By Bill Remy
The onslaught of immediate, near-term issues has conditioned many in the industry to assume this is the new normal: fighting fires is now the status quo. But it doesn’t have to be this way. Now is the time to leverage those lessons in manufacturing adaptability learned over the last few years and implement forward-looking strategies to become more nimble, flexible, and focused.
In the coming year, having an agile and adaptable mindset will be a strategic and competitive weapon. Change is inevitable, so it’s better to get ahead of it. Embracing that notion and investing in proactive strategies—rather than being the victim of circumstances—can help any company adapt to whatever comes next.
People are the most important part of your business, so start there. Talent strategy is a critical piece of manufacturing success, but it’s also one of the most challenging. An ongoing skills shortage and high turnover continue to plague most manufacturing companies.
We’ve seen a sharp decline in interest in manufacturing jobs while favor for tech and service industry work continues to grow. Manufacturers must be creative in attracting and developing a workforce. One option is to shake up recruiting tactics. Get involved with high school and community college vocational programs to create apprenticeship programs for skilled labor. This can help recruit and train young people early to demonstrate the benefits of a steady, in-demand and rewarding career.
Next, improve and invest in onboarding and training. Many companies see extremely high turnover with the first 90-day churn exceeding 100% and chalk it up to laziness or unwillingness to work. But the truth is, new employees often aren’t given proper training and support. During the height of labor shortages, most companies pulled back on onboarding and training because they needed to put people immediately to work. That means new employees were thrown onto production lines and factory floors with very little training and often paired with experienced staff. It’s no wonder they couldn’t keep up—that’s a recipe for failure. 2024 is the year to reinvest in better training and longer shadowing periods to build employee confidence and keep new recruits from bolting for the door.
US manufacturing has not made significant productivity gains since 2005 and has largely been flat or declining since 2009. While speed is essential, productivity goes beyond meeting quotas. It requires streamlining the entire Order to Cash process from raw materials acquisition and production planning to shipping and distribution, all at the right cost. For example, some companies that offer multiple product options do so at their own expense with inefficient processes that either eat into profitability or force them to price products out of the market. Instead, consolidating orders and finessing procurement and production processes to shed costs can create greater capacity and flexibility.
Take an unbiased look at your entire process and lose the “that’s the way we’ve always done it” mentality. Examine and analyze everything, one piece at a time. Go directly to points of impact to see and understand the challenges. Ask employees – those working on the factory floor – for suggestions on reducing waste, eliminating redundancies, or accelerating steps. Efficiency experts don’t have to be the sole source of productivity hacks. Many of the best ideas come from those on the production line, who work on the manufacturing process day in and day out, and know it like the back of their hand.
Manufacturers have faced significant challenges due to prolonged lead times for materials, compounded by disruptions in shipping and logistics stemming from geopolitical tensions and strained international relations.
To bolster supply chain agility and mitigate risk, companies can consider reshoring or nearshoring to local markets whenever feasible. While relocating procurement to the Americas may initially appear to incur higher labor costs, the benefits of reduced lead times, lower shipping expenses, and enhanced manufacturing stability can outweigh these drawbacks. Additionally, nearshoring can significantly minimize the complexities associated with managing suppliers, logistics, warehousing, and staging. It’s essential to calculate the total landed cost comprehensively and identify opportunities to reduce the overall cost of ownership for supplies.
Fostering supply chain agility in risk management also involves developing contingency plans with alternative suppliers. It’s crucial to evaluate supply chain risk based on historical data and investigate the capacity of suppliers two or three tiers deep in the supply chain. Prepare for various scenarios through ‘what if’ planning, and establish multiple failure modes to ensure resilience in case of disruptions.
While technology in manufacturing is increasingly important to productivity, the buzz over new capabilities like AI can give companies the false impression it’s a silver bullet. In the rush to adopt because they feel like they should or have fear of missing out (FOMO), many lose sight of the ultimate goal.
Instead, tackle technology responsibly with a crawl-walk-run approach. Start by identifying the problem to solve, and whether potential solutions will actually deliver—if it doesn’t create a force multiplier or significant productivity lever, it’s not worth it. Consider the data and infrastructure needs to be sure your enthusiasm doesn’t exceed your capabilities. Implement slowly and prove as you go to make the most of solutions and avoid wasting valuable resources.
Large companies especially are under greater pressure from board members and shareholders to lower their carbon footprint, but smaller companies could arguably stand to gain the most from environmental, social and governance (ESG) programs. The solutions are often quite simple.
There’s probably not a single company that can’t save 15-20% on energy with small changes like upgrading to high-efficiency LED lighting or installing occupancy sensors to reduce burn time.
Improving workplace conditions can play a big role in drastically reducing the cost and productivity impact of turnover. Take a look around. Are you operating a “3D” factory—one that’s dark, dirty and dangerous? Recordable incident rates have not improved and poor safety has a huge cost, both financially and on morale. Better housekeeping and improved lighting in production areas reduce tripping hazards and create a safer, more pleasant work environment with fewer accidents. Upgrading break rooms and providing clean, well-stocked restrooms can boost morale and show employees you truly value them as your most valuable asset.
One of the biggest obstacles companies face when trying to address these issues is bandwidth. Too often their people are so consumed with day-to-day firefighting they don’t have time, energy or brainpower to spend on strategic, forward thinking.
Companies must confront these issues to be competitive. That means your team needs to be willing to put everything on the table and prioritize time and resources for strategic forecasting and planning. Waiting for a break in the action is futile because one thing’s for certain: it’s never coming. Instead, adopting an agile approach that’s designed to adapt quickly means you’re less likely to get blindsided by the next crisis.
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