As a native Minnesotan, I was intrigued by an article published in the Star Tribune entitled “Minnesota manufacturers’ profits soar, but a labor shortage looms.”
The article shared survey results that show hiring and retention as the major challenges facing the region’s manufacturing sector. At the same time, an “unexpectedly small” number of manufacturers are preparing their operations for any type of labor shortage, the survey found.
This scenario is playing out throughout the country.
Demographic studies show that 10,000 baby boomers reach retirement age each day. These seasoned employees take valuable company know-how with them and leave behind a potentially troublesome outcome for the organization as less-experienced employees struggle to fill their shoes.
What’s the Impact on Manufacturing and Distribution Organizations?
The nation’s manufacturing and distribution industry should be aware of this impending knowledge gap, as the hit to the U.S. manufacturing sector is particularly worrisome.
Recent manufacturing research reveals nearly 3.5 million manufacturing jobs will need to be filled in the next decade, and two million of those jobs are likely to go unfilled.
Baby boomer retirements in the manufacturing sector will create an estimated 2.7 million jobs as they continue to exit the workplace. Anticipated U.S. economic expansion will also play a role as 700,000 manufacturing jobs will be created due to natural business growth.
The Critical Role of Enterprise Technology and a Retiring Workforce
As part of Ultra’s forward-thinking independent ERP consultant team, we guide manufacturing and distribution organizations to prepare for this challenge through the strategic use of enterprise technology.
Ultra guides teams with an approach that includes:
- Business process improvement: Ultra’s experience shows that a strategic approach to business process improvement supported by modernization of enterprise technology for efficiencies will help teams prepare for growing labor demand and the “silver tsunami” of a retiring workforce.
- Digital transformation: Effective business process transformation will help teams streamline manual-based tasks such as quality management, traceability reporting, shop floor control, dealing with external suppliers or functions of procurement departments, and much more. This will help existing employees work more effectively, and weather the storm of the skilled labor shortage.
- Modern enterprise systems to attract today’s workforce: Careful evaluation and selection of modern technology, once implemented, will help organizations appeal to a younger, qualified workforce and retain existing younger employees. Attracting and retaining the best workforce is key. Skilled workers will gravitate to those companies utilizing the latest technology platforms.
A Story from the Field
My colleague, Dennis Gilhooley, Jr., Regional Director at Ultra Consultants, shared a real-world scenario of these very issues in a blog post entitled “Stories from the Field: Benefits of ERP Cut Across the Enterprise.”
Dennis notes in his blog post that the U.S. manufacturing sector is disproportionately affected by the ramifications of an aging workforce. As skilled baby boomers retire, they take their knowledge with them.
Ultra teamed with a metal fabricator facing this harsh reality.
As Dennis describes, the metal fabricator saw its proprietary knowledge slipping away because of retiring expertise and lack of knowledge transfer to millennial workers. Managers told us that the company might lose its ability to innovate and drive manufacturing competitiveness.
The metal fabricator found it difficult to attract and engage young workers when its ERP system was still AS-400 based, with antiquated “green screens” from another era. In fact, a new hire quit on his very first day after struggling with a legacy, user-unfriendly ERP solution that demanded programming expertise.
Through a careful approach to setting ERP selection criteria, Ultra helped the organization select and leverage modern technology that automates and streamlines its quality processes, inventory management, manufacturing process planning, shop floor control and other areas.
As a result, the fabricator was essentially “preserving tribal knowledge” by standardizing on a modern solution. The system’s modern interface was customized by user or role, and offered a Windows-like graphical user interface, touchscreen functionality, anywhere/anytime access via the Cloud, and other modern features to make everybody’s job more efficient.
This is just one of the dozens of examples Ultra has encountered of companies considering enterprise technology and a retiring workforce.
As noted here, manufacturing and distribution organizations can prepare for workforce challenges through the strategic use of enterprise technology and business process improvement.
Contact the Ultra team to discuss the particular issues facing your organization.