“Manufacturers do not accept that anything is impossible.”
In his opening speech for Rethink: The Manufacturing Leadership Summit, National Association of Manufacturers President and CEO Jay Timmons reflected on the world’s emergence from the COVID-19 pandemic and how digital technologies played a role in keeping factories open, keeping goods moving, and especially in keeping workers safe.
Timmons cited MLC research that “the march to Manufacturing 4.0 has become a sprint” as 40% of companies reported that the pandemic accelerated their digitization plans. Indeed, manufacturers who had robust digital operations in place were shown to be in a better position to respond to the pandemic’s disruption, and others quickly got on board with bringing in collaborative and remote operational technologies to keep production lines running.
In examining specific transformational examples, Timmons pointed to 2021 Manufacturers of the Year Dow and Hologic. Dow’s digital transformation throughout its operations eliminated 2 million hours of work in potentially hazardous environments and allowed for significant year-over-year gains in value, even during the pandemic. Meanwhile, Hologic introduced a talent management system that prepares its employees to work in factories of the future and halved the time necessary to bring new employees through the onboarding process.
In closing, Timmons hearkened to manufacturers’ unflappable determination and continuous quest for improvement despite any challenges along the way.
“We can build the world we want to see, and today, manufacturers are determined to see us through our crisis and build a better world for tomorrow.”
When it comes to making a digital transition and realizing ambitious business outcomes, Shell believes that technology might be the least important element.
During his session at Rethink: The Manufacturing Leadership Council Summit, Peter Westerink, General Manager of Digitalization Downstream Manufacturing at Shell, said that the energy company believes transformation is driven 60% by data, 30% by people, and 10% by technology.
Shell has significantly increased its investment in digital adoption, including growth to 1.3 trillion rows or sensor data in its data link, significant growth in its data-focused workforce, a tenfold increase in the use of virtual rooms powered by AR, and the use of AI to monitor more than 6,000 pieces of equipment.
Digitalization and AI are driving efficiencies in Shell’s business by maximizing availability for equipment (“find small and fix small”) and optimizing production in real time while decreasing CO2 emissions. Shell integrates data into a digital twin to enhance collaboration, automation, and remote operations that has gone live in one production facility with plans underway for five others.
Shell is also using these efforts to grow its clean energy capabilities. This includes AI for optimizing electric vehicle charging stations to save money for customers and monitor the power grid. Additionally, the company is using data-driven modeling and physics-based models for hydrogen production, storage, and transport, and using AI to assist in selecting wind turbine locations and optimize windfarm design and construction.
Westerink says Shell is thinking bigger to make energy smarter and sees a brighter future ahead. “We’re excited by the capabilities and communities we’re building, excited by the impact our projects are already having, and excited by the potential we haven’t yet realized.”
We all learn by example. That simple principle lies behind an ambitious undertaking by the World Economic Forum: to build a network of manufacturers that have succeeded in adopting Manufacturing 4.0 technologies, and that can act as ambassadors and educators for the whole global industry.
It’s called the WEF Global Lighthouse Network, and it’s already yielding fruitful partnerships and useful information. Recently, WEF Head of Advanced Manufacturing Francisco Betti sat down with the MLC to explain how it works.
Lighting the way: The Global Lighthouse Network emerged from a research partnership with McKinsey, which looked into what holds manufacturers back from embracing M4.0 technologies.
- After talking to more than 400 senior leaders, the researchers discovered that only 30% of companies were benefitting from technology adoption in their facilities and supply chains.
- As Betti puts it, “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.”
That’s where the Lighthouse companies come in—the WEF decided to ask some of that 30% to open their doors and teach the rest of the industry how to make the digital jump.
How it’s going: Currently, the Lighthouse network has 69 members, assessed by a rigorous and independent review process. Betti says, “What is interesting is that we have companies from a large variety of sectors, and that is by design. . . . The opportunity for cross-learning here is massive.”
- The project is looking for use cases at factories, but also beyond. Many of the real winners in the digital game transform their entire supply chains, and the WEF is also looking to add those sorts of companies to their network.
Get involved: Companies can apply to be a part of the network, says Betti. The process involves an application, which covers both achievements and strategies, and culminates in a site visit.
- “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.”
The transformation: Betti sees the M4.0 technologies as transforming whole economies and enabling “a new era of economic growth.” He makes a bold prediction about its effects on manufacturing leadership:
- “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.”
The last word: “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.”
In a world that only ever speeds up, manufacturers need to embrace technologies that let them shift operations quickly and seamlessly. Manufacturing 4.0 technologies like machine learning and robotics provide that power, but the scale of the M4.0 transformation can seem overwhelming.
In a recent edition of the Manufacturing Leadership Council’s Manufacturing Leadership Journal, Oracle Senior Director of Transformational Technologies Anant Kadiyala lays out six factors that make all the difference for successful M4.0 adaptation. Below is some of his advice.
Technology Adoption: Companies that consider the full range of technology’s benefits are setting themselves up for success. Some trends to consider:
- Software is becoming more integral to business operations and product functionality—allowing products to be configured and monitored in real time using analytics.
- On the operational side, the industrial internet of things and machine vision are enabling a whole host of advances in real-time monitoring, anomaly detection and worker safety, among other uses.
Data-Driven Decision Making: Companies that make good use of data achieve higher margins than their peers, according to a McKinsey study, but that requires some key ingredients, including:
- A unified data infrastructure, including APIs, applications, analytics, real-time systems and much more;
- The right tools to process the data; and
- Employees who are skilled in data-driven operations.
“In most companies, 90% of the data goes unused. In addition, more than 70% of the time and effort in data science projects is often spent on moving, cleaning and preparing data,” says Kadiyala.
New Business Models: “Modern technologies, such as cloud, IoT and AI/ML, enable every manufacturer to have the sophistication of business operations and real-time feedback loops that were only enjoyed by the big players,” says Kadiyala.
Innovation and Experimentation: Manufacturers can pursue different options for innovation, with partnerships being a common choice. Other methods might be design workshops or R&D investments, Kadiyala notes.
- “With the right people, processes and tools, companies can navigate faster and realize value quicker. The lean methodology that the manufacturing industry is renowned for also works very well for innovation.”
Well-Integrated Teams: The right talent is critical to business transformation—and good data, process automation and collaborative practices clear the way for employees’ success.
Culture: As Kadiyala puts it, “Successful companies start early innovation on the edges of their business, deliver a few wins and then gradually build their way into the rest of the organization. All successful transformations need employees to enjoy a strong sense of purpose and mission for the change.”
With 19 global locations, ALOM Technologies Corporation specializes in technology-driven supply chains for Fortune 100 companies. ALOM President and CEO Hannah Kain recently sat down with the Manufacturing Leadership Council to share her thoughts on the state of the industry and the keys to successful leadership.
Taking on challenges: Over the long term, Kain sees workforce development—finding and training the next generation of manufacturing leaders—as a significant priority. But in the short term, she cites COVID-19- and trade-related supply chain disruptions as the most pressing issues.
- “Shifts in demand have increased the need for agility in manufacturing, yet U.S. infrastructure, from ports and roads to cybersecurity, is under extreme strain, and geopolitics have made goods movement more complex,” she said.
Meeting the moment: During the COVID-19 pandemic, ALOM manufactured millions of COVID-19 test kits for the medical sector while ensuring its own workers remained safe, Kain said. The company also met the past year’s challenges by investing in digitization to improve its productivity.
Finding opportunities: Kain cites a range of opportunities for manufacturers of the future, from fast-improving technologies to the availability of new manufacturing talent—if manufacturers can find and harness it.
The importance of culture: Kain believes in what she calls “servant leadership”—seeing yourself as a supporter of stakeholders like customers, employees and suppliers and working to put their needs first. She strives to create a culture of collaboration within her own company.
The last word: “In the end, culture is the company, and the company is the culture,” said Kain. “Our culture is inclusive, collaborative, improvement-oriented and quality-focused, with a strong sense of ownership. Supporting that culture may be the most important thing I do.”
Manufacturing leaders proved they were good in a crisis in 2020—creating new products, speeding up the production of essential materials and instituting safety policies in record time. And as they accelerated their production lines, they also focused on increasing their adoption of Manufacturing 4.0 technologies.
Now, the Manufacturing Leadership Council—the division of the National Association of Manufacturers focused on manufacturing’s digital transformation—is exploring what leaders learned during the pandemic about the importance of digitization. The MLC’s recent survey of manufacturing leaders gives us a window into their thoughts, expectations and plans for the future—after a year like no other. Below are some key insights.
A big impact: A full 54.8% of respondents said COVID-19 increased management’s focus on digital transformation. The changes they cited included new procedures for remote working, new disaster preparedness plans and increased integration across teams and structures.
And here’s another important finding: these changes seem permanent.
- 68.2% said new disaster preparedness plans and strategies will be permanent additions to their operations.
- 57.3% said more collaborative organizational structures will stick around.
- 62.2% expect to keep allowing both leaders and employees to work remotely.
The digital workforce: With baby boomers retiring, companies are looking for new manufacturing leaders and seeking to fill a range of jobs, even as the digital evolution of the industry requires new and different skills. Where are these workers coming from?
- 45.5% of respondents said they would come from internal sources—a drop of nearly 5% from last year’s survey. Leaders felt somewhat more in favor of finding talent elsewhere in the manufacturing industry.
- One-third of respondents said they would look within the industry for talent, while only 13.2% expected to find candidates from other industries.
But these results may soon change, as manufacturers are still figuring out what digital skills they need. Over time, leaders will likely develop different ideas about where to find workers—and how to train them.
- As the survey shows, manufacturers have a big opportunity to ramp up their digital training: only 22.3% of respondents this year said they have formal M4.0 training programs for workers and leadership.
Organizational shift: The emerging digital focus means many manufacturers are shifting toward a flatter, more collaborative working style. The numbers tell the tale:
- Nearly 48.5% of respondents identified understanding how the company should be organized as a result of new technologies as a key challenge—an increase of 23% from last year.
The MLC says: As MLC Executive Director and NAM Vice President David Brousell put it, “Many manufacturing executives acknowledge that the equivalent of several years’ change has been compressed into the past year. 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.”
This year, hurricane season—which officially began June 1—arrived early, as it has every year since 2015. But while 2021’s inaugural Subtropical Storm Ana did not make landfall in the U.S. in late May, meteorologists are expecting the remainder of the year to be a busy time for hurricanes—and as manufacturers know all too well, that can mean trouble is ahead.
In addition to endangering lives, a strong hurricane can cause severe damage to individual companies and the U.S. economy as a whole. In fact, the Congressional Budget Office estimated in 2019 that expected annual losses from hurricane and storm-related damage came to $54 billion.
Always be prepared: Better planning for these yearly occurrences can help manufacturers mitigate the costs associated with storm-caused devastation—and go a long way toward keeping employees safe, too.
Offering resources: In partnership with disaster-relief organization SBP and product-philanthropy nonprofit Good360, the NAM’s Emergency Response Committee works year-round to provide members with access to disaster-preparedness resources and training in advance of natural disasters, and helps manufacturers activate to help their communities when one strikes
For example, in a recent webinar sponsored by the NAM’s ERC, Amanda Gallina, SBP community engagement manager, and Matt Woodruff, vice president of public and government affairs for Texas-based tank barge operator Kirby Corporation, laid out some suggestions for hurricane preparation.
For businesses: Woodruff provided some commonsense advice for employers:
- Ensure new employees understand the hurricane plan well ahead of hurricane season.
- Create a checklist of duties that must be performed, starting with the first day of hurricane season.
- Set up remote work sites for affected areas and employees.
- Provide support to the families of employees who live in affected areas to ensure their safety.
For individuals: Gallina offered advice for all individuals facing a hurricane:
- Collect hazard and emergency information from local and national sources like news and weather apps, NOAA Weather Radio and the Red Cross Emergency app.
- Make a household emergency plan, which should include stockpiling supplies, establishing communication methods and emergency contact numbers and creating an evacuation and sheltering plan.
- Identify and protect important documents by storing them in a fire- and water-proof box, while giving extra copies to a trusted attorney or friend. You can also use secure online cloud storage as another backup.
- Get the right insurance by identifying any gaps in coverage and asking your agent the right questions.
The last word: “We are grateful for the partnership with Good360 and SBP, which allows us to better support NAM members in times of need, but most importantly, provide valuable resources and thought leadership to build resiliency in advance of a disaster,” said NAM Chief Operating Officer Todd Boppell. “Advance planning is critical for successful businesses, and the thoughtful approach demonstrated by our partners resonates with the NAM’s vision to support manufacturing operations.”
To contact the NAM’s emergency response committee or to be added to its mailing list, email [email protected].
Are you grappling with the fast pace of competition in manufacturing? Are you working to keep up with the massive amount of disruption brought on by artificial intelligence, advanced robotics and digital breakthroughs? Are you racing to create new competitive advantages by using the power of Manufacturing 4.0—the next wave of industrial progress based on digitization?
The NAM has you covered with Rethink: The Manufacturing Leadership Council Summit, on June 22–24.
What it is: Rethink is the premier conference on Manufacturing 4.0 for industry leaders as they continue to navigate disruption. Hosted by the Manufacturing Leadership Council—a member-driven, global business leadership network dedicated to senior executives in the manufacturing industry—the summit offers participants strategies and solutions that are designed to advance their operations and improve their competitiveness.
Why it matters: The COVID-19 pandemic supercharged some of the changes that were already occurring in the manufacturing industry. Across the past year, businesses have seen an even greater need for flexibility, agility and speed in operations, and many manufacturers have accelerated their adoption of digital technologies to achieve these goals.
What it includes: The summit will offer a wide range of informative conversations with next-generation leaders and experts. A few elements include the following:
- Case study sessions showcasing real-world examples of advanced manufacturing technologies in action—from efforts to transform legacy facilities into smart factories, to the role of analytics in digital transformation, to the growth of robotics in manufacturing and logistics. By hearing from manufacturing leaders who have taken on these challenges, executives can learn best practices and gain new ideas for their own companies.
- “Think tank” sessions that will allow participants to ask questions and share ideas about advanced manufacturing technology. These conversations will include discussions of topics like quantum computing, manufacturing execution systems, augmented and virtual reality, blockchain, edge computing and sustainability.
The big difference: Most importantly, Rethink gives participants the chance to learn from other manufacturing executives and experts. Many of the industry’s most forward-thinking leaders will collaborate at this summit to make manufacturing better and stronger.
Check it out: Click here for more information and to register for the summit.
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.
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.
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.”
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
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