Why Manufacturers Should View Risk as an Opportunity

July 27, 2018
Discover the seven risk-reduction best practices that deliver the biggest ROI.

The distance between risk and quality is rapidly closing.

If you want to win more contracts from OEMs, you’ll need to take a serious look at ways to error-proof your quality—and that means identifying risk areas.

You might be among the manufacturing companies that are missing the link between manufacturing risk and quality. After all, it’s not just about checking boxes any more.

Recent research from LNS Research points out that compliance is just the beginning of a well-rounded risk strategy, yet many manufacturers across the industry tend to assume that meeting risk-based compliance obligations is the key to qualifying for new business.

There are many more ways you can extend your company’s approach to make managing risk an asset to the business. Here are some better ways to look at the risk/quality relationship.

Measure Risk Performance

Start by thinking about compliance—and risk—from a different perspective. You have high quality compliance requirements but minimal risk requirements. Managing risk is a key factor to achieving operational excellence, not another requirement for doing business.

According to LNS, taking a proactive approach by aligning risk strategies with corporate objectives enables you to mark progress through operational and financial performance. Take a look at your business holistically and determine which approaches to risk will yield the greatest benefit for the entire organization, long-term.

Use Business Systems to Accurately Plan

This is where your ERP and MES system can help you meet those objectives. Factoring risk into your operational plans, including production planning, can help you gain greater control over operations and give your team a real-time look at what’s happening on the shop floor. With one accurate, real-time version of the truth, your company has a clearer view of activities that might pose risks and can make the changes needed to implement risk mitigation best practices.

Go Further

“Compliance is a fundamental requirement [in risk management], but achieving it is not a differentiated strategy,” says Dan Jacob, practice director and principal analyst at LNS Research. “Suppliers looking to improve recurring revenue and bottom line performance should take the proper approach to quality and shift perspective from conformance to performance, from cost-prevention to designed-in quality.”

Discover the seven risk-reduction best practices that deliver the biggest ROI. Download the complimentary LNS Research Spotlight: Roadmap to Supplier Status: Think Risk Performance, Not Compliance.

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