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ML Journal June 2022

Workforce Rebalancing Builds Pressure in the Pipeline

Understanding the differences between how employees and employers are reimagining work helps leaders build better future workforce strategies.   

Recent dramatic changes in the way we work, and how we think about work, have caused a tidal shift in how employees view their priorities and prospects in daily life.

The COVID-19 pandemic accelerated a work realignment trend that was already in progress, and further transformed people’s understanding of work success, purpose, and value.

Rising inflation, The Great Resignation, and calls for increased commitment and action on environmental, social, and governance (ESG) issues, are further reshaping a workforce terrain that manufacturers are all trying to navigate with new eyes. As the initial waves of health-driven change roll into new ones, the workforce is now resettling into pools based on how we work, what we value, and who we are.

It’s a new moment for both employees and employers alike, with new opportunities and a need for greater context around the how, what, and why of work. Understanding these key shifts will help manufacturers already dealing with the current labor crisis, better prepare new approaches to how they can successfully attract and retain their key workforce.

Work Reimagined

The EY 2022 Work Reimagined Survey reveals insights from more than 17,000 employees and 1,575 employers across 22 countries and 26 industries. The findings help highlight the primary motivators of workforce turnover and retention in today’s tight labor market and help highlight areas of focus for manufacturing leaders who are looking to lean into the opportunities of the moment.

“The industrialized world now finds itself poised to fully reimagine a more sustainable and human-centered workforce strategy.”

 

These insights are essential for manufacturing’s future. The industrialized world now finds itself poised to fully reimagine a more sustainable and human-centered workforce strategy. By responding decisively to the moment and recognizing the necessity for the sustainable transformation of business, employers now have an opportunity to redefine a new way of working that preserves the talent pipeline and future value.

Working in a Changed World

As much as the world would like to move beyond the COVID-19 pandemic and its effects, businesses still find themselves rocked by a world in flux, including in the ways we’re working. Both employers and employees necessarily focused on short-term decisions to forge through one of the biggest health challenges in a generation. But now attitudes and strategies toward work are being molded by other macrotrends. Recent analysis from The World Bank shows an expected slowing of economic growth and persistently high inflation over coming years, and an urgent need for coordinated action to address the severe costs of weather and climate disasters.

This backdrop colors the landscape for business investment and employee sentiment at a time when The Great Resignation appears to still be in full swing in some parts of the world.

For example, 68% of employers say employee turnover has increased in the past 12 months, with 43% of employees saying they are likely to leave their current employer in the next year. That’s a significant rise from 2021, when only 7% of employees said they’d be unlikely to stay. The groups most expecting to leave their jobs identified themselves as Gen Z or millennials in the United States (48%) and were mostly working in the technology/hardware sector (60%).

However, flexibility in work has been championed by employees and embraced by some employers over the last two years and has now become an expectation rather than a nice-to-have for most workers. Of those surveyed, 80% of employees want to work at least two days remotely per week. Just 20% of employees voiced reluctance toward fully remote working, compared to 34% last year, showing broader acceptance of working from anywhere.

Despite this signal from employees, nearly a quarter (22%) of surveyed employers say all employees are still expected to return to their place of work five days a week.

“The vast majority of employees and employers seem to agree that the old status quo of the working world is gone.”

 

These diverging perspectives between employers and employees on hybrid/flexible work is only one example of what could be seen as a rebalancing of leverage in favor of workers. Perceptions of workforce culture, productivity, advancement potential, and mobility also show significant differences between employers and employees and could further fuel an already hot race for talent.

Employees and Employers Have Divergent Views on Talent and Culture

With a workforce feeling more empowered and the labor market appearing increasingly liquid, many employers show declining levels of confidence in how their organizations are developing their cultures and maintaining productivity. Only 13% of employers say they agree that their culture has changed significantly and improved since the start of the pandemic, with the same number agreeing about productivity improvements. This is down from 22% and 21% respectively in 2021.

The details of employer sentiment, however, can vary widely. The survey data reveals three distinct segments of employers based on their perception of business productivity and organizational culture:

Optimists (32%)

Employers who have been proactive in their approach to flexible work, real estate, and technology are more likely to agree they’ve seen positive outcomes. These optimists, almost a third of the sample, indicate they feel they have more agency in the present uncertainty. By giving clarity to their workforce and leaning into the change, these businesses invested in a strategic direction and can see the benefits. By taking a consistent, strategic, and cross-functional approach to the current climate, these optimists are more likely to believe they’re steering their own course.

Pessimists (11%)

A smaller set of employers feels disempowered by the moment, though. Their perception of outcomes related to culture and productivity is drastically lower than optimists and indicates less investment in clear actions toward improving technology, onsite amenities, and further flexibility for the workforce. By not being proactive, these employers seem to have remained in a wait-and-see posture while the labor market and overall economic situation has shifted. These employers have not positioned themselves to attract new talent and their veterans may well continue to leave, further deteriorating confidence in their competitiveness.

Massive Middle (57%)

The majority of employers remain somewhere in between the highs and lows without a distinct perspective on productivity and culture outcomes. This shows that employers and employees alike are still undecided about what the future holds. There’s an opportunity here for those more forward-thinking employers among them to now start building leading strategies to help them win the race for talent.

“Some employees may feel empowered by work flexibility, seeing more opportunity for advancement with virtual assignments and a broader mix of employment opportunities.”

 

The vast majority of employees and employers seem to agree that the old status quo of the working world is gone. Most respondents agree that hybrid and flexible working conditions are here to stay, and employees are still prepared to switch jobs if they don’t find what they want. It then becomes more imperative than ever for employers to understand what the workforce most values.

From Pay to DE&I

The depth of collective reassessment of work can be seen in what people say they value. Inflationary pressures, the broader acceptance of remote work, and lower barriers to finding new jobs have all contributed to employees (79%) putting a premium on total pay and other tangible benefits. Employers (83%) agree that the pandemic has accelerated a need for extensive changes to rewards policies, encompassing compensation, wellbeing, flexible benefits, time off, and more.

Such rewards include multiple categories of incentives. A detailed look at the priorities of employers and employees actually reveals a noticeable misalignment between the two. Employees are much more likely to place more weight on compensation and career advancement, followed by work flexibility factors.

The Gap Between Employee and Employer Priorities – Employees

The Gap Between Employee and Employer Priorities – Employers

Pay also factored into how employees perceived Diversity, Equity, and Inclusion (DE&I), 20% of whom said that addressing pay equity is the single most important action a company should take to improve DE&I. Employers agree that more must be done to improve DE&I, but the largest number of employers (17%) cited reviewing hiring criteria as the most important action to take.

Some employees may feel empowered by work flexibility, seeing more opportunity for advancement with virtual assignments and a broader mix of employment opportunities. But there is also some acknowledgement that further acceptance of hybrid/flexible working conditions may risk slower career advancement. There’s a noticeable perception gap between employers and employees with 72% of employers believing new ways of working may cause some segments of the workforce to lose competitive advantage, compared to just 56% of employees.

For employers, pay represents a fixed cost during a time of growing inflation. Only 18% of employers believe pay increases/reviews are needed to address employee turnover, showing a clear disconnect to what employees say they want in a new role, and what employers are expecting to most deliver to help employees thrive. Employers, meanwhile, put more emphasis on learning and skills, flexibility, and employee psychological/mental wellbeing and safety.

Upskilling Committed Workers

The focus on learning and skills by employers could be a reaction to The Great Resignation. If turnover is high and employers show less confidence in productivity gains made through the pandemic, then an employer may be more likely to invest in upskilling the remaining workforce. This positioning from employers may also align with the needs and expectations of a subset of employees more likely to be company-committed. These individuals are more likely to be concerned about the risks of burnout and their mental wellbeing, more likely to work full-time in an office, and have a more favorable view of work-life balance. The strategies and priorities of most employers therefore appear to be in line with this segment of employees who show more loyalty to their present employer.

“Parsing the details of an organization’s workforce provides an opportunity for a bespoke solution to harmonize the priorities of employers and employees.”

 

The distinctions between groups which could be characterized as job jumpers versus the company committed, may be influenced by their professional sector, but also by generation. This highlights the importance of knowing the composition of the workforce to be able to respond to it appropriately.

Working Across Demographics

It may seem self-evident, but it bears emphasizing that the workforce is not a monolith and perceptions of wellbeing, value, and productivity can vary widely among workers based on demographics. The data shows wide gaps between self-perceived levels of wellbeing between geographic location, professional sector, gender, and seniority.

The survey results provide greater detail to generational preferences, especially around physical and organizational design and how the workforce will interact with the office. Gen Z is much more likely to put higher weight on the ability to stay socially connected while working (29%) than do Baby Boomers (21%). Gen Z also puts higher value on flexibility and the ability to have a change of work scenery (22%), compared to just 14% for Baby Boomers. Gen Z is also more likely to consider the design of an office/workspace as a driver to be in the office (12%) compared to Baby Boomers (7%).

Employees Likely to Leave Their Current Employer Are Embracing New Ways of Working

Broadly, the purpose of the physical office and how it influences the way work gets done depends on the demographic makeup of the workforce. Younger workers cite more informal social factors as potential drivers to being in the office, compared to a more utilitarian view from Gen X or Baby Boomers who are more likely to see the space as useful for collaboration. Parsing the details of an organization’s workforce provides an opportunity for a bespoke solution to harmonize the priorities of employers and employees.

5 Areas of Focus

The world of work is clearly in a state of transformation, spurred on by the challenges of recent years and the expectations of those to come. Manufacturing leaders should now consider finding cross-functional ways to respond to opportunities when they arise:

  1. Operationalize hybrid models: Hybrid work is here to stay, so employers should build a structure with intent. They need to understand which roles are best suited to remote/hybrid work, and build the systems required to create value while streamlining functions. This may include building an integrated mobility strategy to manage tax compliance for a geographically diverse workforce, along with structuring rewards and even real estate strategy to attract and retain the workforce they need.
  2. Reinvent the workplace: It’s not enough to repaint an office and expect workers to return to cubicles. Employers should consider a renewed integrated workplace plan that considers the physical space and amenities needed to empower productive workers. But it should also reflect how the workforce engages in social networking and learning both in the physical office and in the digital realm.
  3. Create a work-technology experience: From grocery shopping to hailing a cab, we all know the importance of a good user interface and design for business. A virtual workplace and employee experience platform should be on par with consumer technology providing a seamless technology experience across all work contexts. Done well, this can contribute to efforts identifying areas requiring culture change and moving the organization toward a more equitable reality.
  4. Reshape and optimize programs and career frameworks: The pandemic and so much more have redefined employee expectations, so employers should update their rewards and career advancement models to respond to a still fluid labor market.
  5. Define culture and organizational networks: Before fully undertaking a large-scale transformation, employers should also assess the fitness of their organizational culture. This includes understanding which key aspects of an organizational culture to preserve and how to engage key influencers to reduce friction toward the new physical and digital realities of work.

These areas of focus may differ between organizations, but leaders should work to find the right constellation of solutions that address the specific makeup of their workforce, the desired direction of their organization, and the continued assessment of transformation in progress.

Acting With Intent

Today, work is being reimagined by both employees and employers, but their visions don’t always align. Both see flexibility and hybrid work as the new normal, though further details reveal divisions. Employees are still willing to leave their jobs to advance their career and pay potential. Global uncertainty connected to inflation and labor costs are fueling reluctance among employers who are not eager to reset pay and career opportunities. If companies don’t address pay equity between internal and external labor markets, then efforts toward improving culture, productivity, and DE&I will be neutralized by labor turnover.

By acting with intentionality, and with a better understanding of employee perceptions and values in changing times, manufacturing leaders can build more trust across their workforce and orient their organizations toward a more optimistic future.  M

(Unless cited, all statistics in this article are from the EY 2022 Work Reimagined Survey. The views expressed by the authors are not necessarily those of Ernst & Young LLP or other members of the global EY organization.)


About the authors:

Kim Billeter is EY Americas People Advisory Services Leader.

 

 
Roselyn Feinsod is Principal, People Advisory Services, Ernst & Young LLP.

 

ML Journal June 2022

CASE STUDY: Flex Empowers Employees with LISA Avatar Assistant

LISA, Flex’s ML Award-winning avatar-based line stop assistant, helps significantly improve front line operations while empowering employees to succeed.   

Company Fact File

Company: Flex
Sector: Technology, Supply Chain, Manufacturing Solutions
HQ location: San Jose, Calif., U.S.
Revenues: $10 billion+
Employees: 5,000+ employees, 30 countries
Web url: www.flex.com

Flex’s factory in Althofen, Austria, faced a business challenge: How to make its product lines more efficient in a high-mix, low-volume manufacturing environment where small inefficiencies can have an outsized impact on both the manufacturer’s and the customers’ bottom line.

Flex’s Althofen factory makes more than 500 products in lot sizes ranging from 100 to 3 million pieces, for more than 30 customers. In any given month, the factory manufactures products ranging from parts for lawn mowers to components for automotive GPS systems to Class III medical devices. Every time there is a product changeover, the equipment on the line is reconfigured, a process that requires precision and accuracy. And the factory performs more than 900 of these line changeovers every month.

“It is like a NASCAR pit stop – moving parts, moving people, and every second makes a difference,” says Paul Baldassari, Flex Executive Vice President.

The Flex team was tasked with finding a way to use automation to reduce costly errors that took place during product changeovers. However, like a NASCAR pit stop, success depends not only on the right technology, but also the skillset of workers who can quickly and efficiently shift gears as needs and product lines change.

“LISA has already helped the factory reduce changeover time by 10.5%, reduce line clearance time by 85%, and reduce quality-related downtime by 56%, all while empowering employees to succeed.”

 

The result is LISA, Flex’s avatar-based line stop assistant. This innovative system is already putting the company on the fast track when it comes to stopping a production line that is wrongly configured for the product and stopping untrained operators from proceeding. In fact, LISA has already helped the factory reduce changeover time by 10.5%, reduce line clearance time by 85%, and reduce quality-related downtime by 56%, all while empowering employees to succeed.

Using Agile Principles to Solve Real-Life Issues

Before the LISA project began in January 2019, employees had checklists they had to reference before setting up the assembly lines. But errors could still slip through the cracks due to the manual processes. This caused a lot of stress to front-line workers in terms of error prevention and the need to double check their work.  In one particularly costly scenario, the production line was inadvertently set up to include nitrogen and the output had to be scrapped.

The two primary objectives Flex was looking to achieve were to gain optimal efficiency by empowering employees on the floor to stop wrongly configured productions lines; and to eliminate waste and inefficiency by identifying scenarios in which untrained operators were configuring lines they weren’t trained to configure.

Using Agile principles, a lean group of representatives from disciplines across the organization put their heads together to find ways to accomplish these two objectives. Because the Althofen site had been investing in digital solutions for several years, it happened that there were two critical elements for the solution already in place. On the one hand, a digital source of the correct parameters was needed to manufacture a product. On the other hand, the team needed real-time data coming from the shop floor equipment that provides the actual parameters. These two elements were present, so the team accepted to challenge to combine them in a creative way to solve this operational challenge.

Empowering Workers by Design

Because Flex’s leadership team views employees as the company’s greatest asset, they wanted to empower workers to be valued contributors to the process, particularly during times when new automation capabilities are introduced to their work environments. They knew that the success of the project would depend as much on employee acceptance as it would on the technology and data sources. They also knew that employees could actively resist the introduction of LISA if they felt it was a system simply put on top of employee workflows to report errors and “correct” workers.

“The transformation journey of our Althofen site is a perfect example of Flex’s commitment to advanced manufacturing practices and technologies, continuous improvement, and developing our most important asset – our people.”
Paul Baldassari

With this in mind, the team decided to design LISA as an avatar-based system that had a literal “face” employees could interact with. The avatar approach enabled Flex to demonstrate to employees that LISA was a tool designed to assist them and help them to do their jobs more efficiently. It helped employees regard the tool as a valuable assistant, able to serve and empower them in their roles. As a result, the LISA system has become a valuable contributor to the Flex culture of employee empowerment.

For example, LISA has helped reduce stress for front-line workers by giving them an automated layer of confidence, quality, and safety to ensure success. The elimination of tedious and repetitive work has not only reduced waste but has also freed employees to focus on higher value-add and more interesting activities. In addition, it has reduced the workload, enabling employees to quickly access real-time information, helping them make fact-based decisions to improve efficiency throughout the value chain.

Lessons Learned and ROI Gained

It was only after using LISA that the Flex team in Althofen has also been able to understand some of the limitations of the data that had been informing line production decisions. Because LISA is driven by objective facts, the system does not have the same biases that humans do, biases that often cause employees to correct data without even realizing it. LISA ensures that the data being used to determine production line assembly is accurate and up to date, creating better and more precise outcomes.

LISA’s early results have been promising. The average time to change over a product line before the implementation was 13 minutes. Currently, the Althofen factory average time of changeover stands at 11 minutes, 39 seconds — a reduction of 10.5%, thanks to LISA.

Other metrics resulting from the LISA implementation in Althofen include:

  • Overall Equipment Effectiveness (OEE) has increased 18%, with an average of 900 product changeovers per month.
  • Potential errors through the use of the digital Poka Yoke Solution (otherwise known as “mistake proofing”) were reduced from 900 to 0 per month.
  • Quality related downtimes were reduced by 56%.
  • Line clearance time to check if the operator is trained on work area time reduced by 85%.

Innovation Leads to Accolades

LISA is another proof point of the company’s unwavering commitment to innovation that improves the customer experience. LISA will allow Flex customers to save money, reduce waste, and get their products to market more quickly, making it a more attractive diversified manufacturing partner and strengthening the company’s competitive position.

“LISA has helped reduce stress for front-line workers by giving them an automated layer of confidence, quality, and safety to ensure success.”

 

Thanks in part to the results delivered by the LISA project, Flex’s Althofen factory was admitted into the World Economic Forum’s Lighthouse Network in September 2021. The Global Lighthouse Network’s focus is to accelerate inclusive technology adoption in manufacturing by building a cross-industry network that includes some of the most advanced factories and connected value chains worldwide.

The Althofen site’s demonstration of how it has deployed 4IR technologies to improve operational efficiency and agility to develop a more substantial and differentiated advantage, also garnered the company a 2022 Manufacturing Leadership Award for Operational Excellence.

Flexing Into the Future

While the current iteration of LISA was deployed in the second half of 2020, Flex will continue to iterate and make improvements throughout LISA’s lifecycle and as the needs of the business change.

Although LISA system began life in the Althofen factory, Flex plans to roll it out to twelve additional manufacturing sites in 2022 to support the company’s global digital transformation efforts.

“The transformation journey of our Althofen site is a perfect example of Flex’s commitment to advanced manufacturing practices and technologies, continuous improvement, and developing our most important asset – our people,” says Baldassari.  M

About the author:
Sue Pelletier
, a contributing editor with the Manufacturing Leadership Journal, is a seasoned writer/editor with experience in online, social media, e-newsletter, tablet app, book and e-book, and print publications..

ML Journal June 2022

Leading the Way to Workforce Optimization

In a difficult hiring environment, investing in staff and fostering employee-focused cultures are essential.   

Employees are leaving jobs in record numbers, and meanwhile, the U.S. Bureau of Labor Statistics reports the highest surge in manufacturing demand of the millennium—a 58% increase over pre-pandemic levels.1 This is forcing manufacturers to strategize regarding best practices for attracting and retaining a talented workforce.

As increasing digitalization creates a corresponding shift in employee expectations, manufacturers must provide appropriate solutions and environments to ensure success in today’s evolving professional world. Examples of this include options for remote work, interactive training, agile and rapid collaboration platforms, career development, work-life balance, and others.

Embracing Remote Work

Leaders must embrace a natural outcome of the pandemic: there are numerous arrangements for remote work. Though some job functions require time onsite, manufacturers can pull from a larger talent pool by reducing the need to hire based on location. This can simultaneously broaden organizational diversity, improving innovation and problem solving with multiple perspectives for input. Employees of different cultural backgrounds also often enhance an organization’s language and cultural fluency, extending global support and business opportunities.

Remote hiring can broaden organizational diversity, improve innovation, and expand global support and business opportunities.

 

Additionally, flexible remote work arrangements open the door to employees seeking a better work-life balance. Caregivers especially can find the demands of full-time and onsite employment, which may require a long commute, to be incompatible with demands at home, whereas a remote environment empowers them to structure work time according to their personal needs.

These flexible arrangements, where appropriate, can prevent the resignation of new parents and also attract talented individuals who previously placed their professional careers on pause to focus on caregiving. For example, organizational “returnship” programs, which help experienced individuals reenter the workforce following gaps in their resumes for caregiving, are particularly effective for increasing the number of women on staff.

Managing from Anywhere

Remote work has its share of challenges, particularly when it comes to managing a team. Clear communication becomes even more critical to set objectives and measurable metrics for success when teams and managers are not physically in the office together. Effective goalsetting and results evaluation are necessary for aligning vision and staying on target.

For example, a manager’s objective may be to improve product quality, measured by reducing product defects by 10% this quarter. By defining measurable metrics for success, managers empower employees to self-assess, and by avoiding overly prescriptive processes for achieving results, managers can foster autonomy and creative ways of meeting these objectives. Additionally, individual performance rubrics for advancement with clear milestones—e.g., “successfully leads and executes internal initiatives”—provide employees with the knowledge to improve company performance and advance their careers by independently taking initiative.

Written instructions and procedures for executing a job can be invaluable for familiarization and reference, but they are insufficient when not accompanied by on-the-job training.

 

Setting performance expectations is critical, but leaders must also provide the time and resources for professional development. Training opportunities provide teams with new or refreshed knowledge to attain success, fostering confidence in individual contributors, in addition to their manager and coworkers.

Standardized onboarding helps ease reservations associated with hiring people of different work and educational backgrounds. Written instructions and procedures for executing a job can be invaluable for familiarization and reference, but they are insufficient when not accompanied by on-the-job training. A team member can read a manual about performing maintenance on a pump, for example, but might not fully understand what to look for while inspecting seals until they have hands-on experience.

Interactive training is more engaging than static manuals because it requires learners to respond to instruction, thereby reinforcing knowledge. Shadowing and then performing functions under a mentor is often a helpful way to teach the intricacies of job functions not easily communicated in writing, and it provides experienced team members with the chance to validate newcomers’ performance, creating better relationships.

A similar approach can extend to implementing new tools or processes within an organization — present it on paper, test it in practice, and allow team veterans to validate the results. In an agile environment where technology is constantly evolving, willingness to learn and experiment can be just as important as previous experience.

Growing through Collaboration

When adding a new team member, providing the resources to learn the tools and processes associated with their role is not enough. Long-term retention depends on employees understanding how their role fits into the larger organization, and cross-departmental and cross-site communication can help individual team members understand shared objectives throughout the organization.

For example, a quality engineer may discover insights while performing root cause analysis on a seal defect and share these results to help an operations team member adjust procedures to prevent seal defects in the future. By further sharing this knowledge with other sites and implementing the same changes, teams can improve operations throughout the organization.

To emphasize the importance of knowledge sharing and the benefits it provides, leaders should hold forums spotlighting specific use cases. These forums can take the form of a group chat, a live presentation, or a more informal discussion, and gatherings like these advance business level objectives and individuals’ sense of connectedness to the team. And by sharing success stories beyond an individual team or function, employees receive an opportunity to be recognized for their work among a wider audience.

Exposure to additional departments and sites also provides career development opportunities, considering vertical promotion is not the only path to advancement. In some cases, horizontal mobility encouraged by cross-departmental connections may be just as—if not more—fulfilling because it enables employees to build a more diverse skillset, and better master the organization’s dynamics.

In addition to communicating successes, sharing lessons learned provides opportunities to learn from failures, which are also part of development. Open discussions about both successes and failures enhance understanding among a group and can uncover additional insights.

Performance recognition and career development opportunities are just some of the ways to support a people-first team culture. By prioritizing the respect and care of individual employees, these team members are more likely to remain loyal to the organization.

Cultivating Strong Connections

There are numerous factors that contribute to a job well done, and it is critical for leaders to recognize the factors motivating and detracting from team performance. Many individuals glean a strong sense of motivation from outside the workplace. Maybe they are training for a race, volunteering to help the community, exploring the outdoors, creating art, or traveling the world. By understanding a bit about team members outside of business hours, teams can cultivate more personal and meaningful connections, providing a deeper sense of community.

Leaders can play an important role in developing this type of culture by encouraging employees to pursue interests outside of work, as this can help reduce stress and prevent burnout. These messages need not occur exclusively in a one-on-one context as they can be promoted in teamwide atmospheres. For example, leaders can sponsor company lunches — catered in-person or virtually with meal delivery gift cards — or interactive teambuilding activities, intentionally providing time for people to share individual interests and life updates with their teammates. This helps to connect those with similar passions, while celebrating companywide diversity. This can extend to creating employee resource groups or committees for employees with shared interests, further nurturing team connections, and it can be as simple as starting a new messaging channel or email chain.

In an agile environment where technology is constantly evolving, willingness to learn and experiment can be just as important as previous experience.

 

Additionally, teams can celebrate milestones outside of work accomplishments. Parties to celebrate major life events, such as weddings and new babies, help create a family-like environment. These celebrations can be improved by finding the time and occasion to physically remove the team from its normal work environment to make the time together more enjoyable.

When leadership takes care of a team’s personal and professional needs, this vastly improves the quality of work, increases retention, and makes it easier to recruit new staff. Talented individuals often possess a talented network, and the work experience and job openings are sure to be shared with this network. When considering new candidates for the team without prior connection, introducing them to their potential team members during the hiring process can also provide them with a glimpse of the working environment before both parties make a partnership decision.

Breaking the Status Quo

Teams are comprised of individuals with many different interests, stressors, and motivators. To lead successful manufacturing teams today, more than ever leaders must venture beyond standard procedures to recognize personal needs and celebrate diverse talent, supported by a framework unifying teammates in a common mission. Employees who are professionally and personally satisfied not only optimize their individual productivity, but also enhance overall team production and experience by example, encouraging and challenging others to do the same.  M

About the author:
Katie Gates is the Director of Customer Success Management at Seeq. Prior to joining Seeq, Katie served as a nuclear engineering officer for the U.S. Navy. She has a bachelor’s degree in chemical engineering from the University of Notre Dame and a master’s in engineering management degree from Old Dominion University.

1 Long, H. (2022, Jan 9), Why manufacturing workers are voluntarily leaving jobs at rates never seen before. Washington Post. https://www.washingtonpost.com/opinions/2022/01/09/why-manufacturing-has-seen-biggest-spike-workers-quitting/

ML Journal June 2022

Making Manufacturing an Industry of Choice

Developing the next generation workforce depends on a new approach to cultivating talent for the M4.0 world.   

In a brutally tight labor market, companies across all industries are fighting for top talent and getting creative about how best to attract and retain employees. In the manufacturing sector, this may be a time of reckoning that will force some leadership teams to reevaluate what it takes to be an employer of choice, especially because manufacturers compete more now with other industries for talent than ever before.

Making sure your team is prioritizing the right leadership competencies, embracing advanced technologies and flexible work options, and taking a holistic view of the talent pipeline are all crucial areas manufacturers should focus on if they want to build a competitive next-generation workforce.

Future Leadership Competencies

Some of the defining characteristics of a successful leadership team may seem obvious, like the ability to think critically and make tough decisions. But whereas in the past many leaders may have focused more on being an individual contributor or their own path through an organization, they now find themselves increasingly being defined by how well they help develop their people throughout all functions of the company.

Being able to help cultivate others’ skills is crucial for leaders in any industry, but it is paramount right now in manufacturing where there are notable gaps between open positions for blue- and white-collar workers, challenges in recruiting new workers to an industry many perceive as old-fashioned, and vast possibilities for new ways to harness technology across the business enterprise.

Leadership teams can empower employees by arming them with data not just about operations, but also about their performance.

 

“The manufacturing skills gap in the U.S. could result in 2.1 million unfilled jobs by 2030,” according to a 2021 study from Deloitte and The Manufacturing Institute, a partner organization of the National Association of Manufacturers. Compounding that potential shortfall, there were 1.94 job openings for every unemployed worker across the U.S. economy as a whole in March 2022, according to the Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey.

Without leaders who understand the importance of having a future-state mindset when it comes to the workforce, manufacturers run the risk of falling even further behind. Leaders in the corporate office and shop floor alike need to understand how to communicate the organization’s future vision across teams, evangelize advanced technologies’ role in the manufacturing sector, and spread messages about upward advancement opportunities.

So how can manufacturers develop these key leadership competencies? Here are some potential avenues:

  • Prioritize cultivating talent within the company: Teams should have a clear process for identifying the organization’s high-potential talent and a development program to grow employees’ skills and overall career path. Such programs should also include measurable goals and leadership goals to improve accountability.
  • Become less transactional and more dynamic: It’s common for annual employee performance reviews to be static and transactional. Perhaps most employees at a given business have their yearly review and consistently get a 2% raise. Across the economy, businesses are making the shift from this rote routine to a more dynamic and ongoing process of feedback, reviews and upskilling to better engage employees in their development.
  • Assess retention practices: In the battle for new hires, manufacturers should not lose sight of their approach to retaining the employees they already have. Leadership teams should review their workplace culture and retention practices regularly to ensure they evolve as the market has become more competitive. For employees, the fundamental factors of work enjoyment, good management, access to guidance and mentorship, and having a sense of purpose about what they do are all important.

Being able to help cultivate others’ skills is crucial for leaders in any industry, but it is paramount right now in manufacturing.

 

 

  • Think about technology differently: Like companies in other sectors, manufacturers need to change the way they think about implementing advanced technologies, especially given remote work’s rise and the increasing number of Gen Z workers. Rather than unilaterally making decisions about which technologies the company needs to put in place, leadership teams should make the conversation more collaborative, engaging employees about what types of technologies might benefit both their daily work and long-term development. Adoption of technology will be higher if employees are brought along in the decision-making process and implementation.

Embrace the New

Leadership teams that are skeptical about new technologies should examine why that is. If there is a perception within the company that it’s difficult to get employees to adopt new tech, executives should determine whether that perception is based in reality or based on outdated notions about the capabilities of the manufacturing space. The industry historically has been resistant to flexibility, but the shift to hybrid work and remote digital tools will force businesses to creatively implement manufacturing 4.0 technologies to stay competitive.

Indeed, more manufacturers have started to embrace digital transformation in the past four to five years, perhaps prompted by the U.S.-China tariff battle, which wrought havoc on supply chains and was further necessitated by the pandemic. But many companies likely have come at this from a reactive approach. To thrive in the future, they will need to become proactive about how they harness advanced technologies to create more efficient and streamlined operations and create a dynamic work environment.

And it’s not just about technology driving greater efficiency on the shop floor. Manufacturers need to think strategically and holistically about how advanced technologies can enable flexible work models and keep team members on track for their career advancement. This might involve:

  • Using digital feedback platforms or learning courses: Many companies already use these types of tools at the corporate level, but manufacturers that want to stay competitive need to get more creative with how they incorporate such tools across the entire enterprise, and work to enable technology access for everyone on the shop floor and the corporate office.
  • Reassessing technology policies on the shop floor: Think about manufacturers that don’t allow employees to use their phones on the shop floor, or don’t have Wi-Fi available in their production facilities. This will hinder those companies’ opportunities to attract younger workers. Gen Z workers do everything online, and they likely won’t respond well to a printed binder of policies and procedures. It’s important to have IT policies in place, but manufacturers should also cultivate an environment of trust with employees when it comes to technology use, given that access to phones and computers throughout the day can boost productivity. That trust will also facilitate better employee satisfaction and morale.
  • Better equipping team members with data: Ultimately, data does not solve problems; the way employees use data solves problems. Leadership teams can empower employees by arming them with data not just about operations, but also about their performance. Building data fluency among employees can also improve the understanding that new technologies — such as cobots, wearable tech, and automated processes — exist to enable them as workers, not replace them.

Crucially, there needs to be buy-in from senior leadership for such efforts to succeed. For many manufacturers, this will likely require a mindset shift about the positive ways technology intersects with and improves workplace culture.

Holistic Talent Pipelines

Another mindset shift is in relation to how present and future talent pipelines differ from those of the past. The days of executives, managers, and others staying in one role for three decades is long gone, replaced by a more dynamic environment where employees seek out new opportunities based on a broader variety of factors alongside compensation.

Gen Z workers do everything online, and they likely won’t respond well to a printed binder of policies and procedures.

 

This again highlights the importance of leadership competencies for the future. Executives and other leaders need to understand how the increasing importance of these other factors — location flexibility, inclusive environments, opportunities for growth, and the importance of environmental, social and governance issues — drive employee satisfaction and perceptions of the manufacturing industry.

To become employers of choice, especially in the battle for talent against companies in tech, logistics, retail, consumer goods, and other sectors, leadership teams need to have a holistic view of the talent experience, from recruiting to onboarding and through to reskilling and upskilling employees. That continued engagement, along with employee access to data beyond key performance indicators, can help people have a clearer understanding of their impact on the organization overall. In a labor market where people want to know how they fit into the bigger picture, that engagement and sense of contribution can be priceless.  M


About the authors:

Jason Alexander
is Principal, National Manufacturing Sector Leader at RSM US LLP.

 

 

Marni Rozen is a Director at RSM US LLP.

 

News

Manufacturing Supply Disruptions Could Last into 2023

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Supply chain disruption could continue for more than another year, according to the newest Resilient M4.0 Supply Chain survey conducted by the NAM’s Manufacturing Leadership Council. The MLC is the digital transformation arm of the NAM.

What’s the holdup? A combination of factors is causing fundamental shifts in supply chain approaches across the industry. These include pandemic lockdowns, blocked shipping lanes, container scarcity, material and component shortages, extreme weather events, rising prices and military conflict.

What manufacturers are doing about it: Supply chain organizations are reassessing traditional supply chain strategies, reducing network complexity and integrating key functions.

  • They are also redesigning processes and harnessing the power of digital tools to transform their supply chain ecosystems.

Universal disruption: Even supply chain structures with some local or regional networks have been affected by recent events, according to the MLC’s survey.

  • Ninety percent of respondents reported suffering either significant (52.5%) or partial (39%) disruption in the past two years. Just 0.5% said they had seen no disruption

Improving resilience: While many manufacturers have taken action to reduce supply vulnerabilities, 73% of companies said their current supply chains are not fully protected, and 12% said they believe their supply chains lack resilience.

Integrated supply chains: While today just 19% of companies said their supply chain structures are fully integrated, this proportion is set to more than double (to 47%) within the next two years.

  • The number of companies that remain dependent on siloed operations is set to fall from 14% to 4% over the same period.

Digital opportunities: The race to fully digitize more supply chain operations is picking up speed.

  • In nearly every supply chain function, companies said they are planning significant increases in digital adoption in the next two years to streamline their supply chain organizations.

Obstacles to progress: Many obstacles to future supply chain development involve issues with industry partners. Among the challenges cited by manufacturers in the survey were the following:

  • Differences in digital maturity among partners (54%)
  • A lack of common data platforms (53%)
  • Problems transforming traditional supply chain processes (29%)
  • Upgrading legacy equipment (26%)
  • A lack of skilled employees (22%)

Review the data: Click here to review the data in detail and read manufacturer responses to survey questions.

ML Journal June 2022

Enabling the Circular Economy

USM’s goal is to foster a closed loop program that recycles both metallic and non-metallic materials to be put back into production, says EVP Jodi Keller.   

Q: What is your role and focus at the company?
A: As Executive Vice President at United Scrap Metal, my role includes developing our strategic vision and goals, managing key customer relationships, and cultivating new business while maintaining the mission of the organization: “Making a positive impact on the lives of others.”

Q: What do you see as the most pressing issue facing the manufacturing industry today?
A: Retaining key talent is a major issue for today’s industry. USM’s focus includes initiatives to ensure that high performing talent can find a sense of purpose within their roles and responsibilities. United Scrap Metal is doing that by investing in our team members through leadership programs, exploring ways to leverage their unique personality traits and talents, and offering the flexibility to meet personal needs, all while supporting our company goals.

Q: What is the most important corporate initiative you are involved in?
A: USM’s key focus is on identifying and developing sustainable growth initiatives for both our company and our partners. With Environmental, Social, and Governance (ESG) and the Circular Economy gaining the attention of business owners and stakeholders, we are constantly evaluating our position in the manufacturing lifecycle and the contribution we can make to the overall reduction in GHG emissions. Our unique role in the Circular Economy allows our consuming partners to lower their GHG emissions by decreasing the input of virgin material within the material lifecycle. Some studies have shown a 33% reduction in energy by replacing virgin material with recycled inputs. It is USM’s mission to help reinforce this initiative. We are constantly seeking innovative approaches to facilitate the reduction, or in some cases elimination, of waste by fostering a closed loop program which recycles materials, both metallics and non-metallics, to be put back into production.

Q: What are the most important qualities that manufacturing leaders will need in the future
A: Leaders in manufacturing will need a strong combination of adaptability and innovation to succeed. The past two years have challenged leaders to be agile to change and evolve quickly. No one could have predicted a global pandemic; however, leaders that were able to successfully pivot have not only recovered but have strengthened their businesses in the process. Forward thinking leaders need to constantly evaluate their short-term and long-term strategy in order to stay ahead of the curve and maintain their position within the market. Leaders need to get comfortable about being uncomfortable and seek constant growth. Lastly, it is essential to anticipate potential barriers to growth and establish a plan to overcome them.

Q: What are the greatest opportunities for manufacturers over the next five years?
A: There is an opportunity for unlimited growth in the domestic market. The pandemic, growing international political concerns, and the rise in workforce costs have all contributed to an increased risk in doing business overseas for many companies. Organizations have trended towards onshoring manufacturing in order to maintain control and prevent supply chain disruptions, and there are no signs of that slowing.  Another trend is “conscious consumerism”, where purchasing decisions are driven by a commitment to making a positive impact from an environmental, social, and governance perspective. This type of consumption leads towards stronger brand loyalty to products made in the U.S. All these factors present an opportunity for significant domestic growth for U.S. manufacturers in the years ahead.

Q: What is your favourite activity outside work, or the last book you read?
A: Any activities that include my kids who are actively involved in sports. As summer approaches, you will find me outside working on my lawn or just soaking up the sun, while likely listening to a crime podcast. M

EXECUTIVE PROFILE: Jodi Keller
Title: Executive Vice President
Company: United Scrap Metal
HQ: Cicero, IL
People: 500+ Employees
Revenues: (privately-held)
Industry: Metal recycling
Web: https://unitedscrap.com

ML Journal June 2022

Confronting the Onshoring Workforce Crisis

Workforce planning should be part of every manufacturer’s supply chain strategy, helping to maximize digital opportunities and drive industrial growth.   

For decades, the goal was globalization. In the early 1990s, the end of the Cold War and the growing ubiquity of the internet ushered in an age of new possibilities for American manufacturing, which caused supply chains to sprawl worldwide. Recent years have provided strong incentives to reverse this trend and encourage investment in reshoring. As BlackRock CEO Larry Fink noted in a March 2022 letter to shareholders, we are seeing the “end to the globalization we have experienced over the last three decades.”

Manufacturing today is also plagued by a variety of negative forces from material scarcities to shipping delays to rising costs. At the same time, manufacturers are rethinking their geographic footprints and adopting Industry 4.0 tools and technologies to improve resiliency, meet heightened customer expectations, and decrease risk in the face of continued supply chain disruption. However, an ongoing labor shortage stands in the way of these future plans. Fortunately, there are multiple steps manufacturers can take to address workforce issues and pave the way to continuing success.

Manufacturing Workforce Trends

The manufacturing workforce is aging. According to the National Association of Manufacturers, nearly one-quarter of the manufacturing workforce is age 55 or older. The workforce’s march to retirement was accelerated by COVID-19, which prompted approximately more than 2.4 million Americans to retire early. Nearly all industries were rocked by a mass exodus of employees of all ages during the pandemic, but manufacturing was hit the hardest and experienced a nearly 60% jump in resignations compared to pre-pandemic rates.

“Chronic supply chain disruption serves as a motivation for manufacturers to move closer to key U.S. markets and better mitigate external disruption.”

 

The pandemic also dealt a major blow to manufacturing’s workforce pipeline. Community and technical colleges are common sources for manufacturing employees, but the in-person nature of lessons made that type of coursework difficult to sustain at the height of COVID-19. Enrollment in two-year vocational degrees for precision production fell 18% between the fall of 2019 and the fall of 2020.

Countering these workforce trends will play a key role in manufacturing’s ability to stabilize the supply chain, and in supporting manufacturers as they embrace Industry 4.0 and realize the benefits.

The Onshoring Movement

Chronic supply chain disruption serves as a motivation for manufacturers to move closer to key U.S. markets and better mitigate external disruption. The ongoing semiconductor shortage, which originated in the early days of the COVID-19 pandemic, is perhaps the most well-known example of a manufacturing sector pushed to consider onshoring due to supply chain dysfunction. According to the Semiconductor Industry Association, U.S. semiconductor manufacturing capacity has dwindled from 37% in 1990 to 12% as of 2020. However, the tide is beginning to turn. Semiconductor titans Intel and TSMC have already committed $20 billion and $12 billion respectively to build new U.S. factories. After surging 36% in 2021, capital spending in the semiconductor industry is projected to increase a further 24% in 2022 to $190.4 billion, an all-time high.

Though initial drafts have passed in both the House and the Senate with wide margins of bipartisan support, as of April 2022, funding for the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act has not yet been passed. The legislation would provide $52 billion in federal funding to allocate under the CHIPS Act would provide $52 billion in federal funding to support investment in semiconductor manufacturing capacity as a match to what states and municipalities could offer by way of discretionary incentives, which could encourage greater direct investment in U.S. manufacturing.

Efforts to stimulate U.S. manufacturing require the support of a fully staffed supply chain. However, a major hurdle for semiconductor organizations and other manufacturers interested in onshoring will be finding and retaining adequate labor in their new locations to support manufacturing operations.

Workforce Considerations with Onshoring

Workforce planning should be an integral part of any manufacturers’ site selection strategy. When determining a new site’s viability, manufacturers should conduct a labor assessment to determine whether there is an adequate labor supply locally with the right skill sets to support their operations. If there is not sufficient local talent, manufacturers should either choose an alternative location or develop the talent pipeline themselves along with municipal and educational authorities.

“Workforce planning should be an integral part of any manufacturers’ site selection strategy.”

 

Similar to how Silicon Valley is a talent incubator for the technology industry, a manufacturing talent hub is a community or region that develops around industry opportunities. Workers are willing to move from other locations to the area. The talent hub should have transportation infrastructure, cultural attractions, and lifestyle draws, in addition to career opportunities. A high volume of programs that aim to convey the full benefits of a career in the skilled trades — combined with rapid population growth — are currently making the Sun Belt a popular location for new construction projects, so it is fertile ground for the creation of talent hubs.

Manufacturers can partner with state and local governments, as well as local universities, to launch training initiatives to upskill an area’s existing workforce. Training should coincide with facility construction to ensure there is adequate labor available upon opening.

Broader Supply Chain Workforce Issues

Workforce issues plague manufacturers’ supply chain plans beyond onshoring. The pandemic exposed the perils of just-in-time manufacturing. In addition to ensuring warehouse shelves are well stocked, many companies are shifting their attention to optimizing last-mile delivery. As consumer expectations move from next-day to same-day delivery, manufacturing’s labor shortage is acutely felt in transportation. Last-mile delivery is one of the most important, expensive, and time-consuming steps in a product’s journey from the factory floor to the end-consumer.

Optimizing last-mile delivery is complicated by the dearth of truck drivers, which is projected to get even worse. The American Trucking Associations (ATA) claimed in 2021 that there was an estimated 80,000-person shortage of truck drivers, due in part to low earnings and difficult working conditions. Some smaller manufacturers are turning to rideshare services to deliver goods to consumers in a timely fashion. This tactic might be a quick fix to an immediate problem, but reliance on rideshare drivers is not feasible for larger manufacturers. Also, in areas where rideshare drivers are less available, this solution is not viable for servicing a large customer base. To help address the shortage, manufacturing and transportation companies should review the systemic issues that can lead to high turnover rates for truckers.

In the last decade, the ATA and other agencies have launched initiatives to help military veterans, a demographic typically accustomed to spending long stretches of time away from home and experienced in operating heavy machinery, to secure truck driving jobs. More recently, the Biden Administration’s Trucking Action Plan was set in motion to achieve the following:

  • Take steps to reduce barriers to obtaining a commercial driver’s license (CDL).
  • Kick off a 90-day challenge to accelerate the expansion of registered apprenticeships.
  • Conduct outreach and recruitment focused on veterans.
  • Launch joint Department of Labor (DOL) and Department of Transportation (DOT) Driving Good Jobs initiatives.

Companies facing worker shortages in their supply chain can consider taking a similarly comprehensive approach to recruitment. Manufacturers should not only devote time and resources to attracting staff but also to retaining staff. Pairing new hires with mentors during the onboarding phase can aid in the transfer of skills and foster camaraderie among employees. Training programs should not end when an employee has been sufficiently upskilled to fill a new role. There should be training opportunities available throughout an employee’s career. For example, the company could offer above-average wages for in-house positions and provide training to help existing employees transfer to an understaffed department like transportation.

Continuous upskilling can help workers grow with the company, increasing the value of their contributions and their incentive to remain with the organization. Roles should be designed as stepping stones on the path to advanced skills and greater opportunity. Internal communications should clearly outline employees’ projected career path so that workers are aware of upcoming opportunities.

Manufacturers may want to revisit their compensation and benefits policies to ensure they are competitive in the current labor market. They may want to provide monetary incentives for longevity, such as issuing yearly bonuses or other rewards. Additionally, companies can potentially diversify their labor pool by offering non-monetary benefits, such as providing working parents a stipend for childcare. Education sponsorships can help employees gain new accreditations or degrees to expand their skill set and motivate them to remain with the company.

Workers now expect more from their employers. Upskilling programs and competitive compensation and benefits policies can help manufacturers meet those heightened expectations to better attract and retain top talent.

Industry 4.0 Success Requires a Human Touch

U.S. manufacturers are aware that they need technology as urgently as they need talent. The 2022 BDO Manufacturing CFO Outlook Survey reveals that 50% of manufacturing CFOs consider falling behind on innovation to be a significant business risk. That risk has compelled 68% to pursue digital transformation in the next 12 months. Manufacturers on the path to digital transformation require personnel with the right skills to harness the technology and make Industry 4.0 investments worthwhile. In this way, digital adoption presents both an opportunity and an added workforce challenge.

Workforce should be a core component of manufacturers’ Industry 4.0 strategies. Investments in technology do not yield adequate returns if workers do not have the skills to use the tools to full efficacy. This challenge will require manufacturers to hire new workers with skills they have not traditionally sought in applicants, which means they may be competing with companies beyond other manufacturers for tech-savvy talent. Manufacturers should make their job offers competitive with nontraditional competitors, such as technology companies, to attract and retain talent with in-demand skills. In addition to hiring, manufacturers should also ensure that their existing workforce is adequately trained in the use of new tools. This requires developing a comprehensive change management strategy to enable the adoption of technology throughout the enterprise.

“Investments in technology do not yield adequate returns if workers do not have the skills to use the tools to full efficacy.”

 

Industry 4.0 investments can also be an asset for manufacturers in a tight labor market. They can market their investments in technology to attract younger applicants and highlight the opportunities a career in manufacturing can provide. A manufacturer that employs sophisticated supply chain technology has an advantage in the race for limited labor. Workers with expertise or interest in these technologies might be willing to relocate for a position at the company. Digitalization can also create opportunities for upskilling, which might appeal to prospective and current employees alike.

The adoption of technology also contributes to a safer work environment. Automation can mitigate the potential for human error and related injuries. Industry 4.0 tools can also make manual labor safer to perform. American manufacturers are equipping employees in physically demanding jobs with wearable technology, such as exoskeletons that support and protect workers’ joints to prevent immediate injury, as well as associated long-term negative health effects like carpal tunnel syndrome.

Industry 4.0 tools can also help manufacturers create a more sustainable work environment. A recent Dodge Data & Analytics survey found that 68% of industry professionals are interested in creating zero-carbon facilities that incorporate green materials. Safer and more sustainable working conditions are in alignment with an environmental, social and governance (ESG) ethos and help position manufacturing as an environmentally and socially conscious line of work.

The Future of American Manufacturing

America’s manufacturing revival rests on the industry’s ability to attract and retain talent, stabilize the supply chain, and streamline operations. Manufacturers that ignore the workforce issues facing the industry will not be equipped to successfully transform their supply chains, implement new technologies throughout their enterprise, or scale effectively.

Addressing staffing issues might entail rethinking existing labor sourcing strategies. For example, consider forming partnerships with local government entities and education institutions to sponsor programs to train students with the promise of gainful employment at graduation. In this way, manufacturers can ensure adequate labor and play an integral role in mitigating the student loan crisis by helping to promote careers in manufacturing that generally require less costly education than traditional four-year degrees. Manufacturing training and upskilling initiatives can help stimulate the U.S. economy, as even manufacturing professionals at the lower end of the salary spectrum will benefit from competitive wages.

“America’s manufacturing revival rests on the industry’s ability to attract and retain talent, stabilize the supply chain, and streamline operations.”

 

While there are significant hurdles to overcome, investments in the workforce are not just about mitigating risk. For example, initiatives to create a safer working environment, complete with opportunities for advancement, are in line with ESG values and can help improve employee satisfaction, retention, and serve as an asset for attracting talent.

The journey to resolving the workforce crisis begins with every individual manufacturer as they address the needs of their own organization. For manufacturing leaders, the first order of business should be to determine the labor strength of their own organization. This begins with an assessment of their own workforce based on turnover and retirement rates, the strength of their talent pipeline, availability of viable labor in their local market, and their organization’s past success in attracting talent. The output should be a current and future state projection of their workforce. They should weigh these results against their organizations’ strategic roadmap to determine whether their workforce will be an impediment to their business’s plans for growth and what steps they need to take now to adjust. Starting with a labor assessment to assess weaknesses and strengths throughout the organization can inform a long-term strategy for building a workforce that’s future-focused and built to last.

Devoting time and resources to addressing labor issues and adopting new tools and processes can lay the foundation for company growth, the manufacturing industry’s renaissance, and the nation’s economic wellbeing.  M


About the authors:

Tom Stringer
is National Leader of Site Selection & Business Incentives at BDO USA.

 

 

Maurice Liddell is BDO Digital Market Leader, Manufacturing.

 


Russell Clarkson
is Managing Director, Management Advisory Services, BDO USA.

 

Business Operations

Plant Tour Provides Firsthand Look at Digital Transformation

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On a recent tour of Intertape Polymer Group’s Tremonton, Utah, plant, manufacturers saw disruptive technology in action. From employing 3D printing to slashing parts-making time to programming floor equipment to identify and fix problems quickly, the Manufacturing 4.0 processes and technologies were on full display. The NAM’s Manufacturing Leadership Council hosted the tour and brought 70 MLC members to the paper- and film-based packaging maker.

Growth: IPG, a Montreal-based manufacturer whose products include the cling film StretchFlex, has seen its revenue double in the past six years, from $750 million to $1.5 billion.

  • The company now has approximately 4,000 employees across 34 locations, including 22 manufacturing facilities in North America.

What they saw: In addition to 3D printing and problem-solving floor equipment, tour participants got to see how IPG:

  • Manages parts more effectively with an automated storage system; and
  • Uses “hackathons” and employs a data-driven, digital-first mindset to find solutions to challenges.

Digital journey: In a briefing before the tour, IPG Vice President of Business Transformation Jai Sundararaman described why and how IPG undertook its digital transformation journey.

  • First, the manufacturer conducted an in-depth investigation. This included studying 20 different technologies, attending more than 10 industry conferences, hosting technology summits with vendors and engaging in more than 25 networking sessions with fellow members of the MLC.

Phased transformation: IPG’s phased approach to digital transformation focused on delivering business value. The company undertook the following schedule:

  • Phase 1: Align strategy and execution and “homogenize” operating culture. Upskill and retain talent with digital and process knowledge.
  • Phase 2: Drive revenue and margin growth by applying digital technologies at scale in other functions, such as customer engagement.
  • Phase 3: Leverage digital technologies for business model innovation.

M4.0 discussion: At the end of the IPG plant event, participants joined a panel discussion on data standards and analysis. Panelists discussed how to measure the return manufacturers get from implementing M4.0 technologies and how to get buy-in from employees and leadership.

Upcoming plant tour: Join the MLC’s next plant tour right from your desk on July 27. Participants will take a virtual look inside Accuray’s Global Manufacturing Center in Madison, Wisconsin. This virtual plant tour will highlight the challenges of a low-volume, high-complexity manufacturing and supply chain model. Register today to reserve your place.

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Finding Solutions for a Sustainable Manufacturing Future

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With increased pressure from customers, regulators and even shareholders, sustainable business practices are no longer optional for manufacturers. From reduced energy and materials consumption to lower emissions and ethical sourcing, manufacturers are expected to meet ambitious new goals. Luckily, the Manufacturing Leadership Council has established a new member working group devoted to helping manufacturers reach these objectives.

Support set-up: With five virtual meetings each year, the M4.0 Sustainability and Net Zero Decision Compass Group will explore key issues, best practices and challenges related to creating sustainable, compliant and environmentally friendly operating strategies.

  • At the first meeting, “Next Steps in Manufacturing 4.0 Sustainability,” on March 10, attendees heard from 3M Senior Vice President of Environmental Strategies and Fluorochemical Stewardship Dr. Rebecca Teeters and Lexmark International Chief Sustainability Officer John Gagel. Both speakers are also MLC board members.

Why the new group: The MLC decided to create the group after a survey of their more than 3,300 members revealed sustainability was a top member business concern.

  • “We decided that given the intensity of interest in sustainability and related subjects, such as net-zero and the circular economy, this was an opportunity to dedicate a whole new group to the topic,” said MLC Co-Founder, Executive Director and Vice President David Brousell.

Good for business, too: While manufacturers have been discussing and working toward sustainability for decades, recent growing concerns about climate change and other environmental issues are making the matter increasingly urgent.

  • Manufacturers that take on sustainable business practices are seeing competitive advantages ranging from cost savings to higher product quality to increased shareholder and employee satisfaction.

Lessons from manufacturing peers: The new Decision Compass group will share sustainability strategies, the real-world achievements of manufacturing companies, knowledge about the use and application of advanced technologies and timelines for implementation.

  • Participants will also be able to see how they stack up against other manufacturing companies.

Get involved: The MLC offers resources to help manufacturers improve their operations and learn about digital manufacturing. To learn more about the sustainability group or find out about MLC membership, email [email protected].

ML Journal June 2022

8 Steps to an Empowered Workforce of the Future

Manufacturers are facing pressing talent issues today. But they shouldn’t forget to plan for tomorrow.   

It’d be hard to blame today’s manufacturers for thinking short term. As demand continues to surge — despite inflationary pressures, supply chain challenges, and the war in Ukraine — manufacturing executives are understandably focused on filling orders and seizing opportunities to rebound from a turbulent two years.

The ongoing talent shortage plays a critical role here, of course. According to a recent study, nearly half of manufacturing executives are turning down business opportunities due to a lack of workers. While employment in the manufacturing sector is nearing its pre-pandemic levels, turnover remains high and keeping up with demand remains a challenge. Problems facing the industry before the pandemic — be it an aging workforce, younger generations’ expectations around flexibility, or the widening skills gap — have only been exacerbated.

Yet while manufacturers might be tempted to simply do whatever they can to get enough workers to meet the needs of today, they shouldn’t sacrifice investments needed to obtain and develop the right workers to meet the needs of tomorrow. Failing to do so will limit their ability to grow and derive value from investments in an increasingly digital operating model — and will mean passing up quick wins that will come by embracing long-term strategies.

On the bright side, it’s a good time to make these changes. Volatility and disruption aside, profits remain high, providing ample capital for investment. New technologies and the industry’s ability to produce essential PPE, ventilators, and other critical goods during the pandemic has also shifted negative public perceptions. Sixty-four percent of consumers now view manufacturing as innovative, up from 39% five years ago.

Manufacturers need to think beyond the challenges of 2022 and invest in the workforce of 2030.

These eight steps can help them do just that.

1 Define who you will be in 2030.

Here’s a concept that seems simple but is actually quite layered: Companies can’t assess what talent they’ll need down the line without understanding who they’re set to become. To answer this question, begin by understanding the industry you operate in, the type of products your company produces, who you want to be as an employer, and your current and future customer base.

For instance, a small manufacturer of watches that delivers direct to customers will have different needs than a high-end OEM. Understanding what resonates with your customers and what their future preferences will be — through customer surveys or other feedback mechanisms — can help lay the groundwork for designing your 2030 production line.

“Manufacturers need to think beyond the challenges of 2022 and invest in the workforce of 2030.”

 

Doing so successfully, however, is as much a product of your employer strategy as your customer strategy. Manufacturers are comfortable with strategic plans and budgets, but less so with defining, communicating, and establishing a culture that intentionally attempts to attract and retain talent. They’ll need to apply the same amount of energy into developing their culture, as they do to cultivate and care for their customers, if they want to be successful in the years to come.

In any case, it’s important to remember that M4.0 will increase demand for new roles such as automation technicians, engineers, data scientists, IT/OT analysts, security experts, and IoT solutions architects. These roles use new and different skill sets that typically haven’t existed (at least not in large numbers) in traditional operations. New technologies will also evolve existing roles such as operators who must now understand how to interpret data and use it to prevent issues before they occur.

Starting with a maturity assessment — which defines where your organization is today relative to where you want it to be and identifies the skills needed to get there — will help. From there, a journey map can highlight key progression steps, with measurable outcomes along the way.

2 Segment workforce needs, and define unique strategies for each.

After establishing a 2030 vision for your company and workforce, segment roles by the type of experience needed. Then determine how to attract or create that experience at your organization.

In hiring for roles where experience is not needed, broaden your scope, reduce criteria, and look to non-traditional sources of talent. That could entail diversifying your talent pipeline and collaborating with nonprofits, local governments, academic institutions, and others to find new workers. In Northeast Ohio, for example, MAGNET — a nonprofit supporting manufacturers in the region — has developed programs that invite inner-city high school students to take college courses in manufacturing and work paid internships, as well as a program that aims to help justice-served individuals re-enter the workforce. Numerous other sector partnerships around the country serve similar purposes.

Additionally, given the scarcity of emerging technology skills, it may be easier to hire people for certain roles who have the right soft skills and then train them in the necessary technical skills. With new technologies continually emerging, hiring people who can learn quickly and understand how those technologies 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.

“Once employees are on the factory floor, they’ll need the right tools and training to hit the ground running and grow in their careers.”

 

In other cases, it may make more sense to “rent” talent rather than making a long-term investment — hiring a third party to provide and/or manage certain capabilities rather than absorbing the high labor cost that may be necessary for certain in-demand capabilities.

No matter the approach, it’s worth investing more effort into your employee value proposition. Help prospective and existing employees see the big picture: why their skills are important, how elevating those skills can increase their value to the company, and what opportunities exist for career progression.

3 Shift your culture away from a labor mindset.

The world of work has irrevocably changed, with workers — especially younger ones — demanding more flexibility, work-life balance, and incentives for returning to a physical workplace.

This shift necessitates a transition away from the concept of lean/low-cost workers and toward one that more strategically looks at workforce planning, aligning all aspects that go into your business’s overarching vision to build your future workforce with intention.

To do so successfully, manufacturing leaders will need to determine the behaviors needed to achieve their strategic vision and how to govern in ways that drive those behaviors and accelerate value. We’ve identified nine critical drivers that predict and change business outcomes, including:

  • Purpose
  • Organization structure
  • Operating environment
  • Communication
  • Work environment
  • Total rewards
  • Talent management
  • Governance & risk management
  • Leadership

Putting these drivers together into one action plan will help organizations create an integrated operations management (IOM) framework that gives workers the space to learn, grow, and engage their minds, and also empower them to develop their own processes. This might entail, for instance, giving workers clear accountability measures and pushing them to own those measures and make decisions accordingly. Layering oversight and coaching atop these performance management and problem-solving methodologies can ensure these decisions are appropriate and that workers’ skillsets are continually improving.

4 Update your approach to skills/talent development.

Every manufacturer has continuous education or learning and development functions, but many have gone stale. That will need to change to meet the skills needs of 2030: According to a recent study, only 50% of production employees feel ready to take on advanced roles, and 60% of skills shortages are due to insufficient STEM education and vocational training.

But there are initiatives that can address this shortage. Examples include partnering with vocational training and high schools to provide more apprenticeship and internship opportunities, sponsoring AI and robotics labs in schools, rotational management development programs (like those at GE or Honeywell), and adopting a German-style apprenticeship model in which students spend much of their time gaining hands-on experience.

Industry partnerships with community colleges are especially critical to this endeavor. But manufacturers have to take these partnerships a step further and guide these programs in ways that develop the right future skills and attract students earlier. For instance, Oakland Community College in Michigan, in partnership with HURCO, built an advanced training center and lab to not only educate students with state-of-the-art technologies but also expose them to industry applications and opportunities. In Ohio, Cuyahoga Community College’s Manufacturing Technology Center of Excellence brings its mobile training unit in a 53-foot-long trailer right to the doorsteps of local companies and schools.

Once employees are on the factory floor, they’ll need the right tools and training to hit the ground running and grow in their careers. Digital tools can help, from tablets that can digitize work instruction and standard operating procedures, to wearables that can provide alerts that reduce on-the-job injuries, to augmented reality (AR) that can help train workers and provide work instruction and remote assistance. Lockheed Martin, for example, uses cameras to project images on an aircraft wing to show workers where rivets need to be placed.

Still, there’s a balance to be had in integrating these new technologies to develop talent. While the technologies could play a role in attracting a younger workforce, organizations should be careful to deploy them in ways that support workers’ capabilities. For instance, a 2022 study showed that while using AR helps workers pick up instructions more quickly, it can also set them back should it be taken away later on.

5 Elevate talent acquisition and retention strategies to align with evolving employee expectations.

Behlen Manufacturing in Nebraska surveyed hundreds of high school students about what they’re looking for in a job. The answers? Balance and flexibility, good relationships with leaders and co-workers, community engagement, being valued and heard, and growth opportunities. Salary was way down on their list.

In other words, employee expectations—especially among younger generations—are changing. Nearly 40% of new manufacturing talent have different career/job expectations than previous generations. Thinking ahead to 2030, manufacturers must be prepared to attract and retain talent from this cohort.

While manufacturers aren’t tech companies who can give their employees everything they want — after all, most factory workers will still have to show up on site — they do need to demonstrate they understand this new world of work and be open to some change, particularly around flexibility. A few initiatives they should consider include:

  • Changing work schedules — for instance, instead of three eight-hour shifts, try offering four six-hour ones
  • Onboarding “floating” staff who can provide coverage for people who need time off (e.g., to go to the doctor, etc.)
  • Understanding and appealing to specific employee segments. For example, women are an underrepresented portion of the manufacturing workforce. But Behlen found women enjoyed the satisfaction of making something, networking, and building relationships.
  • Developing a deliberate onboarding process that engages people from the start
  • Establishing employee resource groups to build a sense of community
  • Recognizing your employees’ successes and efforts by offering incentives for contributing ideas and creating structures by which employees can recognize their peers
  • Mapping out employee career progression so people can see the possibilities for growth at your organization
  • Elevating the image of manufacturing and/or your company. This could be as simple as remodeling your front lobby to make a better first impression or showcasing innovative technologies during factory tours.
6 Connect with communities and build your employer brand.

Manufacturers have historically been intimately tied to their local communities. For example, Hershey, Pennsylvania, was built by The Hershey Company, and numerous other cities around the country have similar origin stories.

“Manufacturers must return to a community-based ethos, particularly given lingering perceptions of the industry as dirty and unsafe.”

 

To develop the workforce of the future, manufacturers must return to this community-based ethos, particularly given lingering perceptions of the industry as dirty and unsafe. Their particular focus should be engaging students in high school or earlier, whether that’s through hands-on tours, local events (e.g., manufacturing day), or sponsoring robotics clubs and/or local teams. Manufacturers should also deputize (and incentivize) key employees to volunteer, speak at community development organizations, recreation centers, libraries, and other community centers. At the baseline, they’ll need to develop an active social media presence and brand campaigns on the channels that best target young people and their parents.

Jack Schron Jr., CEO of Jergens, Inc., who decided to keep his family’s business local in Cleveland, rather than one of the many other states that wanted his business, is a prime example of this approach. Building a new HQ in the city jumpstarted a virtuous cycle: soon a food bank was built next door, then the Cleveland Clinic moved in nearby, then a Social Security office.

The site also laid the foundation for Schron’s engagement with the local community, including an effort to clean up brownfield sites; hosting inner-city students for tours, internships, and apprenticeship programs; and creating a first-of-its-kind program for local special-needs students. This longtime investment in his community engenders a culture that drives employee retention: 77 employees have been with Jergens for more than 25 years.

7 Embrace experimentation.

It’s challenging, time-consuming, and even distracting to implement large-scale workforce change. That’s why as manufacturers think ahead to 2030, they should consider ways to experiment with modernized workforce concepts on a smaller scale to see how they work.

For example, a Shell factory in New Orleans gutted an entire floor of its office building and designed a new space for cross-functional teams to drive collaboration. These large, open spaces where teams were grouped by purpose and not traditional function empowered a highly collaborative culture, where work shifted away from roles and toward being part of a project team.

“A central facet of improving any aspect of your business is to measure and incentivize it.”

 

Done well, these initiatives can build ownership and culture around a shared mission, while also helping your organization learn how to best engage workers and develop skills. They also create environments where people can innovate and have fun, which in turn enables a sense of pride, responsibility, and accountability — the opposite of the common manufacturing mindset of clock in, clock out, and go home.

8 Measure and incentivize change.

A central facet of improving any aspect of your business is to measure and incentivize it. This starts by identifying the change outcomes you want to make, who will be responsible for making it, the behaviors needed to drive it, and how (and with what frequency) you’ll measure the results. Along the way, leadership will need to be engaged in prioritizing various changes as well.

There are numerous approaches an organization can take here, from quarterly or annual surveys to a one-question survey placed in the company break room that can check the pulse on pressing topics and provide instant feedback.

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.

The Road to 2030

If the first half of 2022 is any indication, manufacturers have another roller coaster year ahead. Yet while numerous challenges remain or will emerge, it’s also an exciting moment for the industry: Factory orders are rising, technology and innovation is burgeoning, and public perceptions are improving.

To keep this momentum going, however, manufacturers must keep one eye on the future, especially when it comes to their talent. Unfulfilled manufacturing jobs are forecasted to rise to more than 2 million open positions by 2030, resulting in $1 trillion USD in lost GDP. To prevent these losses, industry leaders would do well to bring the digital, M4.0 mindset they apply to the factory floor to workforce planning, while also advancing a long-term, iterative approach.

If done right, you’ll not only see an immediate positive impact, but move towards the workforce needed for the company you want to be in 2030. M


About the authors:

Antonio Martin,
is a Senior Consultant, Consumer & Industrial Products, West Monroe

 

 

Glenn Pfenninger, is a Director, Human Capital Management, West Monroe

 



Kris Slozak,
is a Senior Principal, Consumer & Industrial Products, West Monroe

 

Also contributing to this article were Karen Bundy, Senior Manager, Human Capital Management, West Monroe; and Luis Davila, Principal, Consumer & Industrial Products, West Monroe

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