About the series. September 2024, a panel of five manufacturing experts at Chortek shared strategies and tactics for exploring top-line growth while protecting the bottom line. The following is one of five articles produced as a result of that forum.
The Role of IT in Driving Manufacturing Profitability
In today’s interconnected world, IT is no longer just a support function—it’s a critical driver of profitability in the manufacturing industry. From streamlining operations to safeguarding against cyber threats, an effective IT strategy can help manufacturers gain a competitive edge and protect their bottom lines.
For many manufacturers, the rapid pace of technological change and the increasing frequency of cyberattacks present both challenges and opportunities. Michael Senkbeil, a partner in charge of managed IT services at Chortek LLP, emphasizes that an outsourced IT strategy, particularly with a focus on cybersecurity, is a powerful solution for many small to mid-sized manufacturers. “Cybersecurity preparedness is really a risk management topic, and it absolutely affects profitability,” Michael says.
Cybersecurity as a Profitability Imperative
Cybersecurity is no longer just an IT issue—it’s a business risk that can impact an organization’s financial health. As manufacturers embrace digital tools and connected systems, they become more vulnerable to cyberattacks. Whether it’s ransomware, phishing, or data breaches, a successful attack can disrupt operations and result in significant financial loss.
“In the world of manufacturing, the impacts of a cyberattack can be devastating,” Michael explains. “One ransomware attack can shut down operations for days, sometimes weeks, and the financial and reputational costs can be astronomical.”
For example, Chortek worked with a $14 million manufacturing company that was hit by ransomware, resulting in over $700,000 in losses due to downtime and recovery costs. This could be detrimental for smaller manufacturers, potentially pushing the business into a financial crisis.
To mitigate these risks, manufacturers must adopt a proactive cybersecurity strategy that incorporates best practices, continuous monitoring, and employee training. Relying on an internal IT department or a single IT consultant may not be enough in today’s threat landscape. Outsourcing IT services, especially to firms that specialize in managed services and cybersecurity, ensures that companies stay ahead of potential threats with real-time protection.
A Managed IT Approach: Resilience and Efficiency
While cybersecurity is crucial, an effective IT strategy for manufacturers goes beyond protection. Many manufacturing processes and operations have become highly technical. Technology isn’t just nice to have, it is fundamental to the day-to-day operation of the business. Manufacturers have to approach their IT strategically.
“A lot of manufacturers still operate with a ‘break-fix’ mentality when it comes to IT,” Michael notes. “They wait until something breaks before calling in help. But in today’s fast-paced world, that reactive approach isn’t enough.”
Instead, manufacturers should take a proactive approach to IT management, where systems are continuously monitored, updated, and optimized. By using a managed IT service provider, manufacturers gain access to a team of experts who can manage cybersecurity and help with software updates, cloud management, and more.
The Benefits of an IT Team
One of the key benefits of outsourcing IT is the team-based approach. While in-house IT staff might be experts in certain areas, they can struggle to keep up with the ever-changing IT landscape. Managed service providers, on the other hand, offer a broader range of expertise and resources, ensuring that all aspects of IT are covered—cybersecurity, infrastructure, software, and compliance.
“A team of 14 IT experts is better equipped to handle security threats and operational inefficiencies than one or two people trying to cover it all,” Michael says. By outsourcing IT to specialists, manufacturers can gain access to cutting-edge tools and best practices without the cost of maintaining an in-house team.
Additionally, outsourcing IT allows manufacturers to focus on what they do best: running their businesses. Rather than spending time managing systems or responding to IT issues, companies can rely on experts to ensure that everything from cloud management to cybersecurity is handled efficiently and effectively.
Opportunities for Growth with Cybersecurity Certifications
The federal government has stated a commitment to providing more government contract work to small businesses. Of course, doing so invites a lot of risk, so new standards have been created to provide some guide rails and structure for mitigating that risk. The Cybersecurity Maturity Model Certification (CMMC) is a new framework that requires companies to meet specific cybersecurity standards to work with the U.S. Department of Defense.
Manufacturers that sell to the Department of Defense either through a direct contract or through a subcontract to another provider will have to understand this standard and be compliant with it.
“Even if you’re not working with the DoD, this is still something to consider,” Michael explains. “More companies are going to ask you what you’re doing about cybersecurity, and having these certifications can give you a competitive advantage.”
Manufacturers who are just starting to wrap their arms around cybersecurity should consider picking up a standard like the CMMC and use it as a checklist. This will get your business on a solid path toward cybersecurity best practices.
The CMMC framework includes different levels of cybersecurity standards, from basic to advanced, with more stringent requirements as companies handle more sensitive data. By achieving a high level of cybersecurity certification, manufacturers can protect their business and attract more business by proving their commitment to security.
Conclusion
In an era where technology is driving every aspect of business, manufacturing companies cannot afford to overlook the importance of IT strategy and cybersecurity. A proactive IT approach ensures that manufacturers are not only protected from threats but are also positioned for growth and efficiency. Outsourcing IT to a managed service provider with expertise in cybersecurity and manufacturing operations allows companies to stay ahead of the competition and focus on what they do best—building a profitable business.
At Chortek, we partner best with business owners who understand the importance of a well-maintained, secure IT environment. Usually, they’re also frustrated with how much of their own time they end up spending to make it happen. If that sounds like you, we’d love to learn more to see if we can help you turn your attention back to your business.
Author Bio: Michael Senkbeil is the Managed IT Partner at Chortek LLP, where he serves as a virtual Chief Information Officer (CIO) and IT advisor to manufacturing businesses. With 27 years of experience in IT management, Michael specializes in cybersecurity, technology policy, and IT strategy. He is dedicated to helping businesses protect themselves from cyber threats while optimizing their IT infrastructure for operational efficiency and growth. Michael’s expertise ensures that companies are equipped with the right technology to meet the demands of today’s fast-paced manufacturing environment.
Suggested Reading:
Read the entire Manufacturing Forum: The Future of Profitability series.
From Data to Dollars: Unlocking Profitability with Manufacturing Analytics
Maximize Margins: ERP Best Practices for Profitable Manufacturing
Tax-Proof Your Profits: Strategic Tax Planning for Manufacturers
M&A Trends in the Manufacturing Industry: Seizing Opportunities in a Changing Market
