Manufacturers not doing enough to protect against cyberthreats, report finds

Manufacturers and distributors, like companies in other industries, face mounting cybersecurity risks. Still, some don’t do enough to address the issue and protect intellectual property and sensitive data and information, according to a new industry report from professional services firm Sikich LLP, Naperville, Ill.

Sikich’s survey of manufacturers and distributors for its 2016 Manufacturing Report—which offers a comprehensive view of the state of the industry, including manufacturers’ outlook for the future, strategic priorities, and views on the workforce—found that only one-third of companies surveyed conduct penetration testing on an annual basis.

“Warding off cyberthreats, including cyberespionage, is a top corporate priority across industries, but manufacturers and distributors need to do much more to protect their patents, designs, and formulas, as well as their private company and employee information,” said Jim Wagner, partner-in-charge of the manufacturing and distribution practice at Sikich LLP.

In addition to shoring up their cyberdefenses, manufacturers look to leverage technology to improve customer service, according to the report. More than half (51 percent) of respondents identified improving customer service and response time as a top business driver that will affect their technology strategies in 2016.

Nearly 40 percent said the same about reducing costs as manufacturers see growing cost pressures on the horizon. Forty-seven percent of the manufacturers and distributors surveyed said they expect material costs to increase up to 5 percent in the next year. And 85 percent said they expect labor costs to increase up to 4 percent.

“Manufacturers should take full advantage of technology such as enterprise resource planning … to improve operational processes,” said Wagner. “Those companies that commit to leveraging technology throughout their operations will improve response time with customers, ease cost pressures, and enjoy a competitive advantage.”

The report found that more than half of manufacturers and distributors do not expect the industry to expand in the next 12 months. Further, only 29 percent said they are more optimistic about the U.S. economy compared to the last 12 months, and 31 percent said they believe the world economy will grow over the next 12 months.

At the same time, the findings suggest that many manufacturers and distributors are not doing enough to put themselves in a position to innovate and grow. The report found that more than 80 percent invest less than 5 percent of sales in R&D.

To download a copy of the findings, visit www.sikich.com/insights-resources/thought-leadership/whitepapers/manufacturing-report-2016.