Operational Threats and Mitigation Strategies for Auto Component Manufacturers in the Digital Age

Purpose: The purpose of this paper is to have a deep understanding of threats during various operational phases. This paper provides an idea of various activities at different stages, where the identification of threats can be primary information before they occur during manufacturing operations. A proper action plan can be prepared and executed to handle various threats during operation and to achieve the goal of a successful manufacturer.

Methodology: A study has been performed to identify the common threats in manufacturing operations. During the study, data was collected through various questionnaires and respondents were from automotive industries with experience from 5 to 20 years contributing in different phases of operation.

Findings: During interaction with industrial leaders, it was found that 65% of participants expressed their concern related to the availability of technically skilled manpower and looking at technological enhancement like Industry 4.0, digitalisation etc to be considered as one of the major threats. During the survey, it was also a strong voice from 62% of participants that expectations from end users are changing very frequently which has been a major threat to placing ourselves in a competitive market. 50% of respondents from auto component manufacturers affirmed that the product life cycle of automotive manufacturing industries is getting reduced year by year which is a major threat considering huge investments for particular products and setups which lead to additional financial burdens.

70 % of industrial leaders have expressed that managing rising product costs while staying in the market is a major threat. Raw material costs, operational costs and overhead costs lead to an increase in product costs when OEM (Original equipment manufacturer) expects to reduce the cost of the product from automotive suppliers. Industrial leaders who comprise 60% of the participants expressed that the operational expenses and required resources allocated for operation are probably insufficient, with additional allocation. Provided operational budget may not be enough but an additional allocation of funds can be managed. A budget is defined as the required full financial estimation of the cost which is generally estimated well ahead of than operational schedule. It has been highlighted that the total operation cost to produce a quality product sometimes crosses the budgeted cost.

Practical Implications: In this research, threat analysis as a tool can be useful during the initial stage. Threat identification and analysis of the impacts are a very important activity. By planning judiciously, the threats can be handled and minimise the intensity of impact on operational activities.

Originality/Value: The important value of threat measures is the probable loss due to threats at the operational phase. Threats can result in to increase in cost, timeline, infrastructure and failure of the operations.