Honoring Workers as Manufacturing Surges
On Labor Day, it seems appropriate to honor our team members. Manufacturers would have no hope of scaling up to meet the surge coming down the pike without the engagement of their teams. Instead, excitement is building as high tech meets high touch in manufacturing as investments mount to over $8 trillion, artificial intelligence takes hold to accelerate results, and the best of the best marry people with “robots” to achieve exponential results.
The statistics are moving in a positive direction for manufacturing and supply chain workers. Wages for blue-collar Americans are up 14% over the last year. Additionally, more than 500,000 jobs have been created in the private sector since the beginning of the year with over 2.4 million jobs for native-born American workers. Consumer sentiment is increasing, and as the investments and expansions roll out, team members will be at the crux of success.
Consider People Your Strategic Asset
Over 20 years of consulting, the trends are clear – the most successful clients consider people a strategic asset. What does this mean? As leaders evaluate options to deploy capital and priorities to pursue to achieve their goals, people are always one of the top considerations. Instead of seeing them as labor dollars, they see the “right” people as strategic assets.
Strategic Talent Stockpile vs Inventory Stockpile
A building products manufacturer struggled to keep up with orders as volumes surged after the Great Recession. During that timeframe, most manufacturers reduced costs, slashed inventories and watched every penny. Our client reduced temporary employees but kept their high-skilled resources. They cross-trained them and asked them to perform lower-skilled jobs for interim periods. They provided additional technical skills training and created a talent stockpile. Thus, as volume surged, they were able to ramp up production rapidly and produce on demand whereas their competition struggled. Even the competition that carried extra raw material, work-in-process (WIP) or finished goods inventory ran low and were delayed while replenishments arrived. Their revenue surged, giving them a large head start and traction to sustain the progress.
An aerospace manufacturer had a bottleneck in their machine shop. In essence, as their backlog increased, their lead times were limited by their machine shop output. Thus, we developed optimized production schedules to maximize output and provide clear requirements for purchasing, raw materials staging, and maintenance/ engineering support. Output increased and the backlog freed up. However, we knew that we were dependent on the teams in the machine shop and had to account for vacation schedules at a minimum. Thus, we illustrated the critical importance of supplementing labor capacity of the machine shop to support revenue growth and customer readiness plans as a part of the SIOP (Sales Inventory Operations Planning) process. The executive team approved hiring the appropriate resources to scale up and meet and sustain customer requirements. Service levels shot up, customer contracts were gained, and margins increased.
Retain & develop talent
Our most successful clients are far more focused on retaining and developing talent than hiring new talent. The way they see it, they have invested significantly in their talent, and so they should ensure they retain their key talent. As manufacturing becomes AI-enabled and high-tech, they must develop their talent at a much higher rate than ever before. Additionally, as Baby Boomers retire, vast experience walks out the door. Thus, whatever companies are doing is likely not enough.
Put together cross-training, mentoring, and apprenticeship programs. Supplement these basics with additional training and education programs. Roll out pay for performance programs that recognize additional skills and, more importantly, the application and sharing of skills throughout their organization. Support employees that want to attend certification programs like APICS (body of knowledge in supply chain) and data analytics and/or AI. Encourage your team to attend conferences and education sessions to expand their capabilities. Bring in experts and consultants to speed up the process of developing your people.
Engage people
Retaining and developing people are not enough. You must also engage your people. The statistics have always been simply horrible on this topic although they recently dropped to the lowest in a decade. According to Gallup, U.S. employee engagement dropped to 31% in 2024, marking the lowest level in a decade, and matching the level last seen in 2014. According to Gallup research, engaged employees deliver 10% higher customer loyalty/engagement scores and organizations with engaged teams see 20% higher sales growth. In our experience, it is even higher than that!
The good news is it isn’t rocket science to engage employees. Instead, it requires strong leaders who will explain goals, show employees how they add value to the company’s strategy and people’s lives, provide support and resources, dedicate time to work with people on their individual goals, recognize progress and wins, and hold employees accountable. As a former VP of Operations and Supply Chain, it seemed impossible to fit one-on-one meetings with my team to talk about last quarter’s accomplishments and put together key objectives for the next quarter. It wasn’t good enough to have a long list of unachievable objectives; instead, we had to spend the time to determine what was feasible, what resources were required to support the goals, what bottlenecks were likely to arise, and how we could track progress and ensure success. Having 3 clear objectives is much harder yet wildly more impactful than walking away with a long list that will never be achieved. These discussions with daily and weekly interaction and follow-ups made a significant difference.
Does this mean they do not let people go?
No; in fact, it means they are more likely to provide proactive corrections and support for poor performers, and they will be the first to let a poor performer go if needed. Teams know if someone isn’t pulling their weight and appreciate leaders who are willing to make the hard decisions and address issues. Taking these corrective actions spurs engagement and growth.
Ready, set, go
Companies that value their talent and see talent as a strategic asset will succeed and speed past their competition. High tech and high touch will combine to create exponential success.
If you are interested in reading more on this topic:
The Leadership Opportunity in Supply Chain