Ideas & Insights

Next Generation Leadership & the Changing Workforce

Work Reimagined: 5 Ways to Build a Future Workforce

Manufacturers willing to change how they approach workforce development have an opportunity to stand apart from the competition.   

For manufacturing companies, the challenges and uncertainty posed by the COVID-19 pandemic have been layered on top of persistent workforce trends that will remain unresolved even after social distancing fades from memory, and that can undermine their ability to innovate and thrive into the future.

Consider the aerospace and defense (A&D) sector, for example. While the commercial aerospace market has taken a hit amid the pandemic’s economic fallout, defense spending remains robust. A&D still has plenty of growth potential with the evolving drone market, which offers wide commercial applications. Plans are also on the table for air taxis and hydrogen-powered passenger aircraft, not to mention the nascent global space economy.

But seizing these innovative opportunities requires tech-savvy workers who are being increasingly drawn to other sectors with greater reputations for innovation, including technology, health care, and even gaming. In its 2020 World’s Most Attractive Employers report,¹ Universum found that A&D ranked below computer software and technology as a preferred industry to work in among new IT and engineering graduates. No A&D employers ranked among the report’s top 50 most attractive companies to work for.

Recruiting top talent in this and other advanced manufacturing sectors is only going to become more critical in the future. To remain competitive, industry leaders must continually develop their companies’ digital acumen and evaluate new technologies as they come into play. The ability to attract, develop, engage, retain, and inspire both the current workforce and the next generation of employees is essential. Learning programs and systems also need to be in place for upskilling and reskilling employees to help those companies succeed.

In addition, these same leaders must change their own ways, embracing new behaviors and value systems and getting comfortable with shifting corporate structures and collaborative cultures. In short, the manufacturing industry must revisit its overall personnel strategy to attract the best and brightest thinking among demographics whose career mindsets and preferences differ from previous generations.

Transformation is not a singular proposition in today’s environment, if it ever was.² For organizations to truly reimagine their working worlds and reshape their futures, transformation programs need to live, breathe, and continuously evolve. This is particularly true of an organization’s workforce. If, as is expected, the global economy begins recovering in 2021, even greater competition in labor markets will be a given.

With that prospect ahead, there are five ways that manufacturers can help make their workforce approach stand apart from the rest.

1. Define and promote a purpose and culture 

Younger employees appreciate a strongly felt and inspiring purpose or mission, beyond a profit motive. The pandemic has reset and raised the bar. Fifty one percent of manufacturing employees in 2021 EY Work Reimagined Employee survey3 felt that culture actually improved during the pandemic with a focus on people first and intense communications. They want to play a role in realizing a future vision. Industrial companies need to play the culture card by creating a more purposeful, flexible, and agile work environment to attract millennials. Many technology companies have announced work from anywhere opportunities and are actively recruiting talent from manufacturers that historically had been safe, if not head-to-head, with one of the tech hubs. That a lot of emerging technologies are targeting the industrial sector is also building appeal, providing opportunities for millennials to work with cutting-edge tech and apply it in unprecedented ways. This isn’t just about attracting talent. It’s also about keeping it.

“A majority of workers want to maintain a similar level of flexibility in their work when the pandemic is over.”

The convergence of new technologies can fundamentally shift the manufacturing enterprise, supporting the movement to M4.0. Manufacturers should be embedding artificial intelligence, blockchain, and robotics in their operations today and finding talent anywhere they can that can help them do it effectively. A new global workforce with the ability to augment these technologies is beginning to emerge. Manufacturing companies should be more direct in highlighting these opportunities to potential recruits and delivering on them to their current workers.

Yet, in another EY survey,4 more than one-third of employees (35%) reported a disconnect between their organization’s stated purpose and its day-to-day actions. Manufacturers need to take steps to bridge this gap by defining the day-to-day attributes that define culture in both the work the company does and the behaviors of all colleagues.

If the company stepped up to play a role in the fight against COVID-19, be proud of that effort and make sure employees feel that pride as well. If the company is helping to advance autonomous technology or developing new ways to decarbonize the business, or simply coming up with new processes that are more efficient and more productive, make sure it matters to the team as much as it does to the company’s customers and key stakeholders. If the company is supporting employee wellbeing and work-life balance, make sure that leaders are promoting flexibility for the jobs and roles where it is available. When people have a purpose and feel connected to the culture, they’ll be much more likely to take ownership of it.

For A&D, there is a strong focus on culture and, within that, the purpose behind the sector’s nonfinancial objectives. In commercial aerospace, it’s about passenger safety, not profit. Teams are at their best when they are fundamentally thinking about how to get people where they need to be safely. It’s the same concept with the defense industry. The opportunity to support national security and provide the military with the best technology and tools it needs to do fulfill its mission and applying the latest tech to help it do so, gives deep meaning to a team’s effort and sense of purpose.

Employees want to be part of a team, and they want that team to be engaged in doing meaningful work. Finding the right balance in a world where remote working is becoming more common, is important. In the 2021 EY Work Reimagined Employee survey, 54% of US manufacturing respondents indicated they value the ability to meet and interact with colleagues in their workplace and 62% reported being concerned about the ability to meet with remote team members. At the same time, 40%+ consider themselves to be remote ready, and value the flexibility of the option to work virtually in many jobs and roles.

 

 

“The manufacturing industry must revisit its overall personnel strategy to attract the best and brightest thinking.”

2. Recognize that workforce expectations are changing 

In spite of the challenges posed by the pandemic, employees remain positive about their work. In the 2021 EY Work Reimagined Employee survey, 62% of US manufacturing respondents said it’s “very likely” they will stay in their current job for the next 12 months. A majority of these workers, however, want to maintain a similar level of flexibility in their work when the pandemic is over, including the 69% who indicated they would like to choose when they start and finish their work each day.

If preferences for when and where they work aren’t met, 35% of respondents said it’s “likely” they would quit, and 19% said it’s “very likely” they would leave their job.

The key takeaway is that all employers, including those in the manufacturing sector, need to rethink how they approach the future of workforce development and working cultures. The pandemic has proved across most industries that a high level of productivity can be achieved outside of the traditional construct of employees working eight hours a day, five days a week, in the office or on the plant floor.

It’s not a millennial issue, or an us-versus-them conflict between labor and management. Everyone needs to work together to build a model that maximizes potential and gives a company the best chance to succeed. In some cases, the best structure is to have people in a certain spot at a certain time each day. Certainly, manufacturing is one of those sectors that can’t be done entirely by remote work. But those companies that are willing to have an open dialogue with their teams and discuss the best way to move forward will be the businesses that put themselves in a better position to attract, and retain, the best talent.

3. Be more diverse and inclusive 


Considering the continuing disruption and challenges on the horizon,
the most successful companies need to recruit for diversity of thought. Manufacturing companies owe it to themselves to look at candidates from outside of their traditional recruitment venues. It’s not always easy. In the A&D sector, government contractors are typically constrained by citizenship and security clearance barriers. Other segments of manufacturing have their own barriers that come into play. On the one hand, they want to pull from a wider pool of talent. But companies often have specific needs or skills, so it becomes easier to stick to what they know.

As with many aspects of both life and business, you get out of a particular effort what you put into it. If companies really want to find the best people to hire, they are most likely going to have to work at it. That means casting a broad net and proactively finding ways to develop talent where they haven’t found it before. One way is to hire for skills instead of specific credentials and be willing to mold talent. Companies need to examine their internal culture and practices to ensure they can champion and coach high-caliber individuals to drive the next generation of leadership. They may find people who always had the skills to be a force in their industry but never thought it was a viable option for their career path.

4. Thoughtfully consider politically charged topics 

Companies in every sector have begun to very visibly take stands on broader public issues where in the past they may have opted to remain more neutral. However, employees in the newer generation of workers expect their employers to be more purpose driven and vocal, especially against perceived injustices and inequities.

Companies need to determine where they stand on these issues publicly and be willing to back their positions up with action. That can also tie in to how they present their company’s purpose to recruits and the types of recruits they appeal to. For instance, during US protests about policing practices, one large aerospace company announced that it was issuing millions in grants for groups that serve minority and underserved students pursuing science, technology, engineering, and math (STEM) education.

Many manufacturing companies are understandably focused on the short-term day-to-day challenges of keeping their employees safe amid the pandemic, balanced against the need to continue being productive. But they can’t let the troubles of today obscure the potential of the future: broader workforce and talent initiatives will be required to strengthen the business over the long term. They need to take steps to embed a clear and meaningful purpose throughout the organization and to create an environment in which it is defined and lived, authentically, at all levels.

“The key takeaway is that all employers, including those in the manufacturing sector, need to rethink how they approach the future of workforce development and working cultures.”

5. Redefine the role of HR 

The future of work means HR has to evolve to drive the people experience, serve as an innovation hub, and deliver value outside its traditional role. A recent episode of the EY Future of HR podcast series5, for example, addressed the concept of a “people value chain” as a way to help redefine the HR role for the years ahead.

In the past, 80% of HR’s time and budget was dedicated to traditional vertical services that were largely administrative and operational. The remaining 20% of HR’s time and budget was then focused on more horizontal people services which, ultimately, are most important to developing employee experience and longer-term value to the company. The people value chain concept shifts the more traditional HR activities, such as administrative and procedural services, to a digital people team and virtual global business services, enabling the company’s people consultants to transition into more strategic work that provides long-term value.

To deliver experience at scale, the people function of the future must work horizontally across the enterprise. The people consultant role is fueled by key collaborations with cross-functional teams, executive leadership, virtual business services teams, and the gig workforce, using a mix of human and digital interactions, and allowing high-value people consultants to expand their reach within and beyond the traditional HR function in a number of ways.

    • Cross-functional teams: functional leaders serve both as beneficiaries of HR services, and as cross-functional partners with input and shared accountability for people contributions and experiences.
    • Architect people solutions for business opportunities: serve as the primary people advisor to the executive leadership team and bring the right combination of people capabilities to the boldest ambitions and most difficult business challenges.
    • Foster program and service execution through virtual Global Business Services (GBS): prepare virtual GBS teams to execute programs and deliver services at scale; understand feedback and partner to innovate and drive continuous improvement.
    • Human and digital and the gig economy: digitize HR work, augment people contributions with intelligent automation and enable confident business decisions through rich people insights. Enable gig people consultants to accelerate through the company learning curve and add value to in-flight initiatives.

In this new model, people consultants will be able to focus on the high value-add areas, where typically only 20% of time and budget is currently focused. This new model allows the people consultants to dedicate most of their time on these horizontal people services that drive long-term value.

Reset for the Future

Culture and HR management are often overlooked in the world of manufacturing, where the primary focus has often been on the machines, the products, and the processes that keep the company in business. With the pandemic, however, HR has been at the center of a reset of enterprise focus, from rethinking the use of office space, to redefining health and safety, and the introduction of new workplace technologies for enhanced collaboration and communication.

Today’s successful manufacturers are now coming to understand that they need to devote just as much time to talent acquisition, retention, and experience as they do to every other function in their organization if they want to successfully reimagine the way work is performed and managed in the future to maintain competitiveness.

The views reflected in this article are those of the authors and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.

Footnotes

1 https://universumglobal.com/blog/the-worlds-most-attarctive-employer-2020/
2 https://www.ey.com/en_us/workforce/how-to-keep-your-people-continuously-ready-for-what-is-next
3 https://www.ey.com/en_gl/news/2021/05/more-than-half-of-employees-globally-would-quit-their-jobs-if-not-provided-post-pandemic-flexibility-ey-survey-finds
4 https://www.ey.com/en_us/purpose/is-your-purpose-lectured-or-lived
5 https://www.ey.com/en_gl/podcasts/2021/03/episode-2-how-people-consultants-will-define-the-future-of-hr

Next Generation Leadership & the Changing Workforce

Fueling the Evolution of Post-COVID Manufacturing Workplaces

With the world slowly recovering from the pandemic, digital technologies can help manufacturers prioritize employee health and safety in the ‘new’ workplace.    

Until a year ago, words such as lockdown, quarantine, and social distancing sat quietly in the dictionary. While a few elements, such as social distancing, may go away once the pandemic is under control, other factors such as the need for cleaner air in workplaces, will likely remain.

Even without the pandemic’s added burden, employee health and safety have been a challenge. Fatal injuries per 100,000 workers in the US dropped only marginally from 3.6 in 2010 to 3.5 in 2017.1 The Total Recordable Incident Rate (TRIR) has plateaued in the past ten years,2 even as improvements in machinery and initiatives resulting from regulations and culture have made employers more accountable for employee safety.3

Getting to zero incidents in industries such as oil and gas and chemicals and utilities has proven elusive. One big problem has been money; employee health and safety (EHS) projects tend to struggle to acquire funding for digital investments. Another obstacle is older workers (age 55 and older), who make up 35% of the total workforce.4 They may perceive digital solutions to EHS as a threat and believe injuries are simply a part of the job.

Once the pandemic struck and new and often-evolving health and safety guidelines came into play, the already difficult job of EHS became even harder. EHS professionals need all the help they can get, and that means equipping them with smart tools and technologies. This is where manufacturing companies need to consider investing in the digital transformation of their EHS practices.

Core Priorities for Employee Health and Safety

In this new normal spurred by the pandemic, businesses need to find ways of using resources (materials, water, etc.) more efficiently and managing waste better to ensure optimal employee health and safety.

The risk posed by the old fashioned approach to waste management was recently highlighted by a giant wastewater pond on the verge of collapse in Piney Point, Florida.5 Nearby residents had to be evacuated, and polluted water from the pond had to be pumped into Florida’s waterways to avert the disaster. The collapse would have exposed the local population to toxic waste and likely resulted in billions of dollars in damages and penalties for those who operated the pond. In situations like this, the easy way out—to dig a hole and dump the waste—is no longer a viable option. And yet, for many industries such as power generation and livestock, cheap dumping grounds are crucial.

One way to minimize the need to process waste is to reduce it. The more efficient the utilization of raw materials, the less waste, which is one reason many companies have added Q (for quality) to EHS, making it QEHS. Strong quality processes don’t just result in happy customers, but they also reduce waste by lessening defective parts as a percentage of total production.

As with waste, an increased focus on health and safety is not just about the compliance imperative. The International Labor Organization estimates that nearly 4% of global GDP is lost due to health and safety issues6 and many companies see the emphasis on health and safety as a detriment to productivity.

“At the heart of any digital transformation lies an automated collection of data.”

 

 

Interestingly, countries with fewer incidents per 100,000 workers score higher on the competitiveness scale.7 However, there are direct costs that come from injuries or fatalities, such as compensation, litigation, medical expenses, and even property damage.

So, if ignoring or downplaying EHS is costly, is investing in digital technologies the answer?

The Emergence of EHS-focused Digital-led Solutions

Consider this: The Occupational Safety and Health Administration (OSHA) has tightened compliance requirements while upping the maximum penalty for non-compliance to $13,653 per violation.8

This significant shift has emphasized the quality of inspections, which means the authorities will require more and accurate data. This can only happen if companies switch from error-prone, manual, paper-based data collection to automated data collection.

The Globally Harmonized System of Classification and Labelling of Chemicals (GHS) guidelines are updated every two years by the United Nations. Deployment of digital solutions can help companies automate the updating process to stay compliant with GHS guidelines and improve decision-making for compliance and safety with better insights into hazardous chemical footprints. These digital solutions, which are often mobile-friendly, make safety information accessible to supervisors and employees in real time, allowing them to better manage people and the flow of materials on the shop floor.

But the potential of digital technologies goes beyond helping with compliance requirements.

EHS stands to benefit significantly from the rapid, enterprise-wide penetration of new technologies, including mobile, cloud, social, automation, AI, and more. These solutions can be leveraged to create increased awareness about situations where people need support in managing EHS risks. Imagine the potential if a worker on a remote site was equipped with sensors, could contact experts in real time, and get over-the-shoulder advice in the case of an emergency. With access to real-time data from sites in the cloud, companies can set up centralized EHS support centers or control rooms operated by highly trained experts.

Digital technologies integrate data with workers’ daily jobs—think smart sensor-embedded PPE or mobile-based applications. However, one of the significant challenges with capturing EHS data is that it’s either someone else’s job or not someone’s only job. In these situations, data capture is often delayed, inaccurate, or worse, not captured at all.

The case for digital transformation within EHS is about more than just compliance, though that is undoubtedly important. Good EHS practices improve productivity, protect a company’s reputation, and contribute to its bottom line.

Let’s look at a few specific areas and how digital technologies can help.

“Good EHS practices improve productivity, protect a company’s reputation, and contribute to its bottom line.”

Digital Technologies at the Forefront

Employee Health Management

As employees return to work, many organizations plan to deploy AI and IoT technologies to protect employees’ health and safety.9 These could be wearable devices that track temperature or facial recognition technologies for access control. Such tools will be used to monitor health, ensure safe distance interactions, and facilitate contactless access and security.

Manufacturing companies are also looking to expand the use of robotics and automation on both the shop floor and in cutting-edge warehouses to facilitate contactless delivery.10 For example, autonomous or remotely-guided vehicles and machines are being deployed to move items on the shopfloor and enable human-free loading and unloading at warehouses.

Industrial Hygiene

As more chemicals enter industrial workspaces, the need to assess and mitigate the associated risk grows. The trouble is, this is a specialist job and finding these skill sets is often costly and rare. The task is typically handled by EHS generalists, sometimes with the help of outside consultants, which is a risky approach given how deadly many of the chemicals can be.

Digital technologies can take care of the most challenging and time-consuming tasks involved in industrial hygiene. For example, chemical management software can track chemical inventory and ingredients. While it’s not difficult to know what chemicals are in your facility, knowing what they are made up of and how to store them is not as simple. Some ingredients, like methylene chloride, which is often part of paint-removing solvents, might be dangerous and include specific exposure monitoring requirements. So, suppose your facility managers aren’t sensitized to the presence of such ingredients or overlook it because it’s not a standalone chemical. In that case, you are likely to end up on the wrong side of an OSHA inspection.

Chemical management software ensures complete visibility into the aggregates and ingredients. These solutions also have built-in chemical and occupational exposure limit (OEL) databases, which are helpful to set up and maintain Industrial Hygiene (IH) sampling programs.

Other tools help with forming similar exposure groups, which can be used to determine medical surveillance, qualitative exposure assessments, and additional air sampling. Some solutions can even help you build and deploy your IH sampling plan, employee training, and IH reporting to cut time and errors at the time of audit.

Lockout and Tagout

Lockout and tagout (LOTO) helps companies prevent injuries from machines that are being repaired or serviced. This procedure is made up of a series of steps that employees take to eliminate a machine’s chance of unexpectedly starting up. These solutions provide access to information and equipment over smartphones and tablets with a search function, thus eliminating the need to sift through tons of paperwork.

Safety compliance software increases accountability by walking workers through each lockout step and prompting them to acknowledge that lockout has been done correctly. Each step is time and date stamped with the authorized worker’s name that has applied the lockout and data is available for each machine and can be accessed by managers using a LOTO dashboard.

Hazardous Substance and Compliance Management

Implementing GHS and REACH (Registration, Evaluation, Authorization, and Restriction of Chemicals) compliance activities within organizations is no easy task.

However, tools that feed chemical regulatory data into corporate EHS and Material Safety Data Sheet (MSDS) systems provide regular updates as rules evolve and ensure that GHS classification and labeling are correct. These tools also come with document templates for developing MSDS, labels, and other hazard communication materials and provide easy access to supervisors for legal requirements and internal policies for operations within an organization.

Product Safety and Global Label Management

Labeling has always been a complex task because its intended for marketing and is used for shipment, safety, and other areas. The task has become more complex as regulations around product safety and disclosures have tightened substantially in the last decade. To make matters worse, labeling data resides in different places within an organization, such as with production, marketing, or logistics.

How can companies create labels that serve business needs and enable labeling compliance? Fortunately, technology can pull in data from different sources, including EHS modules with hazard specifications and symbols, enabled by specified workflows and a rule-based engine.

“EHS initiatives are most successful when they are well integrated with regular day-to-day tasks people perform.”

 

Environment Management

Digital technologies can manage air and water emissions, generating accurate data to meet legal requirements. Furthermore, they help detect and communicate deviations, manage investigations, and track follow-up activities. The software calculates and generates reports based on facilities’ day-to-day activities, using an exact virtual model of processes and materials. This produces accurate reports and improves compliance. Many of these tools come with hundreds of pre-loaded reports aligned with reporting requirements, which help cut errors and effort during inspections and audits.

Remote Maintenance Enablement with Smart Glasses

Given the pandemic’s current state, it’s not always possible or even desirable to send expert maintenance engineers to the site. Yet, the work needs to happen one way or another. One solution is to get them to supervise onsite work remotely by ‘seeing’ the actual steps with smart glasses. While such a solution is a must during COVID-19, it will continue to be useful post-pandemic as well, helping to cut travel and increase utilization of expensive expert resources.11

Digitizing Inspections

Once you have embarked on the journey to the digital transformation of the EHS function, you will have a lot of accurate and timely data at your fingertips. Deploying digital checklists for inspections will lead to the recording of data in real time. Enabling teams with the right tools like a mobile or web inspection checklist can mean easier, quicker, less tedious inspections and greater promotion of safety habits.

The Rise of EHS as Part of a Digital Strategy 

Companies are already investing in sensors and IoT devices for predictive maintenance and management of assets. They are also deploying tools for remote training and upskilling. The technologies required to transform EHS are no different.

At the heart of any digital transformation lies an automated collection of data often via IoT sensors, making that data accessible anywhere, anytime via cloud over mobile, and applying analytics to those datasets to draw actionable insights. This is precisely what EHS needs.

The cost of not investing in digital transformation for EHS is higher than ever. Not only is there a potential loss of productivity and possibilities of penalties, but there is a significant reputation risk.

Realizing the EHS of the Future 

The good news is that you don’t need to reinvent the wheel as you chart out the digital transformation of the EHS function, nor does it need to be a standalone exercise or investment. Here are a few tips to get you started:

Change the mindset: A major challenge EHS managers face is the employee mindset. People are afraid of reporting incidents for fearing of being blamed, others see injuries as part of the job, and some feel safety hurts productivity. All these fears and misconceptions are rooted in real-life experience. People have been scapegoated in accidents, and production has been stopped for minor reasons by overzealous EHS managers seeking to impose their authority.

Such mindsets will only change when there is a shift in on-the-ground practices. For example, the fear of punishment can be addressed by recognizing reporting incidents and creating a transparent process for assessing the cause, which focuses on corrective rather than punitive actions.

Look for expense sharing: Different departments within companies already invest in digital technologies such as AI and IoT, so there is a good chance that the data they generate will be useful to EHS. Look for opportunities where data generated by one function is helpful for the other. This will not only help reduce costs but will integrate EHS deeply with the overall digital strategy.

Don’t isolate EHS from operations: Make sure your EHS excellence effort is tightly integrated with the operations excellence initiative. There is a strong link between safety and operational performance. EHS initiatives are most successful when they are well integrated with regular day-to-day tasks people perform. Remember, the goal is safety in operations, not safety versus operations.

Switch from reactive to proactive: With the amount of real-time data available via IoT, there is an opportunity to leverage predictive analytics to avoid incidents rather than reacting to them once they happen.

The future of EHS in the post-pandemic world can be zero-incident, no matter what industry you operate in. But for that to happen, leadership needs to look beyond compliance as a moral imperative and view it as a boost to productivity and the bottom line. Finally, they must make the necessary investments in the digital transformation of the function to ensure success in the ‘new’ workplace.   M

Footnotes

1. https://www.bls.gov/opub/mlr/2020/article/fatal-occupational-injuries-to-older-workers.htm
2. https://www.bls.gov/opub/mlr/2020/article/fatal-occupational-injuries-to-older-workers.htm
3. https://www.mckinsey.com/business-functions/organization/our-insights/overcoming-limiting-mind-sets-to-improve-safety
4. https://www.bls.gov/opub/mlr/2020/article/fatal-occupational-injuries-to-older-workers.htm
5. https://www.cbsnews.com/news/florida-wastewater-leak-piney-point-near-catastrophe-harm/
6. https://www.ilo.org/global/about-the-ilo/newsroom/news/WCMS_007969/lang–en/index.html
7. https://www.pro-sapien.com/blog/health-safety-vs-productivity/
8. https://www.osha.gov/news/newsreleases/trade/01132021
9. https://www.birlasoft.com/articles/an-executives-guide-to-building-a-return-to-work-strategy-in-the-covid-era
10. https://www.birlasoft.com/articles/future-of-logistics-and-warehousing
11. https://www.birlasoft.com/articles/augmented-reality-in-manufacturing

Next Generation Leadership & the Changing Workforce

The Empowered Workforce, Accelerated

Improved experiences are key to employee retention and engagement, but manufacturers must prioritize deploying new digital tools. 


For decades, manufacturing workers on the front lines have been isolated from most of the transformation strategies undertaken by their employers. The typical performance objectives are focused on optimizing operations, lowering manufacturing costs, and driving continuous process improvements. The untapped potential inherent in people who run these operations has proven to be a key foundation for delivering more consistent performance, agile operations, and improved financial results. According to a WEF 2020 report, failing to meet the skills demands of the new technological era can put at risk $11.5 trillion of potential GDP growth over the next decade1.

Some of the most critical challenges manufacturers are facing today as it relates to the frontline worker include: a disconnected and disengaged workforce, tribal knowledge lost resulting in generational gaps, and millions of unfilled manufacturing jobs due to unskilled workers. All these challenges are typically invisible to senior leaders as metrics are not often put in place to measure the impact of such lost value. Most times, productivity metrics are focused on machine health and not necessarily on user error or lack of training. Hence, there is immense opportunity in unlocking new sources of value by defining the current baseline value of frontline worker operations and reimagining new value metrics in a digitally enabled workforce.

Industry 4.0 digital technology is revolutionizing new ways of working for frontline workers and opening new creative ways to add value in operations while empowering workers to achieve more. A radical shift is being introduced with innovative digital solutions to enable workers to focus on value-added activities instead of repetitive tasks in dark, dirty, and sometimes dangerous working conditions. Examples such as predictive maintenance, cognitive quality inspection, operational simulation, and AI power health & safety have proven to improve employee engagement while lowering operations costs compared to reacting to single problems in an isolated manner.

Technology companies can collaborate with manufacturing industries to envision new innovative ways of working for the frontline workforce with cutting edge and best-in-class digital solutions while enabling these organizations to stay on the forefront of these changing trends. Digital capabilities are creating a new generation of empowered, productive, and intelligent frontline workforce. The future strategic vision for the manufacturing workforce should be focused on connecting frontline workers, delivering next generation knowledge and learning management, as well as strengthening health, safety and compliance solutions.

Achieving Collaboration Across the Organization

The ongoing COVID-19 pandemic has accelerated the need for a new manufacturing operating model and made it clear that frontline workers want to be more engaged digitally. They need collaboration tools that allow them to stay connected and to return to work locations safely. While many jobs can be done remotely, most frontline worker jobs must still be done physically at the manufacturing facility. When the pandemic hit, manufacturers across all industries were hit flat footed in either collapsing operational capacity or trying to respond to dramatic increases in demand. Subsequently, market fluctuations accelerated the need for digital transformation efforts across multiple industries.

“Most times, productivity metrics are focused on machine health and not necessarily on user error or lack of training.”

 

One such area of digital transformation was around communication and collaboration tools. Manufacturing companies have been forced to rapidly deploy digital communication technologies across multi-functional teams to remain operational.

Nevertheless, while many companies are now enabling digital communication solutions for their office workers and boardroom, the frontline workers are just coming up to speed. Manufacturers are now recognizing the immense opportunity to empower frontline workers with the right devices and solutions to make their jobs more effective while driving engagement and productivity. These communication tools are enabling new ways of working—from connecting the manufacturing workforce to digitizing business processes, to streamlining onboarding and skilling the workforce. Key security considerations when thinking about the right solutions should include the ability to meet data privacy, cybersecurity, and protection against intellectual property theft.

Beyond security is the employee experience benefit. Manufacturers should prioritize solutions that connect employees from the top floor to the shop floor. For example, digital communication platforms that can curate company-wide content, conversations, relevant news and other resources in an integrated one-stop employee focused platform add tremendous value to the employee experience.

Achieve more collaboration and break down silos with communications technologies and connected employee experience platforms.
Unleash your workforce creativily with simplification and automation of processes using robotic process automation and low code/no code digitized workflows.

Perform remote field service for manufacturing equipment, conduct remote site visits, and eliminate travel cost with mixed reality remote assistance operations.
Reskill, upskill and attract workers with continuous augmented learning platforms to unlock the next genertion operating model.

Unlock higher levels of worker productivity and achieve safe onboarding experiences with immersive training using mixed reality and augmented reality.
Anticipate and respond effectively to worker’s health, safety and wellness needs with digital dashboards and safety monitoring digital tools.

Simplifying and Automating Complex Processes

Eliminating paperwork and transitioning fully to paperless operations is the goal for many manufacturers and a clear important step toward digitalization and building smart factories. Some of the most evident challenges with paper-based (or even worse grease board) processes are that these processes are highly manual, leading to inefficiency, inaccuracy, and high operating costs. Paper-based documentation, for example, often leads to deviations that impact quality metrics, result in hidden factory losses and delayed delivery of products to market.

To make it worse, in regulated industries such as pharmaceuticals, quality defects need to be fully investigated. The operational impact is drastic from days to weeks wasted in conducting investigations to weeks and months of delayed product launch to market, not accounting for the perils of potential recalls if the investigation leads to patient impact.

Solutions that can empower operators and frontline workers, regardless of experience level, are being deployed to upgrade and automate traditional operational processes step by step. No-code/low-code platforms and solutions such as Robotic Process Automation (RPA) can connect digital workflows and assist manufacturing companies to tap into tribal knowledge and empower others to achieve consistency and agility. These solutions have proven value in enabling operators go from an idea to production in just minutes. Expert operators can now drag and drop work practices to their peers without a single line of code. The journey is fast, intuitive and powerful.

 

The untapped potential inherent in people who run operations has proven to be key for delivering more consistent performance, agile operations, and improved financial reults.

 

 

The economic value empowers step-change improvements vs. what has been a game of year-to-year incremental efforts. This is a clear transformation in faster time-to-value for more consistent and reliable realization of product quality, uptime, and service levels for manufacturing companies to serve their customers and realize competitive differentiation. Most importantly, this approach unleashes employee creativity and innovation through collaboration and higher focus on value-added work.

Conducting Real Time Remote Assistance Across Borders

For many years and sometimes decades, manufacturers have relied on continuous improvement programs to identify and deliver incremental improvements based on current operating processes. Too often, these efforts were locally led and relied on the impressive contributions of a few individuals at each facility. The gains delivered relied on the heroics of specific individuals and were not easy to share or scale to other similar facilities.

When the pandemic hit, manufacturers were forced to accelerate their learning journey and determine how to enable continuous improvement efforts remotely. The initial challenge was to figure out how to get employees back to work safely when they were not allowed to visit physical sites. They quickly realized the need to deploy digital capabilities, partnerships and technology solutions to help them innovate quickly to address their specific challenges.

One area that has gained ground is mixed and augmented reality to empower work teams across geographies and in the absence of travel options. These solutions – enabled by technologies such as smart glasses and guided communication platforms – can enable remote site visits, service and repair for manufacturing equipment and operating processes.

Delivering Flawless Training and Onboarding Experiences

Mixed and augmented reality is unleashing workforce creativity and creating new innovations that manufacturers have only dreamed about. Fast and effective workforce onboarding is possible with mixed reality by its ability to ease the transition from theoretical training to practitioner line know-how. Mixed reality training platforms use a combination of 360-degree pictures of workstations and videos, creating an immersive learning platform to teach new workers what to do right the first time.

Mixed and augmented reality provides manufacturers a modern approach to leveraging technology to empower employees with innovative tools to build confidence and become more effective in their daily work. Leading manufacturers are bringing their standard production systems to life using sophisticated features to guide the employee where the work actually happens and where value is delivered. Frontline workers are empowered with critical information at their fingertips to achieve higher levels of productivity while being able to take on new challenges.

“Paper-based processes often lead to deviations that impact quality metrics, result in hidden factory losses, and delay delivery of products to market.”

New Paths to Learning and Knowledge Management

The durable shifts of COVID-19 will remain and force manufacturers to upskill today’s workforce in new and different ways. There is increasing lack of critical knowledge and skill among workers today evidenced by the millions of job openings across different manufacturing industries. Applying practical knowledge during onboarding and through individual training is one of the proven ways to retain knowledge, reskill existing workers and attract workers of the future.

While the ROI from traditional training programs remains suspect, leading manufacturers have seen step change improvements in coverage, capability uplift and time-to-productivity for both existing workers and new hires through personalized experiences. Effective training no longer takes place in a classroom or over recordings, rather a more contemporary approach combines the communication of explicit knowledge with feedback on the tactic knowledge that is learned from learning the job. For manufacturers to transcend their limitations, they need to be empowered with better solutions.

Digital learning platforms that connect internal learning systems with-on demand reinforcement from diverse external sources are enabling manufacturers to create better employee learning and training experiences. Manufacturers can now offer employees personalized learning with specific and sometimes external knowledge to enable manufacturers to unlock new sources of creativity, engagement, and value for their organizations. While the subtle benefits of enhanced employee engagement are hard to quantify, they are the foundation for shaping the cultural transformation to move beyond continuous improvement to next-generation operating models.

Health, Safety, and Wellness

Worker health and safety faced a new set of challenges as a result of COVID-19. In times where strengthening manufacturing operations is critically important, this lesson should not be underestimated. Workers more than ever before need to ensure their employers that they are provided the right level of safety, health and wellness they deserve. Human behavior and environment monitoring are critical to ensure safety compliance. Companies need to ensure that workers are always using PPE correctly while staying away from unsafe operations, and they must ensure best-in-class emergency response mechanisms.

Digitally-enabled solutions to track safety compliance have always been mandatory in the safety and compliance arena. IoT-connected devices that track worker operations can offer safety instructions in critical safety instances and avoid dire consequences. IoT-powered safety tracking and compliance solutions gave manufacturers a better way to monitor work conditions and employee health and improve emergency response through real-time data analysis.

Additionally, as manufacturers contemplate their decisions for safe return to work, it is critical that digital tools with the ability to provide real-time information and insights to prepare, anticipate and respond effectively to worker’s needs be considered a priority. Part of a safe return to work is the use of real-time dashboards and communication platforms to communicate securely and on time with employees, and to quickly adapt to changing needs.

Thinking Forward

Skilling, reskilling, and upskilling the workforce with digitally-enabled solutions and devices is undoubtedly a powerful game changer for a successful modern workplace. Manufacturers should ensure to remain attractive to the new generation of workers by redefining manufacturing workforce engagement, learning and knowledge management – including new working practices and procedures – and health and safety to ensure wellbeing of employees, both physical and mental. More collaborative cultures that can succeed in a hybrid or fully virtual working world requires enhanced people development strategies and training methods, leadership team involvement and awareness, internal communication policies, frequent feedback loops, enhanced business continuity planning and crisis management skills.  M

Footnotes

1. Why we need a global reskilling revolution | World Economic Forum (weforum.org)

 

To realize the full value of M4.0, companies must elevate their approaches for managing and deploying skills aligned with new technology.

The pandemic initially hastened the drive toward digital transformation and automation out of necessity, but progress should accelerate as companies start seeing the measurable value from early M4.0 initiatives. But that will only happen if they have the right skills — in both direct (shop floor) and indirect (leadership, engineering, etc.) roles — for operating new technology in a rapidly changing world.

Skill gaps are a growing concern. In a recent World Economic Forum report,1 60% of U.S.–based companies said that skills gaps in local labor markets prevent them from successfully implementing desired technologies.

Our research2 confirms that: 56% of employers rate their own skills gap as moderate to severe. Among employees surveyed, 60% believe their current skill set will be outdated in the next three to five years. When asked why, respondents pointed to the need to learn new technology (55%), automation replacing their skill set (32%), and the skill set in their role growing more complex (25%).

While this challenge crosses industries, it is particularly acute in manufacturing, where new operating technologies are bringing accelerated change to work and the workforce. Manufacturers need to become as deliberate and strategic about managing skills as they are about managing people. This requires enhanced attention in five areas:

  1. Defining future roles and skill requirements
  2. Acquiring the right skills
  3. Reskilling the existing workforce
  4. Retaining skills
  5. Tracking and measuring skills

Defining Roles and Skill Requirements

As manufacturers navigate digital transformation, they are still trying to determine what the post-pandemic workplace will look like. Our recent executive poll found this is more challenging than executives thought.3 Manufacturers are preparing to accelerate near-term hiring. In the most recent NAM Manufacturers’ Outlook Survey, manufacturers said they expect full-time employment to grow by 2.7% over the next 12 months, the highest rate in three years.4 Mid-sized manufacturers are even more upbeat, projecting a 3.3% growth.

The convergence of these factors makes this an important — but also opportune — time to think about the roles required along the journey to the factory of the future and the skills required for success in those roles.

We all know that M4.0 will increase the demand for new roles such as automation technicians, engineers, data scientists, IT/OT analysts, security experts, and IIoT solutions architects. These roles use new skill sets that typically haven’t existed — at least not in large numbers — in traditional operations.

But existing roles are also evolving, requiring new ways of thinking to realize the benefits of new technology. For example, operators need to understand how to interpret data presented through new interfaces, use that data to sense problems, and make decisions to prevent issues before they occur.

“M4.0 environments will require different types of
training techniques
— whether new job aids or simulations.”

 

Regardless of the role, soft skills are increasingly critical to success. According to the World Economic Forum report, the skills that are increasing in importance overwhelmingly fall into this category. These include aptitude in analytical thinking and innovation, active learning, creativity, critical thinking and analysis, social influence, emotional intelligence, reasoning, problem solving, and ideation. We will add a few even more basic skills to that list: communication, multitasking, time management, and decision making.

These skills don’t just influence performance. They also contribute to a culture that is agile and adaptable and an environment where people — particularly younger generations — want to work.

We have found several tactics to be helpful for defining technology-enabled roles for the future. One is emphasizing the role’s value. This helps people see the big picture: why their skills are important and how elevating their skills can increase their value to the company. It can also help “rebrand” traditional manufacturing roles to appeal more to young talent, removing some stigma around repetitive work and the instability of hourly jobs.

Another is to purposely redesign the employee experience before introducing new technology. This can facilitate adoption. But despite the growing prevalence of technology in the workplace, this practice is not yet commonplace. In our research, 84% of companies said they sometimes or never redesign the employee journey before introducing new technology.5

Because M4.0 is a journey with an evolving destination, you will need a means of measuring your progress along the way, not just at the end. This starts with a maturity assessment that defines where you are today relative to where you want to be and identifies the skills needed to have to get to the “end state.” A journey map should highlight key progression steps, with measurable outcomes at each step.

Acquiring the Right Skills

In the NAM Manufacturers’ Outlook Survey, two-thirds of executives said attracting and retaining a quality workforce is a primary current business challenge, second only to the increasing cost of raw materials.

Given the scarcity of emerging technology skills and the extreme competition for those skills, it may be easier to hire people with the right soft skills and then train them in the necessary technical skills. Consider that there will always be new technologies coming on the scene. Hiring people who can quickly learn new technologies and have the capacity to understand how those integrate with current business functionality will allow you to use internal resources rather than recruiting or hiring consultants every time you add to the M4.0 landscape. In some cases, it may make more sense to “rent” talent rather than buying it — hiring a third party to provide and/or manage certain capabilities rather than absorbing the high labor cost that may be necessary for certain scarce skills.

Competition for skills also warrants more focus on the talent pipeline. Partnerships with schools —university engineering and information science programs, but also vocational and technical schools and community colleges — will be increasingly important. These partnerships should create co-op and internship opportunities for people interested in new roles such as automation techs or M4.0 engineers, while supporting the development of a curriculum around the M4.0 skill set.

Expect competitors to be active in this area. In the NAM Manufacturers’ Outlook Survey, nearly half (44.5%) of executives said they would use federal funding, if available, to expand community college programs. Keep in mind that this is a long-term commitment that, if chosen, can take years to deliver a measurable impact. As such, it should be part of the strategic plan to ensure that it receives sustained effort over time.

Don’t be afraid to try new strategies, just like United Airlines did in purchasing a flight school.6 One idea for manufacturers is to begin building relationships in high school and/or helping develop a classroom curriculum that will teach certain essential skills. This is a great chance to educate future employees about the value of a manufacturing career before they start down a different path. Activities such as lunch-and-learn sessions in classrooms or for students on site at your facility can pique interest and get students thinking about skills they want to develop.

Finally, aim to do a better job of highlighting opportunistic career paths and development opportunities during recruiting. This is particularly important for recruiting younger generations, which place particular value on career growth and development.

“Manufacturers need to become as deliberate and strategic about managing skills as they are about managing people.”

Reskilling the Current Workforce

Reskilling is a known and big concern, with multiple dimensions.

Shoring up training approaches: Training has been a challenge for everyone during the pandemic. Given the changes in the workplace and workforce, this is a good time to look at development approaches and shore up weaknesses to enable reskilling in the coming years.

Manufacturing training, particularly in factories, varies widely. It is not uncommon for training to be more informal (“shadow this person”) than formal, or limited in scope to operating the equipment, with emphasis on the what or how (“do this but not this”) but not the why. In an increasingly automated environment, teaching employees to think and understand is important for both safety and efficiency (e.g., reduced waste).

Managerial training is a common void. Our study of managerial effectiveness found that 59% of managers overseeing one to two other people received no training at all and 42% resorted to mirroring the managerial style of a former boss.7

M4.0 environments will require different types of training techniques — whether new job aids or simulations. One easy-to-implement idea is building digital work instructions into new technology, creating an interface that shows operators every step of the process with the specifications needed to make the product. This ensures that every operator is following the same best-practice process.

Personalizing training: As roles become more specialized, training should become more tailored to individuals, with personalized plans and training timed for when employees need to begin putting new skills into practice. For example, a younger operator with strong technical or analytical acumen won’t have the same level of experience with the machines to know when they will break or the manufacturing mindset to understand the data to be collected and analyzed. That person’s training plan should focus more on operations. On the other hand, an experienced operator will need more emphasis on reading the screen, understanding the data it is presenting, and then using those insights to make decisions.

Having a formal training program also shows employees the skills they need to develop to get to the next level. For example, if an operator wants to become a lead operator, then he or she can find and take training that is necessary to qualify for that role. If an operator takes a specific technology training course and demonstrates expert knowledge of the technology, he or she can become the floor subject matter expert to whom others come for assistance. Extending access to training portals to a broader range of roles — not just management and other indirect roles – will be increasingly essential as training becomes more personalized.

Incentives to reskill: Many manufacturers provide a pay incentive for training — for example, an extra $0.25 per hour for meeting a certain skill criterion. If you do this, however, make sure you get a return on it by ensuring employees are staffed properly and are applying what they learned in their work. Many organizations do not follow up adequately.

Measuring training impact: One significant void in many organizations is a process for understanding and tracking the impact of training. Measurement of classroom training, where it exists, typically focuses on the student’s immediate retention through an end-of-lesson test, as well as the effectiveness of the instructor. Few companies measure how well employees apply the learnings on the job.

Ideally, training measurement should align with important operational metrics. For example, a supervisor notices that the scrap percentage is up in a particular area. That signals a potential need to retrain the operators. Following the training, the company should follow up by looking at particular metrics — scrap rate or first-pass yield — to look for improvement. This is also a way to determine whether you need to improve training approaches.

“With more investment in attracting and developing skills, you need to make sure those skills aren’t walking out the door.”

 

This type of measurement should be systematic and broadly employed, with data that is up to date and available to feed other functions (e.g., human resources and performance management).

Rotations: One idea for broadening current skills is to consider rotational roles, where that makes sense. This is an increasingly popular approach for building a holistic skill set, although in manufacturing it is still more common in larger companies and, even then, for management or engineering positions. Rotations among areas is one simple way to do this in the factory, focusing on activities that are fairly similar. For example, today I am an operator in Area A. Tomorrow, I am an operator in Area B. Of course, this type of flexibility depends on many factors, including unionization and job classifications.

The bottom line is that, as M4.0 takes off, manufacturers will need to make strategic investments in training — otherwise, they will struggle with reskilling. Employers recognize this. In the NAM Manufacturers’ Outlook Survey, executives said that if a workforce training investment bill is enacted, the top two most impactful uses of dollars would be funding for on-the-job training (74%) and funding for incumbent worker training (57.5%).

Retaining Key Skills

With more investment in attracting and developing skills, you need to make sure those skills aren’t walking out the door.
One risk is retaining experienced workers’ knowledge before they retire. That should be happening now. Very skilled craftsmen know how to diagnose and address issues, particularly those that have bothered them in the past: “The machine acted this way. This action fixed it, or this machine needs to be torqued to this setting, whereas everything else needs this setting.” Technology has the ability to identify the “weak signals” machines exhibit before becoming audible or visible to human senses. Capturing and digitizing this insight not only impacts performance; it passes knowledge on to newer workers.

The other risk is attrition — particularly given today’s more fluid careers. Many studies and reports document the tendency for younger generations — most notably, millennials — to switch jobs more frequently than their elders. A recent Gallup study showed that millennials are three times more likely than their elders to have changed jobs in the past year and 10% less likely to expect to be with their current employer in a year.8

“Employers need to become more deliberate and strategic about managing skills.”

 

 

One way to combat this is to be more deliberate about job descriptions and organizational structure so that you can demonstrate a career path that motivates people to stay. With operations evolving, it may be hard to be too specific — but even having general direction can help: “1-2 years as an individual contributor, 2-3 years as a supervisor/lead, 3-5 years as a manager.” It is also helpful to show how the role can progress into other functions, such as IT, engineering, operations, or maintenance.

Here again, quality of management can play as much of a role in retention as it does in day-to-day operational performance. As noted earlier, our research9 found that many companies don’t prepare new managers well for their role.

Tracking and Measuring Skills

If you don’t already use a skills index or inventory— or don’t track skills comprehensively across the organization — this is a good place to start. A skills matrix is essentially an inventory of your existing skills on one axis, with the necessary skills for your operations on the other.

A good skills matrix can provide a heat map that highlights gaps or sources of skills that you may want to tap for open/new roles. For example, it can tell us: “We don’t have people who know how to perform non-destructive testing on welds.” “Everyone who is confined-space trained is within three years of retirement, so we need to start training people to fill this need in future years.” “Or, our electrical planner is close to retiring, and we don’t have anyone else who can perform electrical jobs.” In the case of one client, having this information could have facilitated a mutually beneficial career transition and avoided a months-long search for a maintenance planner. With a comprehensive inventory and tracking of skills, the company could have looked inside for a current employee with key knowledge associated for this role who is in the later stage of a career and wanted a less physically demanding job.

There are various ways to conduct skills mapping and tracking. A skills matrix may employ a binary method (yes/no) or a scale (1-5). Scales can help reveal degrees of weakness, not just gaps, within current resources. Regardless of the approach, it is important that this process is automated and digitized — i.e., not recorded on paper and stored in file cabinets — to give the plant or company the broadest awareness of the skills it already has.

Of course, you will need to have defined targets to track against, not only for current labor planning and progression, but also for the M4.0 journey ahead. For example, if you want to implement a certain operations technology on your manufacturing line by the fourth quarter of 2022, you will need to make sure you have the appropriate people in place to support and maximize that investment.

Adaptability Will Be Key 

M4.0 is not just about using technology and automation to run more efficiently.It is also about being able to adapt to a faster pace of change in markets, competition, and customer expectations.

The direct and indirect manufacturing roles that will propel successful M4.0 adoption and enable greater agility will require an increasingly complex mix of hard and soft skills. Employers need to become more deliberate and strategic about managing skills. The specific strategies to employ depend on your current and evolving operations, but success will require focused attention in all five areas included above.   M

Footnotes

1 Towards a Reskilling Revolution, World Economic Forum and Boston Consulting Group, January 2019
2 The Upskilling Crisis: Effectively Enabling and Retraining Employees for the Future, West Monroe Partners, September 2019
3 West Monroe’s Quarterly Executive Poll, March 2021
4 NAM Manufacturers’ Outlook Survey, First Quarter 2021, March 9
5 The Upskilling Crisis: Effectively Enabling and Retraining Employees for the Future, West Monroe Partners, September 2019
6 Press release, United Airlines, February 5, 2020
7 Companies are Overlooking a Primary Area for Growth and Efficiency: Their Managers, West Monroe Partners, March 2018
8 Why Millennials are Job Hopping, Jennifer Robison, Gallup, October 2019
9 Companies are Overlooking a Primary Area for Growth and Efficiency: Their Managers, West Monroe Partners, March 2018

Relying on outside expertise can be a starting point, but lasting results happen when manufacturers develop their own digital bench strength.

Plant operations require core roles to be on site to successfully produce, assemble, and modify end products and conduct other operations. Because manufacturing organizations are often clustered by skill sets, often there is central core team of machine operators supported by maintenance technicians, quality inspectors, CNC programmers, material handlers, process specialists, manufacturing engineers and other specialty roles and final inspection teams.

In tandem, plant managers and other team leaders seek improvements in such areas as capacity, downtime, throughput, and scrap. All of these help OEE as well as the economics for the site and product margins. However, these tend to be “side jobs” or occasional initiatives to deal with specific problems.

As manufacturing technology evolves, the smart factory becomes more than an aspirational concept. Real capital is being poured into either retrofitting existing sites or dramatically replacing legacy operations with entirely new or near-new plant infrastructure. Yet with many Industry 4.0 initiatives, a suite of data expertise skills is often absent from the plant – a mix of roles representing data architects, data engineers, data analysts and data scientists. This often means that plants aren’t effectively or quickly leveraging things sensor data, batched or historian data, and engineering text notes given the availability of other skill sets and technology.

>In many cases, data experts are hired externally as consultants and reside within a corporate innovation center or IT hub. They are commissioned as needed to assist with select initiatives or specific problems at a site. As a result, they can be foreign to the site itself and, even more importantly, foreign with the resident skills of the teams they need to collaborate with to address specific data-dependent issues. Ideally, leadership should strive to make the data-savvy experts bridge the proverbial digital divide between existing and future infrastructure.

Getting to Better, Faster

Take a past example of efforts to improve product yield at a plant for making disc brakes for aircraft braking systems. For this initiative, data experts were brought to a site and walked through the process so they understood the flow of the disc brakes from raw material to finished product. The data analytics teams also met functional teams with a focus on the design and maintenance engineers who were responsible for improved yield and reduced scrap. The data experts had to learn the plant lingo, abbreviations, and other nuances. After the initial process review, there was a follow up to obtain clarity on the problems to be addressed, along with how KPIs were defined and measured.

With many Industry 4.0 initiatives, a suite of data expertise skills is often absent from the plant.

 

A clear problem definition is a very important part of any data analytics initiative, just as it is in any problem-solving effort. With a clarity of purpose and an understanding of the plant manufacturing process, the data experts conducted a detailed data review to identify missing or spurious data. Each available data source was discussed. Each data field with issues was also reviewed with the manufacturing and design engineers to define rules on how to treat such extraordinary data values (such as using an average of before and after values, or otherwise eliminating the data).

After this due diligence was completed, the data experts were now able to define the project scope, estimate the time to completion and provide a cost proposal. Upon approval, the data experts began their work and ultimately identified specific changes to improve the plant’s yield. This entire effort of familiarizing the data teams with the plant, its jargon, the data and approval of a cost proposal took two to four months, which is a common timeframe. This was all valuable time lost because the data experts were not part of the plant’s organization (Figure 1).

In cases like this, a strategic question presents itself: how can the plant ensure expedient collaboration between core functional roles like design or manufacturing engineers and specialty roles like data analysts while using available AI or ML-based technologies? Does the nature of a product quality issue benefit from computer vision systems to detect and score cosmetic or structural defects more quickly on a part? Can historical failure data and failure modes be grabbed and visualized from cloud servers for design engineers to see on a tablet? Can maintenance teams reduce delays in knowing about pending equipment failure when predictive models are deployed to score likely failures based on subtle but harmful variations in ambient temperature or subtle electrical surges?

In the example of disc brakes, external data consultants were able to identify 20+ areas for improvement based on resolving multiple operational categories. As an example, improvements addressed equipment maintenance problems, utilization of older design fixtures, and the cross-usage of multiple machines and multiple tool sets. All of these were causing poor yield, but no single culprit was easily attributed to the earlier causes of scrapped brake discs. These issues were invisible to the design and manufacturing engineers typically tasked with problem solving. In this case, in collaboration with outside analytics consultants, root causes of scrapped brake discs were eventually identified and addressed, raising yield to satisfactory levels.

An Old Problem with a New Cause

In the 1990s, Six Sigma Black Belts and Master Black Belts were all the rage.They generally started as a central team of key experts who trained people in the plant functions to be Green Belt or Orange Belt certified. For solving complex plant problems, a Black Belt or would be assigned from the central team, solve the problem and move on. Quite soon the problem would reappear in a different flavor, or as an unintended consequence.

Over time this led to training plant employees to use Six Sigma tools and develop their own Black Belts and Master Black Belts. This brought full-time capability to plants and integrated these skills into the plant organization as their critical problem solvers. That was when the application of Six Sigma tools took hold and became leveraged in the plant on a daily basis. Having “free” knowledgeable and embedded resources in the plant eliminated the need for cost proposals, approvals, and time spent getting to know the plant. Case in point: Over the course of five years, General Electric deployed Six Sigma training, effectively upskilling every employee in the company. They provide both tools and skills to enable future process improvements and resulted in company savings of $12 billion1.

Today, we are in the same situation, but now with Data Black Belts – aka data analytics experts. The opportunity to upskill in-house expertise to shape ongoing improvements has never been stronger given any plant’s rich data repository.

Another good case study is that of Tata Steel2. Taking on a committed journey, they trained approximately 130 employees to be adept and comfortable with analytical techniques to help them solve complex issues like getting the right set points to improve throughput by 8 to 12 percent. As a result of optimizing their superheating process for steel production, immense financial gains (and global acclaim) were achieved. In a big way, their operations and teams evolved. Tata Steel embraced upskilling their in-house talent and, arguably, created their own next-gen set of Data Black Belts. This is common for several leading-class manufacturers who embrace not only using new technologies and tools, but also investing in the right mix of talent to capitalize on digital transformation opportunities using data.

 

Leadership should strive to make data experts bridge the digital divide between existing and future infrastructure.

 

 

The analytical tools and capabilities are applicable in process and discrete industries, but the implementation into the plant workforce, by upskilling, is the key element to make it impactful in a continuous and sustainable manner. Often with the initial assistance with external analytical resources, most companies find that investing in its own people has paid dividends. Getting experts from outside to help certainly pays off, such as for fast proofs of value on pilot projects, but teaching plant teams “how to fish” while using relevant technologies, developed models and/or tools will make investments more impactful in the long run.

Data for the Whole Team

A recurring theme of frustration with plant operations and the manufacturing sector overall is about having the right talent – or lack thereof. This not a news flash. In the NAM Manufacturers’ Outlook Survey respondents express their primary business challenges. In Q1 2021, the second highest category was “attracting and retaining a quality workforce” (cited by 65.8% of the responding manufacturers – falling second only to worries about increased raw material costs)3. In Q1 2020 using the same measure, this workforce deficit issue ranked as the top concern among responding manufacturers4. Can a stronger and more collaborative presence of data engineers and analysts help other roles operate more efficiently or be more empowered to run their equipment or reduce scrapped parts? We believe so and it proves out with many firms that invest this way.

A final thought: there is typically little dispute about the investment tied to indirect roles at a plant such as Six Sigma members, HR directors, safety, environmental, sustainability and other support functions to keep the site and workers improving, compliant and in good health. Arguably, the same can be said for any plant’s extended team to invest in, and organize for, skilled analytics experts. These roles also contribute to the plant’s overall health. There is no reason not to apply data analytics to safety (such as near real-time alerts based on injury/risk scores), HR (a bank of employee churn estimates), environmental (continuous set point adjustments for plant power optimization) and other aspects of a plant.

As factories become smarter, so must the staffing and collaboration models that impact the profitability of a plant. While the cliché trilogy of improvements hailing from “people, process and technology” is all too familiar, operations will not improve without the right mix of human talent and skills pointed at the right opportunities.

Skill Set Audit

Shifting from External to Internal Ownership

Organizations will hire external analytic consultants for assistance with ways to solve challenges like improving product yield on a line, addressing poor process optimization, or gaining a better picture of customer data that has never been simple to see in the past. For the benefit of the manufacturer, a transition plan should always be written. This improves the chance that realized gains from pilot projects or multi-phase implementations can be sustained. As part of these transition plans, necessary skill sets should be itemized and defined.

In one case, an automotive OEM had not prepared their in-house teams to take over the updates and modifications of certain customer scoring models. These models were used for knowing likely future customer satisfaction measures which impacted actions owned by sales, service and parts operations. The customer scoring models were built using software they currently licensed and solely ran on data that the OEM possessed.

Yet the mechanics of the model’s scoring algorithm were not fully internalized by in-house team members.

When the ask had been made of the OEM’s staff to own these processes later in the year, there was an absence of necessary skills which threatened this expectation. As part of the plan to ensure they could take over future updates and make modifications to these customer satisfaction models, training plans were written that also included classes to take and the sequence in which they should be taken. As part of the transition package, this firm was also asked which outside market skills the OEM should consider hiring in the future. To that end, a full job description for a data scientist was drafted and submitted to the OEM. This allowed them to quickly start recruiting for the right talent – in this case, an individual contributor with necessary analytical skills. It was realized no amount of coursework was going to fully satisfy the transition plan until appropriate skills were acquired and made part of the OEM’s analytic team.

Footnotes

1 Six Sigma Case Study: General Electric, 6Sigma.us, May 22, 2017
2 McKinsey & Company, How a steel plant in India tapped the value of data—and won global acclaim, March 8, 2021
3 NAM Manufacturers’ Outlook Survey, First Quarter 2021, Figure 6, March 9, 2021.
4 NAM Manufacturers’ Outlook Survey, First Quarter 2020, Figure 3, March 18, 2020.

 

Next Gen Leadership

One of the major effects of the pandemic that many companies are trying to understand is the impact of remote working. Digital technologies enable not only administrative people to work remotely but also to conduct more aspects of operations remotely.

But the heightened need for digital technologies over the past year builds upon a trend that has been developing over many years. Companies have been slowly digitizing processes from design to manufacturing to assembly, with the goal of an end-to-end digital process in mind.

For more than 10 years, MLC has been tracking the implications of digital technologies on the way manufacturers organize themselves and conduct work. The theory is that the injection of advanced technologies into the manufacturing organization will over time reshape the structure of the organization and its decision-making processes.

What we have seen over the years is a clear shift from traditional command-and-control organizational structures to decentralized structures in which business units have considerable autonomy, a model that appears to be a sort of half-way house to a flatter, collaborative structure.

In our 2010 Leadership study, for example, 67% of the respondents said their companies were organized based on either a highly or somewhat centralized command-and-control model. The decentralized and collaborative models each garnered about 16%.

The results of our 2021 Factories of the Future study, published in February, clearly showed the seismic shift that has occurred. Only 6% remained with the command-and-control model, while 74% were in the decentralized camp. Interestingly, the collaborative model has barely inched forward from 2010, despite repeated expressions of intention by manufacturers to embrace it. Only 18% said this year that they had arrived at this organizational form.

But the tide, pushed by the pandemic’s inflection point, may be about to turn. In MLC’s new Leadership survey, 48.5% of respondents said understanding how the company should be organized as a result of advanced technologies is the number one challenge for leadership. That’s up a whopping 23 points from last year.

Seismic shifts take time. The collaborative model’s place in the sun may be just around the corner.– David R. Brousell

 

Next Generation Leadership & the Changing Workforce

Competing for Talent in a Tech-Centric World

Companies need to go all-in on embracing digital tools, understanding demographic shifts in the workforce, and developing intentional succession planning.

 

As evolving technology continues to shape manufacturing’s future, manufacturers will increasingly need to compete with innovative companies across a range of sectors for talent. In order to do so, businesses need to build forward-looking leadership teams that understand the desires of the rising workforce and what those future employees prioritize.

Advanced technologies should be firmly at the center of this effort, whether that means using virtual reality capabilities to provide workers with more innovative training and upskilling, exploring new ways to accommodate remote employees, or incorporating knowledge of new digital tools into the purview of senior leadership.

Along with embracing the way technology is reshaping the sector from the C-suite all the way to the shop floor, manufacturers that understand the growing importance of fostering a values-driven organization and company culture will fare better in the competition for talent not just among manufacturers but across the broader economy.

Time to Rethink the Employee Value Proposition 

As technologies such as automation, Internet of Things-enabled devices, virtual reality, and cloud computing become more ubiquitous throughout the manufacturing sector, industrial companies will find themselves competing for talent with rivals they haven’t dealt with as much before; traditional automakers and their suppliers, for instance, will be up against the Amazons, Teslas, and Microsofts of the world.

That will require companies to rethink their value proposition to existing and prospective employees. It’s clear that employees want a modern, technological workplace; a December 2020 survey of nearly 1,170 frontline manufacturing workers found that 52% of respondents would consider leaving their current jobs to work in a more digital environment.

What’s more is that “digital tools are being under-provided,” according to that survey report from Parsable, a connected worker platform company. “Fewer than half (47%) of frontline workers surveyed are offered mobile technology (smartphone, tablet, wearable, etc.) to help them do their jobs better. Seventy nine percent still use paper to follow work instructions and track progress, resulting in lost visibility and lost opportunities to improve productivity, quality, and safety at scale.

There may be a perception in some cohorts—millennials, for instance—that legacy manufacturing companies lag in adoption of advanced technologies, but these businesses have a chance to make clear just how much technology is playing a role in the industry right now. Manufacturers should explore how technology might enable workplace flexibility, how digitizing some human resources functions could be advantageous, or new ways that automation could enhance training and reskilling efforts.

Taking such actions would demonstrate an understanding of how and why technology appeals to prospective employees, many of whom want to join a tech-forward company so they can continue learning and growing as technology evolves. Much has been written about how advanced Industry 4.0 technologies can streamline operations and boost efficiency, but investing in these technologies is also crucial for attracting and developing a high-caliber workforce.

“Beyond technology, manufacturers also need to keep up with the growing importance of environmental, social, and governance (ESG) issues to employees.”

Demographic Workforce Shifts 

Beyond technology, manufacturers also need to keep up with the growing importance of environmental, social, and governance (ESG) issues to employees, as well as new trends in how people work. Organizations should look at ESG as a workforce strategy that will be especially key to attracting new talent in an industry already grappling with significant job openings and looming implications of an aging workforce.

As businesses in all sectors move away from having strictly a shareholder focus and toward a broader stakeholder focus, it will become the norm for prospective talent to factor how well they align with a company’s ESG priorities into their decision about whether to take a job. All companies are going to have to adjust to these newer expectations, but manufacturers could face unique hurdles given the perception that the sector is less sustainable than other industries.

ESG priorities will be particularly important as socially conscious millennials and Gen Z-age workers rise in the workforce. (And, in fact, those two groups already make up 46% of the full-time U.S. workforce, according to Gallup.) But shifting demographics will also push manufacturers to be more flexible with employee work arrangements, allowing people to work in ways they know they work best.

The surge in remote work from the pandemic will make it tough to go back to an environment in which in-person work is required the way it was before, and manufacturers need to leave that version of the world behind. Embracing technologies to allow flexible work arrangements will be a baseline requirement for businesses to be competitive moving forward, and not just for white collar office workers; companies can now hire remote plant managers, as long as they have the digital tools to be able to monitor the plant location from afar.

These possibilities also mean companies outside of major cities face a new landscape when it comes to recruiting and retaining employees. Their talent pool may be broader if they have the technological capabilities in place to hire someone remotely, but they also may face increased competition they are less accustomed to than businesses in larger metro areas.

Intentional Succession Planning 

Strong leadership teams and intentional succession planning are necessary foundations to any efforts around technology and workforce development. Too many manufacturing companies lack well thought-out succession planning at the executive level, but having such plans in place is key not just for operational success but also for developing clear values and a cohesive company culture—things that are becoming more important in the battle for top talent.

 

 

“Companies need to determine where they may need to make wholesale cultural shifts to attract the next generation.”

 

 

Companies should develop a plan, identifying critical roles all the way from top executives to site supervisors, plant managers, and shift supervisors, to formalize who is next in line for these positions. Teams should also have a process for training those who are part of those succession plans to ensure they have developed the skills they need by the time the transition arrives.

Technology can be an important tool in developing clear succession plans, especially for manufacturers who rely on the longtime knowledge of some C-level executives but don’t have that knowledge formally documented in an accessible way. Seventy-nine percent of respondents to Parsable’s survey of frontline manufacturing workers said they use/rely on paper-based documentation to follow work instructions or track their work. Digitizing those processes—from high-level to shop floor—is necessary if manufacturers want to ensure smooth operations as leadership teams change.

Fostering the Future 

Manufacturing leadership teams should be proactive about performance management and identifying which employees excel in specific areas, so they can provide the resources needed to cultivate those skills. But part of a tech-focused future means that leaders can’t always evaluate employees based on today’s standards—rather, they must evaluate them based on how well prepared they are for the future of manufacturing, including a heavy focus on digital fluency and ability to adapt to change. Senior leadership should also have strong technical backgrounds themselves.

Equally important in developing a high-caliber workforce is evaluating compensation structures, reward systems and benefit plans to make sure they are still competitive. At a higher level, though, companies need to determine where they may need to make wholesale cultural shifts to attract the next generation of employees and leaders.

“Gen Z and younger millennials want leaders who support a diverse and inclusive workplace,” according to Gallup’s article from March. “They demand respect, equity and inclusion—and they are voting with their consumer and employment choices. Diversity, equity and inclusion (DEI) is not a ‘nice to have’ for this generation; it’s an imperative that is core to their personal identities.”

Leadership needs to set the tone for such priorities at the executive level and make sure they are incorporated and communicated throughout the entire organization. The only way for manufacturing companies to cultivate a cutting-edge, next generation workforce is for the current leaders to recognize the importance of these shifts in technology, ESG and employee values and adapt to them.   M

Going for Growth

The World Economic Forum’s Lighthouse Network is pointing the way to enterprise-wide transformation, business model change, and economic growth, believes the WEF’s Head of Advanced Manufacturing, Francisco Betti.

“My belief is that manufacturing is going to play a major role as businesses and economies are transformed in the years ahead.”
Francisco Betti, Shaping the Future of Advanced Manufacturing and Production, World Economic Forum.

Established in 2015, the World Economic Forum’s (WEF) Platform for Shaping the Future of Advanced Manufacturing and Production was created to reflect the growing recognition of manufacturing’s fundamental role in global economic growth. It now comprises a group of over 130 private sector companies, governments from across the world, plus representatives from academia, civil society, and labor unions, and is one of 17 WEF global platform initiatives which range in focus from Global Trade, to the Future of the Digital Society.

In 2017 the WEF adopted a sharper focus on the Fourth Industrial Revolution. A year later, the Advanced Manufacturing Platform launched a unique new project – the WEF Global Lighthouse Network. Its mission is to identify, recognize, and promote manufacturers who have achieved proven operational and financial impact in the adoption and deployment of transformational 4.0 technologies and who can act as beacons of digital industrial progress. Initially focused on individual production sites, the scheme soon expanded to embrace end-to-end value chains and now features 69 Lighthouse examples of transformational success from across multiple industrial sectors and numerous countries around the world.

In our latest Dialogue with a manufacturing industry thought leader, the Head of the WEF’s Platform for Shaping the Future of Advanced Manufacturing and Production, Francisco Betti, talks to Manufacturing Leadership Council Executive Editor Paul Tate about what the Lighthouse network is teaching the manufacturing industry about the benefits of digital transformation, new criteria focusing on sustainability, enterprise-wide transformation, and upscaling operations for the future, and how digital manufacturing operations are creating a new foundational mindset for business model change and economic growth across the industry.

Q: What excites you most about your role at the WEF?

A: In the current post-pandemic world, I think the most exciting thing is the potential that advanced manufacturing has to transform not just business operations, but to transform whole business models to enable a new era of economic growth. The promise of advanced manufacturing, and the combination of technologies that represents, is unique. My belief is that manufacturing is going to play a major role as businesses and economies are transformed in the years ahead. That’s very exciting and it keeps me extremely motivated every day.

Q: What’s the purpose of the WEF’s Platform for Advanced Manufacturing?
A:
We are continuously building, growing, and animating a global community of executives and leaders from government, academia, and civil society who are looking at how to make manufacturing work for business, government, society, and the environment. So, we are constantly incubating ideas, hosting discussions, and developing insights to bring everyone to a common level of understanding of what challenges and opportunities there are for the future of manufacturing. Most importantly, we are always looking for gaps in the global production ecosystem that require public/private cooperation and new kinds of partnerships to move the agenda forward in the global transition towards advanced manufacturing.

“All these Lighthouses created a movement where every employee in the company became part the transformation strategy, and every level of employee played a role.”

 

Q: What challenges keep you awake at night?
A:
When you look at the current landscape, it’s a scenario characterized by winners and losers. Our mandate at the Forum is to make sure that we bring everyone on board in the digital transformation of manufacturing. We may be partnered with some of the largest companies in the world, but it’s also about the small and medium sized enterprises, who are often the ones struggling the most, first to understand what digital transformation in manufacturing means, or looks like, but also how to embrace new technologies successfully. In some developing countries, for example, even a basic access to technology is a real challenge. So, our challenge is, how can we all work together – the private sector, governments, academia, and civil society – and cut across different industries, sectors, and geographies, to help the global production community transform itself at speed and scale and contribute to building a better future?

Q: How did the idea of a Global Lighthouse Network originate?
A:
In 2017 we were doing some research with McKinsey & Company trying to understand what was holding back technology adoption in manufacturing across different industries and geographies. After consulting with over 400 senior executives in operations across different companies, we realized that only 30% of companies, if not less, were actually seeing the benefits of technology adoption across their facilities and value chains. The majority were stuck in what we define as ‘Pilot Purgatory’. There were massive investments being made in new technologies, and thousands of pilot projects underway, but very few were making it to the shop floor or delivering real operational financial value. So, we figured out something was wrong. Most of the global manufacturing community were stuck in this piloting phase, but there was a certain percentage who were starting to see the light at the end of the tunnel and actually delivering new operational and financial value through the adoption of technology.

We also realized that we needed to move away from just talking about individual technologies. We needed to talk about real use cases. Companies are trying to address very specific production or business problems through the adoption of practical use cases, which are very often the result of a combination of multiple technologies.

So, we decided to develop a mechanism that helps identify those who are part of the 30% showing value and try to convince them to open up their facilities and their doors so that others can come and learn from them. Today, if you want to see what Industry 4.0 and advanced manufacturing looks like, I think the Global Lighthouse Network is the best ‘go to’ place for every company trying to get started in this digital transformation journey.

Q: What’s the scope of the Lighthouse Network today?
A:
We currently have 69 members in the global Lighthouse network, all selected through an independent review process and assessed by an independent expert panel of over 30 of the world’s most experienced people in the industrial space.

The largest concentration of Lighthouses is probably in China and Asia right now. But most of these are greenfield sites, and it’s much easier to be a Lighthouse when you start from scratch, rather than transforming an already up and running facility that is 50 or 100 years old, which is more often the case when you look at facilities across Europe, the US, or the Americas more broadly.

What is interesting is that we have companies from a large variety of sectors, and that is by design. We have kept this cross-industry approach because, while every industry sector tends to develop its own different tailored applications, some of the operating principles, some of the enablers, and some of the journeys that companies have gone through are common across different industry sectors. The opportunity for cross-learning here is massive. It’s huge.

Q: What led you to expand the scheme from its initial single site focus to embrace end-to-end value chains?
A:
When we first started to first focus on the successful deployment of use cases on the shop floor, we immediately realized, even after the very first wave of applications, that this is not enough. Many of the companies that have successfully transformed digitally are going beyond factories. They are transforming their entire value chains, connecting them end-to-end. And why that is important, why it is essential, is because it provides a foundation, not just for the transformation of operations, but for the transformation of business models.

If, as a company, you think about how you drive growth going forward, especially in the post-pandemic scenario, it’s by connecting your value chains end-to-end so that you will be able to get access to the data to inform your decisions at all different stages of your supply chain, to be able to expand and scale operational excellence, to develop and create new customer experiences and, therefore, to be able to try to grow.

We are still looking for the next generation of use cases at a factory level, of course, but we are also looking at companies that have been successful in connecting their value chains end to end to set the foundation for new customer experiences, business models, and growth.

 

“There are over 10 million manufacturing facilties around the world today. Let’s see how many Lighthouses are really out there.”

 

 

Q: What has the Lighthouse Network taught us about the impact of advanced manufacturing? What areas of real benefit have you found most predominant across the Lighthouse companies involved?
A:
We have identified five major KPI areas across which every Lighthouse, in one way or another, has made significant progress. In some cases, it’s up to double their previous performance, year after year, and even going beyond that, so it’s extremely enlightening for everyone to see what they have done.

The first is Productivity. Whether it’s factory output, or productivity, or OpEx, or quality cost reduction, every Lighthouse has made tremendous progress through the adoption of 4.0 use cases and advanced technology.

The second, which is a priority in today’s world especially, is Sustainability. Almost every lighthouse that has invested in digital transformation has had an extremely positive impact on sustainability. They have realized that it’s not a matter of cost reduction versus sustainability, or successful transformation versus sustainability, or productivity versus sustainability, but that these all go hand in hand. It’s by improving productivity through digital transformation that they are also reducing waste production, reducing materials consumption, and becoming more energy efficient.

For example, there are some Lighthouses that have reduced energy consumption by as much as 50%. And in the latest cohort of Lighthouse announcements this year, we had our very first Net Zero Lighthouse. So, we are starting to see Lighthouses not just driving the productivity discussion, but also the sustainability discussion, and becoming the ‘go to’ place for companies trying to understand that direct connection about how to meet Net Zero targets.

The third area is Agility. Whether it’s through the reduction of inventory, or the reduction of lead time, or the shortening of change response times, they have all made significant progress. Agility matters because we will need to respond very fast to disruption and changing demands in the post post-COVID world. Agility and flexibility are going to be essential to a successful response to changing markets, and to constantly and ever-changing environments which, most likely, is where we are heading right now.

The fourth area is Speed to Market. Whether it’s because companies have just reduced the time it takes them to get products to market, or the reduction of design-to-action time, this is another critical area of future improvement. We all know that customers want things faster than ever, right?

And that connects to the final point, which is Customization. The ability to be able to rapidly tailor products based on demand, or reduce load sizes, or be able to increase configuration accuracy, have been some of the major impact areas we have identified.

Q: When you stand back from these five main KPIs, are there other aspects that you’ve noticed in Lighthouse company performance?
A:
We’ve also learned that all these lighthouses were not only successful in transforming themselves and seeing the operational and financial impact, were not only able to transform their operations to create more resiliency to navigate the COVID-19 pandemic in a better way than anybody else, but through these transformations they are setting the foundations for growth in the years to come.

And that’s how the world of operations connects in a very unique way to the world of new business models for the very first time. We have seen this especially in the Lighthouse companies that are looking at operations not just as a cost center, but as the foundation that will allow them to set their organization up for success in the years to come, mainly through the transformation of their businesses and by creating new customer experiences.

I also think that in the post-COVID scenario there’s going to be no resiliency without sustainability. All these Lighthouses are starting to factor in sustainability as one of the major drivers towards successful resilience.

“Sustainability is a critical aspect in the current context. We are now discussing how to ensure that sustainability becomes an even stronger criteria when it comes to the identification of Lighthouses.”

Another outcome is around workforce transformation. If there’s one thing that all the Lighthouses have in common, it’s that they have all massively invested in upscaling and reskilling their workforce. They have developed new approaches to create a pull effect with technology by engaging shop floor operators and shop floor engineers, working closely with the research and development teams, to develop new technology applications that best fit their needs for the often unique facilities in which people operate in different sectors. It’s also very interesting to see how some Lighthouses are interacting with educational systems when it comes to the development of their workforce. Whether it’s by partnering with local colleges or universities, where you have shop floor engineers going back and forth between education and front-line shop floor experience, I think these new types of partnerships for retraining and reskilling will gain further emphasis going forward.

One final thought. Hopefully, these Lighthouses will also be able to maintain the same pace of innovation that they were able to develop before the pandemic, that accelerated during the pandemic, and that will allow them to continuously differentiate themselves from the rest in the future. I’m passionate about innovation, and when you look at some of the companies in the Lighthouse network who are taking a bottom-up approach to innovation, that are allowing new use cases and solutions to emerge in places that are relatively remote, like facilities in Southeast Asia, or North Africa, or Latin America, and how those use cases are now getting adopted at a global company level. We have really seen a change in the way in which we are now driving and sourcing innovation in manufacturing. I think that’s fascinating.

Q: How can companies get actively involved in the Lighthouse Network?
A:
The Global Lighthouse Network is a World Economic Forum initiative in collaboration with McKinsey & Company. There is an open and transparent application process. Companies start by contacting us to express an interest and by filling in an application form to share information about the top five use cases they have adopted. These can be either within a single facility, or across their value chains. They then highlight their major achievements on both the operational and financial side. It’s important that companies have a track record that shows they have made significant progress across the key KPIs over time, so the level of maturity also plays an important role in the application.

There are also specific questions that focus on some of the enablers, like their strategy to upscale their workforce, the way they were able to build new teams with different skill sets, such as merging the OT/IT types of skills, or how they were able to align their digital transformation strategy in manufacturing with their sustainability strategy.

The last element of the application is what we call the change story. As I mentioned before, it’s not easy to build a Lighthouse when you are transforming a brownfield facility, compared to a building a greenfield site, especially if the brownfield is in a very remote location when even access to connectivity may be a challenge. So, the change story counts and plays an important role there.

The next stage is a site visit. Right now, because of the pandemic, we are running these virtually. The goal is to build a report, and to support the company in building the best possible application, which then goes to the independent expert panel. The panel convenes on a quarterly basis to assess all the applications, vote, and decide on those who finally get recognized as Lighthouses in the network.

“If you look at the Lighthouse network companies, they all went through an amazing mindset change process to get there.”

 

Q: What’s next for the WEF Lighthouse Network? Where does it go from here?
A:
We aim to continue growing and expanding the network in three directions, mainly because there’s a growing demand from the global manufacturing community to be able to learn more about these areas.

Sustainability is a critical aspect in the current context. We are now discussing how to ensure that sustainability becomes an even stronger criteria when it comes to the identification of Lighthouses. Not just because of all the pressure that’s coming from regulations and customers, but also because companies truly believe that it’s the right thing to do to become carbon neutral, or even carbon negative, as soon as possible. Companies are already factoring in sustainability as a key building block of their resiliency building strategies and realizing that it’s not a choice between productivity and sustainability, but that both run in parallel. So, we will be making sustainability a much heavier criteria in the selection process of Lighthouses for the future.

The second area is about expanding digital transformation strategies beyond manufacturing and into other functions of the organization, such as procurement, or marketing. That means taking this Lighthouse mindset and going beyond a production site or end-to-end value chain to transform operations across different lines of the company so we better understand how companies can take a more holistic approach to digital transformation by learning from what has happened in manufacturing and building on that. It’s the idea that manufacturing can be the foundation for the transformation of the broader organization. We believe that’s the next area where transformation is going to be happening at speed.

The third area is what I call the “upscale concept” — companies who are transforming multiple facilities, or multiple value chains, or multiple functions. For the very first time, we are starting to see some initial examples of that happening. I don’t think we have any company who is truly at scale yet. What we have are many companies who have successfully transformed one site, one value chain, and are in the process building a strategy to deploy and replicate that approach more broadly. That’s the third element that will be looking for as these new operational business models develop.

On final comment. There are over 10 million manufacturing facilities around the world today. We only have 69 in the network so far. Let’s see how many Lighthouses are really out there. The process of scanning and assessing this vast landscape of manufacturing companies is huge and we’re still at the very beginning. Even if we don’t find many more, we can at least help those other 10 million companies and factories successfully transform and accelerate their own transition towards advanced manufacturing.

Q: What kinds of skills do you think the next generation of manufacturing leaders will need in that new era?
A:
If you look at the Lighthouse network companies, they all went through an amazing mindset change process to get there. They’re now thinking about digital transformation and looking at operations and manufacturing in a new way. They’re not thinking about manufacturing simply as a cost center. They are thinking about the foundational blocks that will set their companies up to succeed and really advance in the years ahead.

What is common, or at least is present in all of them, is that there is a vision that is embraced and supported by the CEO. The future of operations and digital transformation has become a top priority on the CEO agenda. For example, at our recent gathering of Lighthouses we had 15 global CEOs on stage. That could not have happened a couple of years ago.

But more than that, we are under the impression that there is a trend that we will most likely see going forward where Chief Operating Officers will become the next generation of CEOs. Those who know how to successfully run operations by transforming them digitally are most likely going to provide top leadership positions in the near future. They understand the power of change, that transforming operations can be a foundation for success, and the importance of bringing people on board as an essential part of that process.

“There is a trend that we will most likely see going forward where Chief Operating Officers will become the next generation of CEOs. Those who know how to successfully run operations by transforming them digitally are most likely going to provide top leadership positions in the near future.”

 

You could argue that all these Lighthouses created a movement where every employee in the company became part the transformation strategy, and every level of employee played a role. That could be a shop floor operator who participated in the creation of a specific pilot for the development of a use case, that was then deployed, tried and tested, and utilized across the organization. Or the important role of middle management in the development of the strategy. Or the board in deciding to make the right investments in technology. I think that employees at all levels were engaged. The future of manufacturing is about the combination of technology and people, so investing in people, involving them, and creating that common sense of purpose is one of the keys for success.

Q: Looking ahead, what trends do you think will define the manufacturing industry by the end of the decade, in 2030?
A:
I think there are three main trends that have driven the transformation of manufacturing and forcing companies to rethink the way they were designing their operations. And these will continue to drive change in the post pandemic world.

The first is the fourth industrial revolution. Technologies are evolving at speed and scale, and you need to catch up with that change or you will be left out. It’s provided the ability to create new customer experiences by merging IT with OT and will continue to transform manufacturing in the years ahead, simply because technology is growing and developing exponentially.

The second big trend is the sustainability imperative. We knew, before the pandemic, that something was happening with climate change, and we needed to find new ways to future growth and to strengthen our value chains against potential disruptions.

The third is the geopolitical and economic landscape, which is extremely complicated and more volatile than ever before, especially since the pandemic brought in new disruptions. It’s not yet clear how long this is going to last, but it has already played an accelerating role when it comes to the transformations that we have seen.

It’s the combination of those three mega trends — the fourth industrial revolution, the imperative for sustainability, and the economic geopolitical landscape – all accelerated by COVID-19 and the pandemic, that will continue disrupting and having an impact on the way in which we will run manufacturing companies going forward. Companies will have no choice other than building more agility and flexibility into their operations, continue to invest in their people at the center of every company’s operations, and they will need to build greater resilience.

If you look at those mega trends in combination and you look at the years ahead, then the crises we will face will most likely intensify, happen more often, and have a deeper impact on our global value chains. So future proofing yourself against that is going to be extremely critical.

But on the positive side, if you transform digitally, and you do that by bringing your people on board, you have not only become more productive, you’re not only becoming more resilient, you’re not only becoming more sustainable, but you are setting your organization for growth in the years ahead. Why? Because you will be able to develop new customer experiences, transform business models successfully, and enter new spaces in which you were probably not present before. And that’s the conversation that every CEO wants to have in their company today: how to transform the organization for the next 10 years to come.

Q: Finally, if you had to focus on one thing as a watchword for the future of manufacturing, what would that be?
A:
It’s about growth. We are not just talking about the transformation of operations, we are talking about the transformation of companies, of businesses, to set the foundations for future growth. That’s going to have a positive impact on industry sectors, national economies, and the global economy. And because of the positive results we have already seen on the way we work, and on the environment, then it’s also about the future of society.   M

Fact File: World Economic Forum
HQ: Cologny, Geneva, Switzerland
Business Sector: International Organization for Public-Private Cooperation (NGO)
Membership: 1000+ Members (Industry,
Academia, Government, Research, etc.)
Funding: $396 Million (2020)
Employees: 600 (2020)
Presence: Europe, North America, Asia

Francisco Betti
Title: Head of Shaping the Future of Advanced Manufacturing and Production, Member of the Executive Committee, World Economic Forum
Nationality: Swiss
Education: Bachelor’s degree, political science, University of Cagliari, Italy; Master’s degree, international relations, Sapienza University of Rome, Italy.
Languages: English, French, Italian, Spanish
Previous Roles Include:
– Head, Advanced Manufacturing Industry, WEF
– Future of Manufacturing & Production Lead, WEF
– Government Engagement Manager, WEF
– Assistant Manager, International Development, PwC

ML Journal June 2021

Tackling the Talent Shortage Problem

 

 

I’ve been working in the manufacturing industry for 23 years. All during this time, and likely before, manufacturers have had difficulty finding skilled workers and filling open jobs. For example, in an article I published in 2004, a report from the NAM entitled “Keeping America Competitive: How a Talent Shortage Threatens U.S. Manufacturing” said that 10 million new skilled workers would be needed by 2020.

Today, the problem of skills and open jobs continues, with projections of future workforce needs indicating that the problem of finding qualified candidates for jobs is going to deepen.

In a report published last month, Deloitte and the Manufacturing Institute, a sister organization of the MLC, said that the manufacturing skills gap in the U.S. could result in 2.1 million unfilled jobs by 2030.

Baby boomer generation retirements, a continued negative perception of manufacturing in the general public including students, and an emerging set of digital functions and roles that manufacturers will increasingly need to fill, a dynamic that was vague in 2004, are all contributing to the workforce problem.

But there are a number of strategies and tactics manufacturers can employ to address the issue. Deloitte and the MI, for example, said in their study that diversity, equity, and inclusion employee recruitment strategies can “exert a growing influence” to help manufacturers fill open jobs.

This issue of the Journal offers a number of articles on the talent issue, particularly through the M4.0 lens.

In “Building M4.0-Ready Skills”, authors from RSM say that to realize the full value of M4.0, companies must elevate their approaches for managing and deploying skills aligned with new technology.

“As technologies such as automation, Internet of Things-enabled devices, virtual reality, and cloud computing become more ubiquitous throughout the manufacturing sector, industrial companies will find themselves competing for talent with rivals they haven’t dealt with as much before”.

And in “Competing for Talent in a Tech-Centric World”, authors from West Monroe say companies need to go all-in on embracing digital tools, understanding demographic shifts in the workforce, and developing intentional succession planning.

What’s your leadership and workforce plan for the future? Write to me at  [email protected]

 

Next Generation Leadership & the Changing Workforce

Reimagining the Art of the Possible

COVID has instigated a host of strategic and tactical changes in manufacturing which will be permanent features of the industrial landscape for years to come, rewriting leadership’s playbook and redefining the rules of competition.

The fallout of COVID-19 has affected many aspects of the manufacturing industry  over the past year, but one of the most significant has been a heightened urgency about adopting Manufacturing 4.0 technologies and techniques to deal with what was and continues to be unprecedented business disruption.

Many manufacturing executives acknowledge that the equivalent of several years’ change has been compressed into the past year. Companies had to respond quickly to the pandemic crisis, adapting production environments, standing up new health and safety protocols, enabling more front-line workers to do their jobs remotely, and, in some cases, pivoting to produce products, such as life-saving ventilators and masks, that they had never produced before.

A key ally enabling such rapid change, many found out, was M4.0 digitization. Those that had already embraced the digital model had an easier time adapting; those that did not had greater difficulty.

For manufacturing leadership, the time has been both a test and an opportunity. Leaders have had to deal with the daily stress of keeping the business running, making sure employees were safe and engaged, and reacting to often unpredictable changes in demand. But they have also been able to arrive at a broader view of what’s possible. Now, executives across the industry are in the process of deciding what COVID-compelled changes may take root in their companies and which may not.

The Manufacturing Leadership Council’s new research survey on Next-Generation Leadership and the Changing Workforce, one of MLC’s Critical Issues facing the industry, sheds considerable light on what COVID-related changes are top of mind for leaders, how leaders are thinking about their role in the digital era, what knowledge and expertise will be needed in the future, and what key challenges they envision along the way.

New disaster preparedness, resiliency, and remote working strategies will become permanent features of manufacturing leadership’s playbook.

The Effects of COVID

MLC research over the past year has clearly documented that manufacturers want to accelerate their adoption and use of M4.0 as a direct result of the pandemic. The new Next-Generation Leadership survey reveals the implications of this tighter embrace.

A solid majority of the new survey’s respondents, 54.8%, confirm that COVID-19 has increased management’s focus on digital transformation (chart 1). New procedures for remote working by leadership teams and employees, new disaster preparedness and resiliency strategies, and more cross-functional organizational structures are among the most significant implications cited by survey respondents (chart 2).

But when asked whether these and other management strategies and tactics will end up being permanent elements in leadership’s playbook going forward or just temporary, a result extraordinary in the annals of MLC research occurred.

Powerful majorities said that most of the changes they were asked about will become permanent elements of their leadership approach. For example, 68.2% said that new disaster preparedness plans, resiliency strategies, and response teams will become permanent features in their companies. Likewise, 57.3% said that more collaborative, cross-functional organizational structures will take root. And 62.2% expect that remote working by both leadership teams and employees will continue (Chart 3).

Defining Leadership 

As these changes take place, the definition of what operational leadership means in the digital era is becoming more deeply engraved in that metaphorical playbook.

In the new survey, 75% of respondents say that establishing a fact-based, information-driven culture of decision-making in their organizations is the statement which best describes what leadership means in the M4.0 era. This finding is up six points from 2020’s survey.

The two other statements which received the highest responses (survey takers were asked to rank their top three choices from a list of seven options) are: having the skills to orchestrate employees, customers, and business partners in a digitally driven, collaborative business ecosystem, at 55.5%, and understanding what it means to fully integrate digital technology in order to operate the business, at 54.1% (chart 4).

Notable, though, is the finding on aggressively adopting advanced IT and operational technologies. This year, the percentage of respondents citing this statement leapt 11 points to 29.1% of the sample compared to 2020, an increase which may reflect the desired acceleration of M4.0 as a result of the pandemic.

“Establishing a fact-based, information-driven culture of decision-making is once again the most popular definition of what leadership means in the M4.0 era.”

And when it comes to new skills that will be important for the digital era, survey respondents have reinforced the message about culture and collaboration by citing data analysis skills, understanding how to use digital technologies to advance manufacturing, and working in a collaborative environment as key areas of development (chart 5).

Perhaps as a result of the amount of change that has occurred in the past year, manufacturing executives are feeling somewhat better about how well prepared they and their teams are to manage the journey to M4.0.

The percentage of leaders who indicate they are not prepared for the journey has dropped nearly five points in this year’s survey, to 15.2% of the sample, while the percentage of those who have some degree of preparedness has rise slightly over last year (chart 7). For those who still feel that they are not prepared, the most cited reason, by 29.1%, is that they are simply not sure how M4.0 applies to their particular business (chart 8).

Nevertheless, perceptions about how vulnerable their company’s future success might be as a result of their level of M4.0 preparedness remain a mixed bag, with the percentage of those feeling very vulnerable rising to 15.2% of respondents this year, compared with eight percent in 2020, and those not feeling vulnerable at all dropping to 6.9%, from 12% last year (chart 9).

Desired Knowledge and Expertise 

Looking ahead, what do manufacturing executives say are the most important leadership skills and abilities they feel they must develop to be successful with M4.0?

This year, once again survey respondents attach the highest degree of importance to the ability to rethink the business and successfully embrace the digital model. Even though the percentage of those indicating a high degree of importance to this ability dropped nearly six points from 2020, to 66.1% this year, this ability remains far ahead of other factors such as reducing costs and process integration. (chart 11).

“For manufacturing leadership, the past year has been an unprecedented test. But it has also been a time for more expansive thinking about what’s possible.”

And when it comes to a variety of technologies with which they feel they need to develop knowledge and expertise, this year’s survey findings strongly mirror last year’s results. For example, this year manufacturing executives once again attach a high level of emphasis to developing expertise around cybersecurity, advanced data analytics, and simulation and modeling (chart 12).

The quest for knowledge and expertise will play out against a backdrop of demographic and organizational challenges that will reverberate deeply in manufacturing companies.

The Challenges Ahead

As baby boomers retire, companies grapple with the persistent open job problem, and as they seek to understand what functions and skills they will need in an increasingly digital-influenced workforce, many manufacturers executives today see the primary source of next-generation leaders coming from their internal ranks.

But this year’s finding of 45.5% of respondents citing internal sources dropped nearly five points from last year’s survey, with a modest shift occurring in favor of finding talent elsewhere in the manufacturing industry. Fully one-third of respondents this year said they would be looking within the industry for talent. Only a fraction, 13.2%, expect to be sourcing candidates from other industries (chart 13).

These number could shift, of course, as manufacturers attain a greater understanding of what functions and skills they will need in the future. Today, only a fraction of survey takers, 7.4%, indicate they have a solid understanding of the new digital roles and skills they will need. About 65%, however, say these requirements are somewhat understood, up several points from last year, an encouraging sign. But where there is substantial headroom for improvement is in training. Only 22.3% of survey takers this year indicate they have formal training programs in place to educate workers and leadership about the requirements of M4.0 (charts 15,16).

As they work out these issues, leaders today will also be grappling with the structure within which people will work, a structure which has been slowly but inexorably changing over the years to a flatter, more collaborative model of working. In this year’s survey, nearly half of survey respondents, 48.5%, identified understanding how the company should be organized as a result of new technologies as a key challenge for leadership, a finding up a whopping 23 points from last year. No doubt this finding has been flavored by the pandemic experience as more people have had to work remotely, but the effects of M4.0 technologies in empowering more people with information and thereby changing decision-making processes may also be a mounting factor (chart 14).

The effects of M4.0 technologies will also have an impact on workforce size, as a significant number of manufacturers are looking at automation and advanced M4.0 technologies as ways to address the open jobs problem. This year, 41.7% of respondents said these technologies will help offset the difficulty in filling open jobs, up from 36% last year.

What the Future May Hold

As historians have pointed out, sometimes great crises give rise to new and better ways of doing things, enabling progress. The heightened sense of urgency in created digitally-powered agility as a result of the pandemic has fostered a broad set of strategic and tactical changes across manufacturing, all adding up to an opportunity to redraw the boundaries of what was thought possible.

Now, manufacturing leadership has the responsibility to see these changes through. If they are successful in doing so, they will take the industry to a new and better level, raising the bar for all and redefining the rules of competition.   M

Part 1: COVID-19 Impact

1. A Majority Says COVID Has Increased Focus on M4.0

Q: What impact has COVID-19 had on your leadership team’s focus on digital / M4.0 transformation? (select one)

2. Remote Working, Resiliency Top List of COVID-Related Changes

Q: What impact has COVID-19 had on your leadership approaches to managing your manufacturing enterprise? (rank each category)

3. Solid Majorities Say Many Changes Will Be Permanent

Q: How long do you expect these new leadership approaches to continue? (rank each category)

Part 2: Defining the Leadership Role

4. Once Again, Building a Fact-Based Culture is Top Leadership Definition

Q: Which statement best describes what leadership means in the Manufacturing 4.0 era? (Rank top 3)

5. Data Orientation, Digital Acumen Lead Desired Skills

Q: Which new approaches and skills do you feel will be most important for the M4.0 era? (Rank top 3)

6. The M4.0 Business Case Remains Key Question

Q: What’s the most important thing your company’s executive management team wants to know about M4.0? (Select one)

7. Slight Improvement in M4.0 Preparedness

Q:How prepared do you think your company’s executive management team is to lead and manage the journey to M4.0? (Select one)

8. M4.0 Applicability is Key Issue in Preparedness

Q: If your company’s executive management is not well prepared for M4.0, what is the most important reason for the lack of preparedness? (Select one)

9. Perceptions of M4.0 Vulnerability Rise

Q: How vulnerable will your company’s future success be as a direct result of your company’s current level of M4.0 preparedness? (Select one)

10. M4.0 is Largely a Collaborative Effort

Q: Who is leading the charge around your digital
transformation efforts in your organization? (Select one)

Part 3:  Developing Knowledge and Expertise

11. Rethinking the Business is Key M4.0 Skill

Q: Looking ahead, what degree of importance would you assign to the following M4.0 leadership skills and abilities? (Rate each on scale of Low/Medium/High

12. Cyber, Analytics Top List of Desired Knowledge

Q: Looking ahead, what degree of emphasis would you place on the following technology areas in terms of developing knowledge and expertise? (Rate each on scale of Low/Medium/High)

Part 4: Assessing Leadership Challenges

13. Most See Next Gen Leaders Sourced Internally

Q:Where do you see the next generation of leaders coming from for your company? (Select one)

14. M4.0 Organizational Impact is Top Challenge

Q: In thinking about the requirements and implications of M4.0, what do you think are the most important challenges for leadership? (Rank top 3)

Part 4: Workforce Development and Transition

15. Understanding Digital Skills Makes Little Progress

Q: How well prepared do you think your company is in understanding the new digital roles and skills that you will need in the next few years? (Select one)

16. Vast Majority Still Without Formal M4.0 Training

Q: Does your company have a formal training plan to educate workers and leadership around the requirements of Manufacturing 4.0?

17. Automation Seen as an Open Jobs Remediator

Q: What impact do you think the increasing adoption of automation and advanced M4.0 technologies will have on workforce levels in your company in the future? (Select one)

Survey development was led by David R. Brousell, with input from the MLC editorial team and the MLC’s Board of Governors.

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