2 main challenges of European manufacturers

By | September 14, 2022

We recently hosted an Advisory Board meeting of senior executives from European manufacturing organizations to understand the latest topics or challenges they are dealing with. Two main challenges On their lists were energy prices and cybersecurity, how the two intersect, and the role technology can play in overcoming the obstacles these threats pose.

Energy prices

Unsurprisingly, the first challenge is rising energy prices and how most manufacturers are dealing with the situation here in Europe. They are in firefighting mode and it is very difficult to make a profit from their operations.

Many companies have been forced to completely halt production for weeks, and this will continue in the coming months as prices rise exponentially. Some European manufacturers are Arcelor Mittal (Germany), Aperam (Belgium) and CF Industries (UK).

Producers tend to see energy prices only a week in advance and therefore cannot plan for the long term. If these costs are not passed on to customers, they affect everything else, pushing manufacturers out of line.

Cost uncertainty makes the S&OP process more complex. For example, frozen food requires cold storage, and rising energy costs make planning difficult. The biggest problem is that it doesn’t seem like it’s going to stabilize anytime soon.

Are such high prices the new normal? This is becoming more difficult as absorbing costs or maintaining high safety stocks makes it difficult for manufacturers to stay afloat.

Cyber ​​security

As part of the digital transformation in manufacturing, there has been a shift from traditional closed systems to interconnected and open systems. This industry has made the Internet environment extremely complex, leaving the Internet with many vulnerabilities and increasingly attracting criminal attacks.

These cyber attacks have increased massively in the last six months. The manufacturing industry is only now waking up to the need and importance of cyber security.

Most manufacturing organizations are increasing their investments in cybersecurity, but this is limiting their operational technology (OT). They explained how to disable certain cybersecurity measures because they affected the performance of their equipment.

Decision making between safe environment and equipment performance was not achieved.

A successful cyberattack on gas-producing systems or equipment can lead to production shutdowns and lead to an energy war. Unfortunately, this is the current reality that manufacturers are struggling with.

Manufacturers acknowledge supply chain struggles caused by the pandemic, but attacks on power generation equipment are striking at their core. The situation is forcing them to rethink their IT capabilities — what to keep in-house and what to outsource/partner and with whom.

At such times, the most important thing is to be patient, but the question is how? How to secure energy, smarter supply chains, optimized and secure systems, what is happening and what to do?

This is where technology can play a key role, and manufacturers are looking for technology partners not only to help them solve these challenges, but also to build long-term sustainability, particularly around energy and materials. These challenges also provide an opportunity to think differently, innovate and explore different business models, and only those manufacturers who manage to overcome this difficult phase will remain relevant in the market.

IDC European Manufacturing Summit

Join us at IDC on November 15th European Manufacturing Digital Summit as it will be an excellent opportunity for manufacturing managers to further discuss these challenges, share lessons learned and connect with a peer group.

Our advisory board members want to hear about how technology providers are helping to solve these challenges during the summit. A summary of past discussions with our Advisory Board can be found here. The summit will also provide an opportunity for manufacturing organizations and technology providers to discuss how they can thrive in an increasingly digital and sustainable, yet uncertain, volatile and complex economy.

IT managers and senior decision makers can sign up here for the summit.

Contact us for more information about the summit Stephanie Naujox to eat Gunjan Bassior visit https://www.idc.com/eu

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