A survivor’s guide to navigating the historic drop in productivity and the increase in cost-of-goods.
By John Abplanalp
As COVID-19 pandemic has begun to wane in recent months and economies have reopened, new uncertainties and headwinds have emerged that are affecting productivity across all industrial sectors, from global markets to local organizations.
An area of significant change for some manufacturers is the risk that has developed in their supply chains. The pandemic shut down manufacturing operations around the world, and the ability to ship products and equipment across borders was severely restricted. Disruptions in distribution and supply were experienced in every manufacturing sector, and now have organizations scrutinizing their supply chains to mitigate weaknesses. To future-proof against the next crisis, many in the industry are rethinking their sourcing and manufacturing strategies and operations, with a more holistic view of the supply chain. Manufacturers are looking to make broad changes and relying heavily on data and analytics, to uncover the insights that will favorably shape future decision-making when disruptive events, both local and global, happen.
Across the manufacturing sector and related supply chains, leaders in global manufacturing organizations are using analytics to increase asset productivity and increasing uptime through the implementation of predictive maintenance; labor efficiency such as through planning activity automation; and optimizing net working capital, regularly increasing, or decreasing inventory according to market fluctuations and customer demands.
Manufacturers are integrating innovative technologies, including the Internet of Things (IoT), AI and machine learning, all of them driving Industry 4.0. Smart factories equipped with embedded software, advanced sensors, and robotics collect and analyze data and allow for better decision making that can bend the productivity curve. Even greater results can be realized when data from production operations is merged with operational data from ERP, supply chain, customer service, and other operational systems to create whole new levels of visibility and insight from previously independently housed information.
Rapidly gaining influence in bending the manufacturing productivity curve is the trending three-letter acronym, ESG. It stands for Environmental, Social, and Governance. Many elements of ESG have long been part of various corporate initiatives related to efficiency, profitability, and productivity. But managing a broad spectrum of environmental, social, and governance issues under one ESG umbrella is new – and is fast becoming an integral part of business and manufacturing operations. Increasing interest means increasing risks – so companies focused on improving the bottom line via productivity need to treat ESG reporting like the integrated effort that it is. The significance of ESG and its impact on achieving sustainable productivity is an especially important and complex topic and one I am looking forward to covering in greater detail in a future blog post.
In the end, and at the beginning, for that matter, improving productivity is a real world, day-to-day effort that is enabled and empowered by information. Foundational to data-gathering efforts is instituting a holistic process from the outset that generates the most useful data. But who should be included in the process of determining the type of relevant data the information gathering system will capture?
In my experience, that mechanism can be best served through the contributions of an organization’s entire workforce. From the c-suite to the production floor, identifying the barriers to a company’s productivity is a real-world endeavor that frequently yields its best results through a unified effort, especially that of a manufacturer’s workforce.
If the goal is to eliminate the non-value-added work that roadblocks manufacturing productivity, then who better to enlist in the process than the very people who are primarily responsible for that productivity? Their observations and experiences can be invaluable in designing information gathering systems that they themselves directly benefit from.
To be clear, a single manufacturer cannot be expected to fully capture these benefits on its own. Companies need an end-to-end data set—such as comprising its entire supply chain or furnishing visibility of an entire system. They also need a data set sufficiently robust to drive conclusive insights.
It cannot be emphasized enough to say that data from partners often plays a vital role. This makes it essential for manufacturers to build an efficient ecosystem in which companies are afforded the ability to collaborate to exchange data on a timely basis.
But data, no matter how expansive or comprehensive, is still data. It is the human factor that makes the difference in bending the productivity curve. It is people, first and foremost, who evaluate, analyze, and put that data into action. They transform digital information into real-world results.
In today’s world of B2B, empowering a workforce, from top to bottom, to provide opinions and recommendations that contribute to success is a core tenet of sustainable productivity. Employees have found their voice, and they express it through their feet, moving towards or away from companies who do not value their role and contributions. Employees are responsible for products, services, and solutions that attract and retain customers. If employees are not engaged, efficiency, productivity, profitability, and enterprise value all suffer.
In the post-pandemic workplace, the employee value proposition must be a consideration in every strategy and company decision. That requires a shift away from an “employees work for me” attitude to an “employees work with me” mindset. This transformation will inspire membership, not followership. Followers take on “accessory” roles, while membership is about having an “owner’s” mentality and spirit as contributors and co-builders of the vision.
Consistently soliciting employees as engaged contributors is an essential component that drives sustainable productivity. When employees become engaged contributors, the output is increased collaboration, execution, engagement, innovation, production, and revenues. As an example, real-time shop floor data collection enables warehouses to optimize productivity, gathering data from processes so that manufacturers can drive advancements for a broad variety of metrics. These include improving quality of product, improved traceability and compliance, longer equipment life spans, more rapid cycle times, and highly precise control of inventory.
So, how will you manage the risks and opportunities in both the short and long term? While you think about that, here are a few thoughts that sum up this article and hopefully, help you strike a healthy balance as you seek to bend your productivity curve.
- Establish a robust ecosystem of appropriate and meaningful data collection (usually the obstacles to productivity) within your organization and throughout your entire supply chain.
- Invest in a data collection platform that provide a holistic and robust compilation of information.
- From the executive offices to the manufacturing floor, arm your workforce with the type of copious real-time data that drives timely analysis and smart decisions.
- Empower the people throughout your organization to play a meaningful role in your company and its success. Their shared ownership in its growth and achievements will generate a plethora of benefits from loyalty to efficiency and much, much more.
- Encourage collaboration and the sharing of finding and insights that drive innovation and efficiencies for all involved.
If you would like to read some more of my recent articles about driving sustainable productivity and creating true value for your organization, you can check them out here.