Top Manufacturing Industry Challenges and How To Overcome Them

In the wake of the COVID-19 pandemic, the changes in the economic and business environment have impacted the manufacturing industry, particularly small and midsize enterprises. While technological advancements have provided some growth opportunities, there are also new risks and challenges within the manufacturing industry that you should be aware of so your business will be prepared to navigate them.

If you are a small-business manufacturing leader trying to steer through the ever-changing issues in the industry, this article highlights the top three manufacturing challenges for you. We will also talk about solutions to each of these problems so that you know where to start.

Challenge #1: Cybersecurity risks

Thanks to the fourth industrial revolution[1], more manufacturers are using machine learning, artificial intelligence, and robotics. With this increased automation comes cybersecurity threats that can cause significant financial loss. For example, the cyberattack on Norsk Hydro[2], one of the largest manufacturers of lightweight metal, cost the company $52 million in 2019.

So what are the security risks for small businesses?


Small manufacturers face challenges in terms of resources, so they often outsource production, meaning that they have to deal with third-party vendors from time to time. In cases like this, cybersecurity (37%) is the biggest challenge when outsourcing production to external companies.

Generally, vendors are allowed access to an organization’s network to get necessary information about operational technology, software, and other confidential details.

These third parties are connected to your network, so they can collect and store important information. Hackers are continuously looking for weak links in an organization’s cybersecurity, and if they get access to your network, it will result in considerable damage.

Solution: Identify the gaps in security, and implement an effective cybersecurity strategy.

Running a security gap analysis will help you identify the cybersecurity vulnerabilities within your organization. It involves a thorough check of network security controls and policies and whether they comply with the industry standards.

After identifying the necessary gaps, you can build a solid cyber security strategy. Most threats can be tackled by using next-gen firewalls, but it is always good to have an additional layer of security. So, endpoint security tools and virtual private networks (VPNs) can be used to add more protection, as they enable only authorized users and applications to access your data.

Here are some additional things you can do to make sure your cybersecurity strategy is top notch:

  • Educate your employees about recognizing data breaches and following basic cyber security practices and guidelines.

  • Install strong security software that protects you against viruses, malware, and other online threats on all of your business’s computers.

  • Ensure your office’s WiFi network is encrypted and secure.

  • Limit physical access to your business’s computers, and have user accounts for each employee.

Looking to implement tighter cybersecurity in your organization? Check out our directory of more than 150 cybersecurity tools.

Challenge #2: Access to the right skilled workers

In an attempt to reduce business expenses, more organizations are minimizing their workforce with the help of automation and artificial intelligence (AI). However, there is still a need to manage manufacturing outputs and the automation process itself, and this is where businesses need skilled workers. Automation is especially a struggle for small businesses as most workers do not have the expertise to use this type of technology efficiently.

In 2020[3], employment in the manufacturing sector was 19.9% below the 2005 level. Although there are several jobs in the manufacturing industry, business owners are struggling to acquire skilled labor. One of the reasons is that the baby boomer generation is retiring, which leaves an enormous gap in experience and skills.

Also, because of the specific nature of the manufacturing jobs, such as specialized civil engineering positions, there are a limited number of qualified candidates.


Cumulative Change by percent in manufacturing employment (seasonally adjusted) and number of job openings (seasonally adjusted), 2005-2021 (Source)

Solution: Use innovative hiring practices, and conduct regular training for employees.

One of the best possible solutions for organizations dealing with skilled labor shortages is to get creative in terms of recruitment—look for different online platforms and software solutions that help hire the right talent. It is also essential to be flexible in your hiring approach. For instance, if an applicant has all the required skills but less experience than what you were looking for, you should consider giving them a chance. The idea is to diversify your recruitment practice to have no shortage of skilled employees.

Another possible solution is to invest in a learning management solution (LMS) so that your employees can be trained in their desired in-demand skills. And as your workforce continues to up-skill, they can fill any talent shortages you may have for your organization.

Trying to hire skilled employees for your organization? Check out our directory of more than 30 staffing services.

Challenge #3: Delayed smart manufacturing implementations

Smart manufacturing is an innovative approach to manufacturing that uses robots, sensors, and other technologies for automating parts of the production process. There are many specialized tasks in the manufacturing process that require accurate monitoring of pressure, temperature, or position.This is where this technology-driven tactic can provide immense benefits to a manufacturing company.

More organizations are using smart manufacturing to reduce labor costs and make production cost-effective and efficient. However, because of the COVID-19 pandemic and the changing economic climate, these efforts have been halted.

In fact, nearly half (49%) of manufacturers have delayed[4] current smart manufacturing implementations because of the pandemic.


Solution: Have a well-defined objective and a successful implementation plan

As you look for opportunities to implement smart manufacturing within your organization, you should identify the main objective. Ask yourself, “What is the problem I am trying to solve with smart manufacturing?” For instance, do you want to reduce manufacturing costs, or are you looking forward to improving the quality of the product you make?

Once you have zeroed in on your primary objective, you should devise a solid implementation plan that considers your human and capital resources, your existing infrastructure, the required skills, and the cybersecurity measures. It is also important to discuss the perceived challenges regarding implementation with your partners.

Additionally, carefully plan when to implement automation. Automation strategy can only be implemented when both your subject matter experts and your IT teams are available to help with any issues that crop up. So before automating jobs, ensure that you have their time and support.

Another crucial factor to consider before using a technology-driven approach is your organization’s budget, because hardware, such as robotics, can cost quite a bit.

Looking forward to implementing production strategies that reduce time and improve efficiency? Check out our directory of more than 50 planning and scheduling software.

Overcome these challenges with efficient manufacturing solutions

Amidst the many challenges facing small to midsize manufacturing companies, the industry itself continues to be a vital part of our economy. To make the most of the smart manufacturing trend, small businesses are moving toward innovative software solutions. These smart tools can improve current processes, workforce productivity, and increase your manufacturing operations’ reliability and profitability.

As a small business entrepreneur, you can leverage more actionable manufacturing resources to make strategic decisions. Checkout our manufacturing related research and articles for valuable insights that will keep you updated on the latest trends.


1. The Fourth Industrial Revolution: What It Means, How to Respond, World Economic Forum

2. Norsk Hydro Cyber Attack Cost It Nearly $52m in First Quarter, Insurance Journal

3. Annual Report on U.S. Manufacturing Industry Statistics: 2021 , National Institute of Standards and Technology

4. Make Smart Manufacturing Work by Knowing These Benefits and Challenges, Gartner