What are the risks, challenges and opportunities?
When most people think of startups, they picture hip loft offices, beanbags and charismatic CEOs with boundless enthusiasm and a seat-of-the-pants attitude. While this may be the case for some new businesses, particularly within tech, the picture for many startups is starkly different.
Starting a brand new business in an industry such as manufacturing comes with a high level of risk. According to Failory.com, it is estimated that around 90% of startups in any industry are doomed to fail. On top of that, the failure rate for traditional manufacturing companies is pretty high at 51%. Only construction (53%) and information (63%) are higher.
Steering clear of industry challenges that sink other businesses
The manufacturing sector presents many challenges for a brand new business. The industry is facing a skills crisis, with around 22% of manufacturing workers due to retire within the next 10 years. The challenge will be to channel young talent into STEM careers, which includes manufacturing.
And as the sector moves towards digitisation and automation, new tech-based skill sets will be needed. Startups can’t simply expect the right talent to be right there waiting to be hired. They may have to consider apprenticeships, partnering with educational institutions and taking steps to grow their own talent.
Manufacturing startups will also face challenges such as utilising new technologies, global competition and knowing when (and how) to scale their business.
But entrepreneurs wanting to break into manufacturing shouldn’t let failure rates and obstacles such as these scare them off.
How technology can open up a world of new opportunities
While starting out in manufacturing of course comes with a great deal of risk, there are also enormously exciting opportunities to be seized. This is especially the case now that large markets are looking for ways to bring their supply chains back home.
The company I co-founded, Fractory, is bringing metal fabrication online. It began as all good businesses do – with an idea, one based on filling an obvious and vital gap in the market. Realising that the procurement process in manufacturing was taking far too long, we developed a cloud-based online quoting system to improve efficiency and free up as much as 20% of an engineer’s time. The lead times for each step in the manufacturing process can be reduced using Fractory’s pioneering system that utilises in-house built algorithms.
But where Fractory stands apart from other startups is its position as both a manufacturing firm and an exciting tech innovator. Where others have built on existing systems, we invented our own – a pioneering cloud-based platform that’s already transforming manufacturing procurement in the UK, Scandinavia and the Baltics.
The issues are the same everywhere, so an actual solution can be applied in different countries with ease. What was once seen as a niche workflow hack is rapidly turning into standard practice, as a whole new cloud manufacturing industry springs up.
As said in the beginning, the failure rates for both startups and manufacturing businesses are pretty high, which makes for a daunting combination. At the same time, there is a lot of talk about digitalisation, but the journey towards Industry 4 presents its hurdles.
So looking around, there are a few gaps to fill in the manufacturing sector to help the traditional companies overcome their problems. Harnessing technology to solve key industry issues is the key to opening up new opportunities for yourself and other companies alike.