Small and Medium Enterprises (SMEs) face several challenges and risks. A constant worry for SMEs, specially those who are manufacturers, is to ensure their investments are safeguard. Here is a list of four common risks faced by manufacturers:
- Damage To Goods
Manufacturing organisations have to maintain a constant stock of goods in the form of raw material, work-in-progress, and finished goods. These goods are the lifeline of any business. Loss of goods due to fire, theft, natural disasters or other unforeseen circumstances can have a serious impact on the profitability as well as future potential of the business. Goods can also be damaged during transportation and logistics.
- Machinery Failure
Production units depend on complex and expensive machines. A machine breakdown or failure can cause loss of production and affect quality, which can lead to loss of business and even cause an irreparable damage to the firm’s reputation. In addition, repair and maintenance increases overhead costs.
Manufacturing processes involve several equipments and workers handling different machines and working in trying conditions. A minor lapse can derail the production workflow and the corresponding domino effect can ruin the entire process.
A labour strike, claims for compensation, natural disasters and other interruptions like unavailability of raw material, lack of resources, etc. are major external risks for a manufacturing concern. They have the potential to cause irreversible damage to the company. Risk management initiatives help but to what extent?
- Risks Based On Workflow
Every manufacturing concern has a specific workflow that involves procurement, storage, production, shipping, exporting, etc. A glitch in any of these processes can have a large impact on the business.
In addition, production strategies like just-in-time (to avoid over production), lean manufacturing (lesser waste of resources), make-to-order (to ensure 100% sales), assemble-to-order, value engineering, etc. demand higher dependability and nothing can be left to chance.
Play Safe, Stay Secured
Because customers rely on businesses to deliver top quality goods at highly competitive prices, business owners need to ensure that their unit remains efficient and effective. To that end, availing business insurance is a smart thing to do.
Manufacturers should consider the following insurance policies to safeguard their assets.
- Workman Compensation (offers financial aid to factory workers in death and disablement)
- Group Health Insurance (covers health related costs of workers and employees)
- Fire Insurance (reimburses the loss incurred due to fire at production centers)
- Erection All Risk - EAR (provides compensation for storage and erection related losses)
- Correction All Risk - CAR (covers risks related to damaged equipments and third party liability)
If you own a manufacturing unit, investing in these insurance plans can protect your business and provide financial support during crisis.
Click here to know more about comprehensive insurance plans that can help you safegaurd your assets and protect your business.
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