Creating the Flexibility Manufacturers Need to Pursue Growth

It is difficult to hire people with the right skills, which negatively impacts manufacturers’ desire to increase production

With the Institute for Supply Chain Management (ISM)’s manufacturing index reporting 65 months of growth, the index also found manufacturers continuing to hire. The important role of talent in manufacturers’ growth plans cannot be understated. The Accenture 2014 Manufacturing Skills and Training Study—Out of Inventory Skills; Skills Shortage Threatens Growth for U.S. Manufacturing report released earlier this year found that manufacturers could be negatively impacted by increased production costs stemming from a shortage of skilled workers. Sixty percent of 300 U.S. manufacturers surveyed for the study said it was difficult to hire people with the right skills—a situation that negatively impacts manufacturers’ desire to increase production.

Talent is one of three critical dimensions of the foundation upon which leading manufacturers rely as they seek to increase their flexibility, and thrive in a world of ongoing volatility and uncertainty. The other two dimensions of flexibility that manufacturers need, as outlined in the Accenture Manufacturing Flexibility Index, involve the extent to which digital technologies are used across a company’s operations and the ways in which physical assets are managed.

Flexibility—The Key to Success

In fact, while nearly nine in 10 U.S. executives surveyed for the Accenture manufacturing study believed that the ability to flexibly and dynamically move production from one plant to another or to even alter the mix of products made at a factory is important, quantifiable evidence exists to support that belief. Accenture found a strong correlation between manufacturers’ business performance and high scores on its Manufacturing Flexibility Index, which compares regions and industries on their performance across the three dimensions mentioned above, which are critical to achieving operational flexibility.

Those manufacturers with high index scores experienced greater business growth between 2011 and 2013. During the same time period, they also were more likely to increase their production, boost profitability and increase their labor efficiency by more than 10 percent. And, with those results to help propel them forward, those that had greater flexibility tended to be more optimistic about achieving growth in the future.

Driving the Digital Dimension

First, accepting that digital could be the great equalizer, there are some steps companies can consider to leverage new technologies to increase their flexibility.

For instance, oftentimes, companies lack a centralized capability to help manage their supply chain performance and aid decision support. Digitally enabled control towers, applied to the supply chain, can give manufacturers integrated visibility across all dimensions of their network, from demand and capacity to inventory, orders/shipments and logistics.

Control towers also can help a manufacturer conduct predictive analytics to make sense of the data they collect to trigger alerts, detect tipping points and run what-if analyses to support scenario outcome modeling, and ultimately initiate appropriate responses. Another benefit is that it can enable a manufacturer to monitor its supply chain activities and alert another part of the supply chain when a situation arises that may have an effect elsewhere on the operations. For example, if a shortage of raw materials is predicted, production and inventory may be reallocated down the line.

A manufacturer also may leverage advance technologies, such as automation, robotics, simulation and 3D printing, to improve operational and financial performance.

Aiding Asset Management via Digital

Digital, if applied strategically, also can revolutionize asset management with analytics, telemetry data and cloud-based systems. These types of technologies give manufacturers the ability to continuously monitor and predict their asset reliability. As a result, manufacturers can structure and schedule maintenance activities at times that would be the least likely to interfere with production, and equally important, they can enable manufacturers to proactively identify and avoid potentially major, costly breakdowns.

Likewise, wireless sensors and mobile mounted apps help companies enhance plant safety by monitoring conditions in potentially hazardous locations, and alerting field or plant workers and managers to situations in real time.

Digital technologies also can give companies the ability to continuously monitor product performance in the field, and automatically feed that data back to manufacturing and engineers in real time. Having access to such information enables companies to identify and correct quality defects quickly and improve product design.

Addressing the Talent Dimension

But it is not just about digital technologies. Manufacturers also need a multi-tiered talent development strategy to strengthen their talent supply chain. Companies that successfully address the manufacturing skills shortage invest in a multi-tiered talent development strategy to address the issue over the short-, medium- and long-term. In doing so, they offer digital learning experiences, a combination of formal and informal training and a certification approach that also enables their people to build skills. Companies may consider partnering with community colleges, vocational programs and other community-based organizations to create and launch education and training programs to develop the specific skills they need.

And, to further expand the candidate pool, manufacturers may need to drop the notion of the perfect candidate. Instead, they should consider looking for candidates with generalist skills that can easily be developed to perform the work that the manufacturer needs an employee to do. As employers build their pool of workers who may lack specialized skills to fill critical roles, they can identify their best performers to upskill. By providing such a path to higher skilled work through training and apprenticeships, employers can offer a fulfilling career path that can also encourage long-term employee loyalty.

By building a workforce with the right skills and incorporating digital capabilities in operations, manufacturers can create the flexibility they need to scale up and down, execute on alternate strategies as needed and step up their game in the face of ongoing volatility. As the Manufacturing Flexibility Index revealed, companies that excel in digital, asset management and talent will be better positioned to increase their global competitiveness.

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