Manufacturing and automotive companies are faced with unique challenges, from managing supply chains to overcoming workforce shortages. In such an asset-heavy industry, safety and risk management are vitally important. With an integrated risk management solution, manufacturing companies can identify and avoid losses in the hardening market.
These risks can fall into several categories, including operational, financial, market, competitive, reputational, and strategic risks. But all of those can be broken down into four simple categories, all of which have a “ripple effect” on the others. By focusing on these four risk categories, a manufacturer can effectively address a number of the others at the same time.
Human Risk
People play a role in almost every type of risk. A compliance risk comes from a failure to obey rules or guidelines, whether that failure is on purpose or accidental. Reputational risks often come from this human failure, as do competitive risks.
Risk Management information systems help you manage this human risk and even project the probability of an error and what level of risk that might create. It also helps illustrate to employees the risk they put themselves and the company in the way of by failing to follow procedure and pay attention to detail.
Human risk is perhaps the greatest even in an automated environment and should be at the top of any manufacturer’s list. The same is true for remote work and remote monitoring of processes. Often risk comes from an ignored alarm or a human assumption of an error in the system.
No matter what your company type or size, your people are your backbone, and without them, your company would not exist. Managing human risk is good for everyone, and keeps your company working the way it should be.
Process Risks
Even if humans follow the processes outlined for them, if those processes are flawed, missing steps, or simply not understood, the process itself can cause risk. Business processes can cause strategic risk as they can disrupt everything from operations to finances to the strategic planning process.
This also includes the parts of any process, from a weak link in the supply chain to machinery on the production line that causes too much downtime, or worse a faulty product that must be remade. Without both the right materials and the right people in place, a business can seriously suffer, and even be impacted to the point of failure.
As the pandemic so strongly illustrated, a strong supply chain with contingencies, extreme care for the health of your workforce, and other factors can result in the inability to deliver products promptly. This creates shortages in the market, which then creates more supply chain issues.
RMIS allows companies to gather data on processes, determine where weaknesses exist, and either bypass or correct them before it becomes a larger issue and poses a larger risk to your business.
Technology and Power Risks
Nearly every business relies heavily on technology for everything from process automation to internet connectivity to remote monitoring and facility access. Manufacturing is dependent on a strong and reliable power grid, the ability to process and analyze data quickly after it is gathered, and more.
Without a strong technology foundation, strong cybersecurity that protects the business from various attacks, and redundant power and backup systems, any manufacturer can be seriously at operational and strategic risk. These can both impact reputational risk as well, making recovery a marketing and PR nightmare as well.
An RMIS offers the ability to predict and manage these risks before they get to the operational or strategic level. They help companies make data-driven decisions about protection, prevention, and even the proper reaction to technology and power risks.
Physical Facility Risks
Finally, there are risks that come with any physical facility, from theft to employee safety to protection from weather and other natural disasters. Physical risk can come from human error, faulty equipment, process or policy faults, or even direct human intervention like vandalism.
This risk also has a ripple effect on operations, financial, strategic, reputational, and other risks. Proper facility risk management is critical to any operation.
It can also save money on insurance and other more “reactive” measures. Just like the other forms of risk, RMIS can help a manufacturer stay on top of physical facility risk and help them mitigate that risk and put preventative measures in place before small risks lead to large ones.
Are you an automotive or other manufacturing company in search of RMIS solutions, or do you want to know more about risk management and how it can impact your business? Check out Ventivtech today and learn what we can do for you and your business.
