Top Risks for Manufacturing in 2023

Reliability and consistency are crucial factors in the manufacturing industry. Any kind of disruption could lead to drastically reduced productivity and will make it difficult for manufacturing firms to stay on track with their targets. While disruptions can be sudden, it’s possible to implement strategies to address these potential issues such that the impact on manufacturing and logistics processes is minimal.

In this post, we’ll be taking a look at some of the top risks to manufacturing businesses in 2023 and possibly beyond.  

Global Supply Chain Disruption

Manufacturers need raw materials and other supplies in order to create their goods. If their supply chain is disrupted, it could halt the production of certain goods and effectively stop their businesses from functioning.

One of the biggest disruptions to note is Russia’s invasion of Ukraine. Growing political tensions have placed many supply chains on high alert. Access to certain materials (such as refined rare earth minerals) may be cut off for some time due to this complex political and economic situation. There doesn’t seem to be any resolution in sight, so we predict that this could have long – lasting effects on the supply chain that could last until 2025.

The COVID – 19 pandemic also caused major shortages of certain raw materials and products due to many Chinese factories shutting down as a result of spreading infections. Disease outbreaks can severely reduce employee numbers and cause logistical delays.

One possible solution for these supply chain disruptions is to rethink procurement models and Just – in – Time (JIT) inventory. If manufacturers have alternate options for securing raw materials and other goods, then it’s important for them to secure multiple contracts and work with several different vendors to ensure that their supply chains won’t be negatively affected.

On the other hand, the JIT inventory system highlights the importance of lean production in order to reduce waste and accurately forecast demand. This has led to new strategies such as manufacturers developing their own components instead of relying on other companies, or switching to more reliable local manufacturers instead of relying on overseas suppliers.

Top Risks for Manufacturing Companies in 2023
Top Risks for Manufacturing Companies in 2023

Workforce Shortage

The recent COVID – 19 pandemic has caused a sharp drop in manufacturing jobs. While the industry was already struggling with new talent acquisition, the pandemic has made things worse by accelerating the workforce shortage. This is being caused b y a number of factors:

  • Misconceptions about manufacturing jobs often dissuade people from working in the industry as opposed to taking white – collar jobs.
  • There is a major skill shortage, making it difficult to find qualified and talented local workers.
  • Qualified manufacturing staff aren’t paid enough to convince them to relocate, meaning manufacturers only have local talent to draw from.
  • The manufacturing workforce is aging, leaving gaps that are challenging to fill.
  • As advanced manufacturing technologies are introduced, it creates higher skill requirements which simply aren’t being met.

There are several solutions that could help manufacturers overcome the workforce shortage. For example, community outreach is a great way to find local talent that is willing to put in the time and effort to learn more about manufacturing, ultimately expanding the local talent pool. It’s also possible to offer better training and reskilling programs for current workers and encourage entry – level employees to join by offering ways for them to build on their skills and be promoted to higher positions. Lastly, better pay incentives can help relocate talent, grow the local talent pool, and give manufacturers more options to recruit skilled workers.


The U.S. consumer price index rose 7.9% during the 12 – months that ended February 2021. This is the steepest annual increase since February 1982 and it’s uncertain when inflation will ever slow down. These price spikes and increased input costs have forced manufacturers to increase the price of their goods in order to maintain their current margins, but this can cause downstream problems for distributors and end – consumers.

There are two key ways to combat inflation and its disruption to manufacturing. First, consider transferring risk upstream. Increasing the number of suppliers means prices can be more competitive and this makes it easier to manage costs. It’s also possible to transfer risk downstream by using fixed contract costs or variable selling prices.

Semiconductor Shortage

The demand for semiconductors since the pandemic has skyrocketed, creating a major shortage that has yet to cease. Demand continues to outstrip supply and the consolidation of suppliers has made the supply chain even more vulnerable to disruption. This means many manufacturers have to greatly increase the price of their products and sub – components. It has also made manufacturers less flexible, stalling many processes, and leaving them unable to fulfil consumer demand.

Thankfully, government policies are starting to bring chip and semiconductor manufacturing back to the U.S. The President signed the CHIPS and Science Act in early August 2022 which promises to strengthen future industries, bolster supply chains, and protect national and economic security. There are also strategies to minimize the impact of a chip shortage, such as decoupling software from hardware for more flexibility. Design modularity can also be a strategic advantage for businesses that want to have more flexibility in product architecture.


Lastly, cybersecurity has become a growing risk as modern manufacturing companies switch their processes to digital alternatives. Network infrastructures need to be protected to ensure that data breaches do not occur and it’s important to utilize risk management techniques to mitigate cybersecurity vulnerabilities.

Another concern is that many manufacturing businesses make heavy use of legacy computer systems. These systems are typically much harder to maintain and may be incompatible with modern solutions. They might also have weaker security features and lack security updates. This means many security vulnerabilities will likely never be patched.

These risks could cause a number of issue s, such as a complete collapse of a manufacturer’s systems or a data breach that could lead to hefty fines. This makes it incredibly important for businesses to continue to focus on their digital transformations to ensure all of their systems are up to date with modern standards.

To receive a free, in-depth executive briefing on the “Top Risks for Manufacturers in 2023“,  please call (310) 539-4645 or click here to schedule a time to speak with one of our experienced consultants.

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