore’s manufacturers, resilience is the name of the game

New technologies are changing how and what items are being manufactured. Processes that used to be manual are now digitised, networks have transitioned to the cloud, and the products themselves have more technology embedded.

The sheer myriad of I4.0 technologies may already be overwhelming for manufacturers, particularly the small and medium enterprises (SMEs). As focus tends to be on implementation, many often overlook critical areas such as the cyber vulnerabilities that come with widespread technology deployment. The more that products and processes are electronically linked, the more vulnerable they become to cyber-attacks, resulting in anything from unauthorised access to systems and data to complete operations shutdown.

In fact, cyber-attacks targeting the manufacturing sector have increased both in numbers and severity. Chubb’s global data suggests that in 2020, manufacturing is the second most targeted industry for cybercriminals. In addition to the significant increase in cyber incidents, the average cost of a cyber claim is also at an all-time high.

In a bid to improve customer-centricity and revenue, many manufacturers are switching from a product-only model to one that includes more value-added services such as maintenance, installation, design, consulting and training.

Coupled with the fact that more smart products are being manufactured in a modern facility, both kinds of new offerings imply a more intimate relationship between a manufacturer and its customers, whether it is sharing data from smart products or installing and servicing products after they have been sold. With manufacturer and customer being connected in more ways and for a larger part of the product lifecycle, it adds an extra dimension to the risks that manufacturers could be liable for.

Manufacturers must be conscious that they need protection against compensation demands or lawsuits for a financial loss incurred by a customer, which could stem from a product or service defect or not meeting customer expectations, specifications or contractual requirements.

Supply chain is a huge pressure point for manufacturers and the entire value chain as we have seen over the past two years. The pandemic and incidents such as the Suez Canal blockage have completely broadened our perspectives on the types of events that can hamper the supply chain.
 

But the threats don’t end there.
 

The increasing interdependent relationships between manufacturers, customers and suppliers have led to greater integration between all parties alongside third-party logistics, IT, and financial service providers. With the enablement of digital technologies, an enormous amount of sensitive data is stored and transacted between parties. Once the network is compromised, there could be cyber-attacks against any (or every) stakeholder in the supply chain.
 

In addition, with an increasingly integrated supply chain, manufacturers’ reliance on suppliers to provide component parts or sub-systems underscores the importance of sourcing and quality control. This is because a defect in a small component could trigger a domino effect on the factory floor.
 

For more in-depth discussions, read these articles to examine the diverse internal risks and external risks that manufacturers face.
 

Uncertainty comes in many shapes and forms. I recommend thinking about exposures in a new way as you confront challenges that may not have existed in the past. With a broader view of risks, you can anticipate challenges better, seize opportunities faster, and emerge from setbacks stronger.