Technological obsolescence. Energy prices. Supply chain disruption.
Sources of risk to companies are given varying amounts of thought, depending on the company and depending on its circumstances.
On the whole, Australian manufacturers could arguably do better at planning ahead. According to an ABS survey from 2017, only 11.8 per cent of them had a written strategic plan. 31 per cent had some kind of strategic plan, but it wasn’t written down.
“Yesterday’s manufacturing risks are different from today’s, and today’s risk assessments can help navigate the risks of tomorrow,” explains Kathy Robertson, Partner at BDO’s National Manufacturing and Wholesale Group.
“That’s why developing a purpose-built risk review was important to us – in our experience, continuous risk assessments and phased changes over time can result in improvement to a manufacturer’s risk outcomes. However, often manufacturers are overwhelmed by their risks.”
The risk review Robertson speaks of is a mobile app or desktop browser-based five- to ten-minute survey, created with “regtech” company 6clicks and aiming to assess key risks and potential impacts on a business.
The app allows a user to swipe left or right to select a relevant category of risk (beginning with a shortlist of ten) and in a few clicks to register its likelihood, causes and effects.
At different levels
One user of the Manufacturing Resilience Review, Ball & Doggett Non Executive Director Simon Doggett, said there were no giant surprises for him, “However, the review made me stop and think about each of the risk areas and how they could impact.
“In today’s economic climate, risks are presenting and changing regularly (just consider the impact of Covid as an example) and as a result I believe a formalised risk review should be a frequent discussion and process in all businesses.”
Doggett’s company has roots going back a century, and was formed by the 2017 merger of print supply companies K.W. Doggett and BJ Ball. It is the country’s “largest distributor of printable materials and consumables” to the graphic communication and packaging industry.
Nowadays it is owned by Japan Pulp & Paper, adds Doggett, and “Under the secure ownership of JPP, the business is now able to make decisions with a longer time horizon.
“All strategic decisions encompass an assessment of the level of risk to the business and require board approval to proceed.”
The Manufacturing Resilience Review produces a risk matrix collecting, weighing and presenting risks, emailed to a user.
There’s value in taking this review throughout all levels of a business to help drive better decision-making, according to Robertson. Often there’s a gap in risk knowledge from the top to the bottom of the organisation.
Participants will also gain aggregated data collected from the Review, to be presented later this year in BDO’s first Manufacturing Resilience Report publication.
Robertson says the upcoming report will also feature analysis from BDO experts, “to help manufacturers understand and assess their most common risks, benchmark themselves against other manufacturers, and find ways to solve their risks”.
“We want to be able to continue to create a variety of useful resources for manufacturers off the back of analysing these risks.”
The compiled data and insights will be a contribution to understanding resilience within the industry, following the Advanced Manufacturing Growth Centre’s 2018 Building Resilience n Australian Manufacturing study. In that work, it was found that losing one customer would be enough to shut a business for ten per cent of manufacturers, and would have a moderate to significant impact for 30 per cent of them.
The research found Australia to be a particularly volatile environment for manufacturers, more so than other developed economies such as Germany and the United States.
“AMGC found that resilient manufacturers display superiority, diversity and flexibility, and in their following 10 Ways To Succeed In Australian Manufacturing report outlined key areas manufacturers need to focus on to succeed,” explains Robertson,
“Similarly, BDO identified specific categories of risks for manufacturing in the area of operations, compliance, finance, societal, technological, procurement and economical. These were further drilled this down to ten key risks, which manufacturers can assess in the app.”
Click here to find out more about the Manufacturing Resilience Review.