The labor shifts fueling the manufacturing worker shortage are persistent, leading manufacturers to identify activities and processes they can automate. Unfortunately, for many, skilled labor is no longer readily available. In a recent Deloitte and The Manufacturing Institute study, nearly 45% of manufacturing executives are turning down business opportunities due to a lack of manufacturing workers. The manufacturing skills gap in the U.S. could result in 2.1 million unfilled jobs by 2030, with the cost of those missing jobs totaling $1 trillion by 2030.
What It’s Costing Manufacturers
There are over 790,000 open jobs in manufacturing currently. Manufacturers struggling to fill these jobs are seeing the immediate impact of not being able to take on new business and risk not being able to deliver orders to current customers. Manufacturing worker shortages are impacting every area of productivity and product quality, increasing costs in the following five areas the most:
- Lost revenue from prospective and current customers. Manufacturers are turning away orders because they don’t have enough workers to fulfill them. They’re also cautious about setting expectations with new customers on delivery dates, given how understaffed many are.
- Customer service satisfaction levels start to diminish. Running partially staffed production shifts leads to product quality problems that understaffed quality management teams miss. As a result, defective products aren’t discovered until they arrive at the customer, creating Return Material Authorizations (RMA) and reducing customer satisfaction.
- Hidden supply chain costs. Production schedules are more constrained due to the manufacturing worker shortage, which has a cascading effect on supply chain efficiency and costs. In addition, many manufacturers are dealing with warehouse labor shortages, extending delivery times, increasing costs, and increasing customer order costs.
- Spiking operations costs. Delays caused by manufacturing worker shortages increase operating costs, starting with the high cost of contract workers, if available. There’s also the cost of replacing workers recruited away by manufacturers who offer greater flexibility and freedom in how they do their jobs. It can also take months to get a new manufacturing worker up to speed, increasing operations costs.
- Lower productivity and high risk of workplace injuries. Hiring inexperienced, unskilled workers often lowers productivity and leads to costly mistakes. Unskilled workers also increase the risk of workplace injuries and accidents that could harm other workers on the shop floor.
Automating Manufacturing Delivers Results
Manufacturers successfully use automation to reduce their hiring needs by eliminating resource-intensive tasks and streamlining operations. By selectively applying the following automation technologies, they’re getting more done with smaller production teams:
Optimizing production teams’ time with Labor Capacity Planning
Forecasting and optimizing the labor available will reduce unplanned disruptions, alleviate having to constantly re-assign workers to urgent tasks, and reduce partial production runs. Labor Capacity Planning measures standard labor hours against the required hours to meet production schedules by week, day, or shift, based on work orders and labor schedule. It’s also invaluable for calculating available labor by category and qualifications and scheduling operators by skill level.
At our customer Mar-Bal Incorporated, a leading manufacturer of thermoset composite products, they’re centrally processing incoming orders using their DELMIAworks ERP system and EDI (electronic data interchange) with minimal staff. Orders automatically update the production schedule and generate work orders to distribute to their overall manufacturing operations. Remote visibility of orders, inventory, and operations combined with forecasting, planning, and scheduling tools continue to be critical to optimizing labor capacity planning while reacting quickly to changing customer and market conditions.
Identify resource conflicts early and solve them with Material Requirements Planning
Manufacturing labor shortages can create resource conflicts and increase inventory costs if too much or too little raw materials are purchased for a given production run. Material Requirement Planning (MRP) systems manage all resources needed to meet production schedules while maintaining safety stock and on-hand inventory levels. DELMIAWorks incorporates MRP and ERP in a single solution that enables a manufacturer’s material requirements system to span activities throughout their supply chain to accurately match resource availability with demand.
The DELMIAWorks MRP system considers all aspects of the manufacturing process, including evaluating material availability based on the required manufacturing date while factoring in current demand and material lead time. The MRP system also factors in Labor Capacity Planning with Auxiliary Equipment, Machine and Work Center Capacity, and Rough Cut Capacity Planning to get the most accurate view of all available capacity before scheduling labor and other resources.
Our customer Custom Profile provides specialized extruded plastic products to the appliance, furniture, point of purchase, and marine industries with an emphasis on design support, quality assurance, and in-house tooling. Custom Profile relies on their DELMIAWorks MRP system to automatically update their production schedule a minimum of six times a day. On average, it takes less than seven minutes each time, resulting in real-time, optimally scheduled orders with no wasted production time, materials, or labor. 80% of Custom Profile’s shipments are based on a four-day or less lead-time, making visibility and control across manufacturing essential. To achieve that goal, Custom Profile expanded its reliance on DELMIAWorks and today uses the system’s native EDI solution, Warehouse Management System, RealTime™ Production Monitoring, ERP, and MES systems to optimize their available labor while improving production efficiency.
Pursue Lights-Out Manufacturing With RealTime Production Monitoring And MES
Insights gained from RealTime Production and Process Monitoring are table stakes for achieving lights-out manufacturing. The goal is to have one or more production shifts run entirely automated with minimal onsite support. Given the manufacturing labor shortage and rising operating costs, lights-out manufacturing is now a priority.
RealTime Production and Process Monitoring is part of the DELMIAWorks MES system and is used today by manufacturers to achieve lights-out manufacturing for one or more of their production shifts. It also provides the data-driven insights that production scheduling, manufacturing, and quality engineers need to find and close productivity gaps.
Our customer Eldon James is a world-class medical tubing and connection solutions manufacturer in Colorado. They’re running one lights-out manufacturing shift across 28 injection-molding machines and two manned shifts allowing production to run 24/7 to keep up with the increased demand for medical tubing and connectors. Machines are monitored using the DELMIAWorks RealTime Production Monitoring system, providing real-time data to MES and ERP systems that give feedback to the operations teams working the production shifts. As a result, engineering can connect with production remotely, and quality control can monitor output and logistics immediately when the product is available and ready to ship via their DELMIAWorks MES system. Eldon James also relies on the DELMIAWorks Track and Traceability module to know where raw materials are coming from and where finished goods have been shipped at lot and batch levels.
How Companies Are Taking On the Challenge of the Manufacturing Worker Shortage
Manufacturers face the daunting challenge of balancing three factors core to their business.
- Having a reliable supply of high-quality materials that aren’t on allocation and unavailable.
- Orders are growing faster than forecast, and customer demand exceeds current capacity.
- The manufacturing worker shortage is holding back productivity.
The good news is that automating manufacturing operations can save valuable time, reduce costs, and enable manufacturers to respond to all customers. Finding productivity gaps and closing them is the first step in meeting the challenge of using automation to overcome the manufacturing worker shortage.