Tech and cyber battlefronts can reshape manufacturing

As Australian manufacturing embraces the digital age it faces an evolving landscape dominated by the opportunities of technological advancement and the threats of cyber threats and IP security. 

From the adoption of Industry 4.0 technologies to integration of IoT (Internet of Things) and AI-driven processes, the manufacturers I talk to understand they must harness technology to drive efficiency and innovation. 

However, these same technologies expose them to new cyber risks, with increasingly sophisticated attacks targeting critical infrastructure and intellectual property. 

Lean manufacturing and automation

Manufacturing is a one of the cornerstones for our economy in terms of GDP, jobs and exports, and with the uptake of lean manufacturing and automation this can only strengthen.

To remain robust, there must be a continuing focus on innovation, improvement and excellence.

This means moving on from outdated hardware and legacy IT systems and upskilling workforces to have the required tech capabilities.

Manufacturers are recognising the need to invest in cloud migration, AI and automation for operational efficiency and to meet regulatory sustainability requirements.

Robotics, automation and digitalisation are driving significant changes within the sector, from production line robots increasing speed, safety and quality, to IoT devices allowing real-time monitoring and control of manufacturing processes.

Then there is artificial intelligence machine learning, with algorithms to optimise production schedules and supply chain management.

Lean manufacturing focuses on creating more customer value using fewer resources, by finding and removing activities that are not adding value.
It has the potential to provide Australia’s manufacturing sector significant improvements in quality, efficiency and customer satisfaction.

AI threats a cybersecurity focus for business

Manufacturers are grappling with cybersecurity challenges as they modernise their IT infrastructure to enable AI integration.

They deal with sensitive data, from production processes to proprietary designs, making cyber espionage and IP theft an ongoing risk.

My colleague Ashwin Pal, an RSM partner specialising in cybersecurity and privacy, says robust cybersecurity preparation must be a top priority for every manufacturer, or they could face serious negative financial and reputational consequences.

Without rigorous testing organisations may overestimate their level of preparedness, leading to disastrous outcomes during actual cyber incidents, he says.

RSM’s new report, Cyber storm rising: navigating the path to resilience for Australian businesses, includes a survey of 150 c-suite executives that shows only 50% of business leaders are confident in their staff’s capacity to manage cybersecurity risk, compared to 84% of UK and UK leaders.

The survey found just over half (51%) of businesses are making protection against AI-enabled cyber-attacks their top priority for 2025, followed by guarding against ransomware and extortion attacks.

Only one in three large organisations have very high confidence in their staff’s ability to handle breaches.

While a majority of Australian leaders (64%) say their business is prepared to respond to an attack, this is considerably less than in the US and UK (94%). 

There’s an urgent need for manufacturers to invest in risk management, tailored security measures and regular testing to get prepared for the next major glitch, outage or attack.

This is clear from RSM’s data:

• 29% of large Australian businesses and 16% of medium businesses experienced one or more cyberattacks in the past year
• 32% of Australian businesses had a third-party data breach in the past 12 months, with 23% reporting financial, reputational or operational impact
•  Phishing is the most common form of attack (20%), then data leaks (13%) and ransomware (10%)
• 46% of large organisations have experienced a phishing attempt, with almost half of their existing security plans unsuccessful in limiting the damage related to direct data extraction
• 40% of those who experienced phishing took between a week and a month to recover from ransomware and extortion; 27% took more than a month to recover
• About half of large organisations have done no internal testing; more than half have not tested their wifi or web applications or done external testing, meaning they are extremely vulnerable to attack.

Steps to strengthen tech capabilities

Manufacturers must strengthen their tech capabilities and cyber defences and ensure they have strong R&D investments in place to future-proof their businesses.

In RSM’s report, businesses say their top three cyber risks are the constantly evolving threat landscape, the complexity of their IT infrastructure and a lack of staff compliance and insufficient staffing and training.

Smaller manufacturers in particular often lack the resources needed to implement best practice cybersecurity measures – but are very aware that operating outdated IT systems leaves them more vulnerable to attack.

And it’s not just their own systems in the firing line – given the interconnected nature of the manufacturing sector, a cyber-attack on your supply chain can have a significant ripple effect.

When implementing the key tech trends reshaping the industry, Australian manufacturers must not forget to strengthen their defences while harnessing the power of digital transformation.

The cyber security team at RSM has specialists on IT as well as Operational Technology (OT) security to help protect clients in the manufacturing sector. Focusing on both IT and OT is important as IP generally sits in IT systems whereas OT systems control the manufacturing processes.

An investment in system testing and staff training and awareness is key for efforts to ensure data integrity, privacy and cyber protection.

An abridged version of this article first appeared in Australian Technology Magazine.