The Labor Shortage and How Manufacturers Can Manage Near- and Long- Term Uncertainty
There were nearly 11 million open jobs in the US by the end of July 2021 -- over 57% more than in January 2021. Manufacturing jobs in particular have been impacted during the pandemic, with consistently over half a million openings at any given point. Labor constraints have left manufacturers wondering if things will ever go back to a pre-pandemic state, or how to best adapt to the new world. In this blog, we explore what manufacturers can do in both the near term and the long term.
Nearly two years since COVID-19 first made headlines and disrupted global supply chains, a labor shortage still continues to make meeting demand impossible for many manufacturers. Even if materials and machines are available, without operators to manage the assets, factories can only produce goods at a reduced capacity.
To give a sense of the magnitude of the challenge and its cascading impacts, the automotive industry alone is expected to lose $210 billion in revenue in 2021 due to the labor shortage. One major cause is the Delta variant continuing to spread among the workforce in Asia, driving a global chip shortage, an important component in cars.
Hiring more labor or investing in automation robots in the near term is often out of the question for factory leadership in a time of uncertainty and lost revenue -- automation can also take significant time and capital to implement. Thus, plant managers are left to make do with what they have available and to meet orders as best they can. However, a single worker calling out sick can easily render obsolete a plan for the week, even more so if an entire shift must be quarantined. Kinta has spoken to manufacturers from coast to coast and all report similar challenges: recreating the production schedule from scratch every day based on available labor is time intensive, but also leads to missed orders and an inefficient use of resources.
Investing in the right factory digitization tools can help alleviate the added burden of labor uncertainty in the near term. For example, Kinta can aid production schedulers not only in creating optimized schedules based on the factory’s current state, but also in enabling the planner to reoptimize that schedule instantly when faced with a sudden change.
Kinta’s algorithms ensure scheduling agility by taking the top factory priority, such as ensuring on-time delivery, and using an AI-enabled algorithm to determine the best possible schedule given the factory’s constraints. With a live connection to an HR system and other data feeds, Kinta can calculate the optimal production plan for the currently available labor and assets in minutes.
Furthermore, reoptimizing the schedule for an employee that suddenly falls ill is equally quick, allowing factory leadership to be confident that their facility is operating at maximal capacity and is best leveraging its available valuable production resources. Rather than spend the first 45 minutes of a shift taking attendance, reassigning tasks and rejiggering the production schedule, Kinta can instantly produce an optimized schedule to operate against.
Beyond technology solutions near term, in the long term, manufacturers will also need to look at retraining the workforce, as the manufacturing landscape is poised to change dramatically due to digitization. Some manufacturers understand the long term outlook and have launched initiatives to help train the workforce for this changing landscape.
In short, today’s manufacturers are faced with new, seemingly intractable problems in our post-pandemic new normal. Countless unfilled positions and a limited labor pool underpin a growing skill gap in the sector -- in the manufacturing environment of the next few years, labor will be scarcer than ever. For manufacturers to thrive in this new world, Kinta believes in both strategic digital tools in the near term, as well as investing in communities and employees to support continued long term growth.