New technology for Manufacturing 4.0 requires a strategic way of thinking for organizations to realize the benefits
This article was originally featured in the Manufacturing Leadership Journal in June 2021. ©2021 Manufacturing Leadership Council, a division of the National Association of Manufacturers. All Rights Reserved.
The pandemic initially hastened the drive toward digital transformation and automation out of necessity, but progress should accelerate as companies start seeing the measurable value from early M4.0 initiatives. But that will only happen if they have the right skills—in both direct (shop floor) and indirect (leadership, engineering, etc.) roles—for operating new technology in a rapidly changing world.
Skill gaps are a growing concern. In a recent World Economic Forum report, 60% of U.S.-based companies said that skills gaps in local labor markets prevent them from successfully implementing desired technologies.
Our research confirms that: 56% of employers rate their own skills gap as moderate to severe. Among employees surveyed, 60% believe their current skill set will be outdated in the next three to five years. When asked why, respondents pointed to the need to learn new technology (55%), automation replacing their skill set (32%), and the skill set in their role growing more complex (25%).
While this challenge crosses industries, it’s particularly acute in manufacturing, where new operating technologies are bringing accelerated change to work and the workforce. Manufacturers need to become as deliberate and strategic about managing skills as they are about managing people. This requires enhanced attention in five areas:
As manufacturers navigate digital transformation, they’re still trying to determine what the post-pandemic workplace will look like. Our Q2 2021 executive poll found this is more challenging than executives thought. Manufacturers are preparing to accelerate near-term hiring. In the most recent NAM Manufacturers’ Outlook Survey, manufacturers said they expect full-time employment to grow by 2.7% over the next 12 months, the highest rate in three years. Mid-sized manufacturers are even more upbeat, projecting a 3.3% growth.
The convergence of these factors makes this an important—but also opportune—time to think about the roles required along the journey to the factory of the future and the skills required for success in those roles.
We all know that M4.0 will increase the demand for new roles such as automation technicians, engineers, data scientists, IT/OT analysts, security experts, and IIoT solutions architects. These roles use new skill sets that typically haven’t existed—at least not in large numbers—in traditional operations.
But existing roles are also evolving, requiring new ways of thinking to realize the benefits of new technology. For example, operators need to understand how to interpret data presented through new interfaces, use that data to sense problems, and make decisions to prevent issues before they occur.
Regardless of the role, soft skills are increasingly critical to success. According to the World Economic Forum report, the skills that are increasing in importance overwhelmingly fall into this category. These include aptitude in analytical thinking and innovation, active learning, creativity, critical thinking and analysis, social influence, emotional intelligence, reasoning, problem solving, and ideation. We will add a few even more basic skills to that list: communication, multitasking, time management, and decision making.
These skills don’t just influence performance. They also contribute to a culture that is agile and adaptable and an environment where people — particularly younger generations — want to work.
We have found several tactics to be helpful for defining technology-enabled roles for the future. One is emphasizing the role’s value. This helps people see the big picture: why their skills are important and how elevating their skills can increase their value to the company. It can also help “rebrand” traditional manufacturing roles to appeal more to young talent, removing some stigma around repetitive work and the instability of hourly jobs.
Another is to purposely redesign the employee experience before introducing new technology. This can facilitate adoption. But despite the growing prevalence of technology in the workplace, this practice is not yet commonplace. In our research, 84% of companies said they sometimes or never redesign the employee journey before introducing new technology.
Because M4.0 is a journey with an evolving destination, you will need a means of measuring your progress along the way, not just at the end. This starts with a maturity assessment that defines where you are today relative to where you want to be and identifies the skills needed to have to get to the “end state.” A journey map should highlight key progression steps, with measurable outcomes at each step.
In the NAM Manufacturers’ Outlook Survey, two-thirds of executives said attracting and retaining a quality workforce is a primary current business challenge, second only to the increasing cost of raw materials.
Given the scarcity of emerging technology skills and the extreme competition for those skills, it may be easier to hire people with the right soft skills and then train them in the necessary technical skills. Consider that there will always be new technologies coming on the scene. Hiring people who can quickly learn new technologies and have the capacity to understand how those 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. In some cases, it may make more sense to “rent” talent rather than buying it — hiring a third party to provide and/or manage certain capabilities rather than absorbing the high labor cost that may be necessary for certain scarce skills.
Competition for skills also warrants more focus on the talent pipeline. Partnerships with schools —university engineering and information science programs, but also vocational and technical schools and community colleges — will be increasingly important. These partnerships should create co-op and internship opportunities for people interested in new roles such as automation techs or M4.0 engineers, while supporting the development of a curriculum around the M4.0 skill set.
Expect competitors to be active in this area. In the NAM Manufacturers’ Outlook Survey, nearly half (44.5%) of executives said they would use federal funding, if available, to expand community college programs. Keep in mind that this is a long-term commitment that, if chosen, can take years to deliver a measurable impact. As such, it should be part of the strategic plan to ensure that it receives sustained effort over time.
Don’t be afraid to try new strategies, just like United Airlines did in purchasing a flight school. One idea for manufacturers is to begin building relationships in high school and/or helping develop a classroom curriculum that will teach certain essential skills. This is a great chance to educate future employees about the value of a manufacturing career before they start down a different path. Activities such as lunch-and-learn sessions in classrooms or for students on site at your facility can pique interest and get students thinking about skills they want to develop.
Finally, aim to do a better job of highlighting opportunistic career paths and development opportunities during recruiting. This is particularly important for recruiting younger generations, which place particular value on career growth and development.
Reskilling is a known and considerable concern with multiple dimensions involved. Taking the following approaches not only ease concerns but sets up the workforce more effectively and efficiently.
Shoring up training approaches: Training has been a challenge for everyone during the pandemic. Given the changes in the workplace and workforce, now is the time to look at development approaches and shore up weaknesses to enable reskilling in the coming years.
Manufacturing training—particularly in factories—varies widely. It is not uncommon for training to be more informal (shadowing someone) than formal, or limited in scope to operating the equipment, with emphasis on the what or how (“do this, but not that”) but not the why. In an increasingly automated environment, teaching employees to think and understand is important for both safety and efficiency (e.g., reduced waste).
Managerial training is a common void. Our study of managerial effectiveness found that 59% of managers overseeing one to two other people received no training at all and 42% resorted to mirroring the managerial style of a former boss.
M4.0 environments will require different types of training techniques—whether new job aids or simulations. One easy-to-implement idea is building digital work instructions into new technology, creating an interface that shows operators every step of the process with the specifications needed to make the product. This ensures that every operator is following the same best-practice process.
Personalizing training: As roles become more specialized, training should become more tailored to individuals, with personalized plans and training timed for when employees need to begin putting new skills into practice. For example, a younger operator with strong technical or analytical acumen won’t have the same level of experience with the machines to know when they will break or the manufacturing mindset to understand the data to be collected and analyzed. That person’s training plan should focus more on operations. On the other hand, an experienced operator will need more emphasis on reading the screen, understanding the data it is presenting, and then using those insights to make decisions.
Having a formal training program also shows employees the skills they need to develop to get to the next level. For example, if an operator wants to become a lead operator, he or she can find and take training that is necessary to qualify for that role. If an operator takes a specific technology training course and demonstrates expert knowledge of the technology, he or she can become the floor subject matter expert to whom others come for assistance. Extending access to training portals to a broader range of roles — not just management and other indirect roles - will be increasingly essential as training becomes more personalized.
Incentives to reskill: Many manufacturers provide a pay incentive for training — for example, an extra $0.25 per hour for meeting a certain skill criterion. If you do this, however, make sure you get a return on it by ensuring employees are staffed properly and are applying what they learned in their work—many organizations do not follow up adequately.
Measuring training impact: One significant void in many organizations is a process for understanding and tracking the impact of training. Measurement of classroom training, where it exists, typically focuses on the student’s immediate retention through an end-of-lesson test, as well as the effectiveness of the instructor. Few companies measure how well employees apply the learnings on the job.
Ideally, training measurement should align with important operational metrics. For example, a supervisor notices that the scrap percentage is up in a particular area. That signals a potential need to retrain the operators. Following the training, the company should follow up by looking at particular metrics—scrap rate or first-pass yield—to look for improvement. This is also a way to determine whether you need to improve training approaches.
This type of measurement should be systematic and broadly employed, with data that is up to date and available to feed other functions (e.g., human resources and performance management).
Rotations: One idea for broadening current skills is to consider rotational roles where it applies. This is an increasingly popular approach for building a holistic skill set, although in manufacturing it is still more common in larger companies and, even then, for management or engineering positions. Rotations among areas is one simple way to do this in the factory, focusing on activities that are fairly similar. For example, today I am an operator in Area A. Tomorrow, I am an operator in Area B. Of course, this type of flexibility depends on many factors, including unionization and job classifications.
The bottom line is that, as M4.0 takes off, manufacturers will need to make strategic investments in training — otherwise, they will struggle with reskilling. Employers recognize this. In the NAM Manufacturers’ Outlook Survey, executives said that if a workforce training investment bill is enacted, the top two most impactful uses of dollars would be funding for on-the-job training (74%) and funding for incumbent worker training (57.5%).
With more investment in attracting and developing skills, you need to make sure those skills aren’t walking out the door.
One risk is retaining experienced workers’ knowledge before they retire. That should be happening now. Very skilled craftsmen know how to diagnose and address issues, particularly those that have bothered them in the past: “The machine acted this way. This action fixed it, or this machine needs to be torqued to this setting, whereas everything else needs this setting.” Technology has the ability to identify the “weak signals” machines exhibit before becoming audible or visible to human senses. Capturing and digitizing this insight not only impacts performance; it passes knowledge on to newer workers.
The other risk is attrition — particularly given today’s more fluid careers. Many studies and reports document the tendency for younger generations — most notably, millennials — to switch jobs more frequently than their elders. A recent Gallup study showed that millennials are three times more likely than their elders to have changed jobs in the past year and 10% less likely to expect to be with their current employer in a year.
One way to combat this is to be more deliberate about job descriptions and organizational structure so that you can demonstrate a career path that motivates people to stay. With operations evolving, it may be hard to be too specific — but even having general direction can help: “1-2 years as an individual contributor, 2-3 years as a supervisor/lead, 3-5 years as a manager.” It is also helpful to show how the role can progress into other functions, such as IT, engineering, operations, or maintenance.
Here again, quality of management can play as much of a role in retention as it does in day-to-day operational performance. As noted earlier, our research found that many companies don’t prepare new managers well for their role.
If you don’t already use a skills index or inventory — or don’t track skills comprehensively across the organization — this is a good place to start. A skills matrix is essentially an inventory of your existing skills on one axis, with the necessary skills for your operations on the other.
A good skills matrix can provide a heat map that highlights gaps or sources of skills that you may want to tap for open/new roles. For example, it can tell us: “We don’t have people who know how to perform non-destructive testing on welds.” “Everyone who is confined-space trained is within three years of retirement, so we need to start training people to fill this need in future years.” “Or, our electrical planner is close to retiring, and we don’t have anyone else who can perform electrical jobs.” In the case of one client, having this information could have facilitated a mutually beneficial career transition and avoided a months-long search for a maintenance planner. With a comprehensive inventory and tracking of skills, the company could have looked inside for a current employee with key knowledge associated for this role who is in the later stage of a career and wanted a less physically demanding job.
There are various ways to conduct skills mapping and tracking. A skills matrix may employ a binary method (yes/no) or a scale (1-5). Scales can help reveal degrees of weakness, not just gaps, within current resources. Regardless of the approach, it is important that this process is automated and digitized — i.e., not recorded on paper and stored in file cabinets — to give the plant or company the broadest awareness of the skills it already has.
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. For example, if you want to implement a certain operations technology on your manufacturing line by the fourth quarter of 2022, you will need to make sure you have the appropriate people in place to support and maximize that investment.
M4.0 is not just about using technology and automation to run more efficiently. It is also about being able to adapt to a faster pace of change in markets, competition, and customer expectations.
The direct and indirect manufacturing roles that will propel successful M4.0 adoption and enable greater agility will require an increasingly complex mix of hard and soft skills. Employers need to become more deliberate and strategic about managing skills. The specific strategies to employ depend on your current and evolving operations, but success will require focused attention in all five areas included above.
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