If we want digital transformation to take hold in the manufacturing industry, we must consider how people, process, and technology work together, hand-in-hand. It sounds simple enough, but it’s not. We need to be careful to consider all three, and not just simply turn to technology to plug a hole or solve a problem in one of the other areas. This seems to be where manufacturers are investing millions only to find out later—even sometimes much too late—they needed to consider the importance of three in tandem.
Perhaps one of the biggest hurdles today is the “people” side of the equation. We all know there is a skilled labor shortage in the manufacturing industry. But what do those words really mean? In fact, numbers are downright scary. We also all know the labor market is the key to the next era of digital transformation. Let’s take a look.
The Problem
The manufacturing industry is expected to reach a critical shortage of 3.8 million workers within the next decade. According to L2L’s latest study, 75% of respondents have observed a noticeable lack of skilled workers in the market in the past year, while 46% reported significant resignations within their organizations during the same period.
High turnover is a critical issue, with 81% of manufacturers experiencing disruptions in plant operations due to this challenge. The skill shortage exacerbates the problem, impacting productivity and efficiency for 78% of respondents. Worker dissatisfaction is also on the rise, with 40% unhappy in their current jobs and 31% considering leaving, underscoring the need for new retention strategies.
This particular report suggests digital technologies can have a positive impact on manufacturing operations. We see 93% of users believe digital communication tools improve transparency and accountability and nine in 10 reported faster onboarding and a significant reduction in upskilling time thanks to digital collaboration platforms.
The Solution
Technology can certainly aid in the transformation happening in the manufacturing industry, but it is only one component to consider, and it has an interesting relationship with the workforce. In our report, Who Is the Worker of Tomorrow?, we find 69% of manufacturing professionals report their job is in jeopardy of being partially or fully replaced by technology.
Many business management gurus have talked about the shift in the workforce. Interestingly though Peter Drucker’s vision of the shift in the workforce struck a chord with leaders predicting a new type of workforce. He foreshadowed an impending move toward information and technology.
Businesses would flourish. This surge in the economy would then mean investing in more knowledge of workers to reduce and execute many of the manual tasks. His vision, like sundry others, has resulted in knowledge workers, information workers, eliminating multitude of manual labor jobs.
Now, with the birth of generative AI (artificial intelligence), we are seeing a resurgence of even more repetitive tasks being replaced by this new technology, creating an entirely new shift in the workforce of tomorrow. This new shift is creating a new open work environment in which an abundance of traditional blue-collar jobs will be reduced, but so will countless primary white-collar roles. The worker of tomorrow wants more flexibility over their work schedule—something I talk about over on The Peggy Smedley Show this week—and AI technologies open the door for more attractive freelance opportunities. But how is this accomplished in a manufacturing environment? First, by thinking and acting differently about the people and the technology.
Another factor here is we are not looking at the disparity in AI taking over and letting good talent go. The reality is AI is good at collecting and summarizing information, but someone still must look at it who knows the topic. Only people will know if the answer from AI is right or wrong. All too quickly, the business side of the house is cost-cutting the manufacturing knowledge that understands the real workings of the operations. And a critical component to all of this is we must train these people to know the difference. My analogy here is there is a difference between book smarts and street smarts. This is the problem we are seeing today. All too quickly our best street-smart assets with all their knowledge are leaving and they can quickly solve the problems that will arise as quickly as they close the door.
A Deloitte survey found nearly three-quarters of organizations are looking to change their talent strategies in the next two years because of generative AI. At the end of the day, we need people and AI working alongside each other if this is going to be successful. As I continue to advise more and more manufacturers, think twice before you let your brightest people walk out the door.
What seem like simple cost reductions today could result in multi-million-dollar shutdowns in production or your regular problem solver, you just took for granted. Just ask yourself: are you jumping the gun? There is true value to be had with gen AI, but it will require training, reskilling, and upskilling. And that starts with finding the right people for the job.
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