How Can Digital Transformation Solve the Labor Shortage Crisis in Manufacturing?

Why Are Manufacturers Resisting Digital Change Despite the Clear Profit Benefits?

Uncover the 2023 insights from Studio ID on manufacturing’s digital future. Learn how automation and predictive analytics are solving critical labor shortages, why legacy systems are killing efficiency, and how to build a data-driven roadmap for profitable digital transformation.

Struggling with outdated systems and worker shortages? Read the full report summary now to discover the step-by-step digital roadmap that keeps manufacturers competitive.

Recommendation

As worker shortages reach crisis levels, the supply chains that manufacturers rely on have become slower and less reliable. According to this Studio ID report for Supply Chain Dive, manufacturers must become more efficient if they want to remain competitive. Digital transformation at the corporate and production levels offers companies opportunities to enhance their efficiency through automation and smart manufacturing technologies.

Take-Aways

• Manufacturers need a digital transformation strategy.
• Despite digital’s benefits, many North American manufacturers are resisting digital transformation.
• Choose digital transformation technologies that align with your business strategy.
• Manufacturing’s future is digital.

Summary

Manufacturers need a digital transformation strategy.

Digital transformation can improve many companies’ results. Among other concerns, the proper use of digital technologies can help manufacturers deal with chronic labor shortages. This is pressing: the National Association of Manufacturers reports that more than 75% of manufacturers have trouble hiring and keeping skilled workers.

Digital transformation can help companies address this issue on several levels. For example, automation and predictive analytics can help factories operate with fewer workers. In addition, digital technologies can accelerate sophisticated worker training, potentially qualifying new hires to perform tasks that ordinarily only experienced employees could perform.

“Manufacturers that initiate large-scale changes without a clear road map for the transformation are less likely to see the results they want. Simply put, there’s great value in approaching a daunting task — one incorporating process and culture change and requiring significant investment — with the desired end defined.”

Even adopting a single new technology can bring about a digital transformation, defined as an overarching strategic change in which manufacturers address both their business issues and the digital needs of their production operation. Manufacturers have reported uneven results in their pursuit of digital transformation; some firms have reduced their investment in digital and some haven’t invested at all.

Despite digital’s benefits, many North American manufacturers are resisting digital transformation.

Digital technologies, such as robotics and machine vision, can transform manufacturing. Yet relatively few manufacturing companies have adopted these technologies on a significant scale. The same is true of using digital technologies to improve employee training, even though that step alone boosts a company’s bottom line. At many companies, entrenched business practices are the foremost obstacles to digital transformation.

“Legacy systems become even more outdated every year…growing frustration with legacy technologies may indicate that more manufacturing leaders now recognize the importance of change.”

Executives may not be aware of how digital transformation can support their company’s business goals, particularly if their employees already regard existing obstacles to digital transformation as too daunting. Inadequate financing for digital transformation suggests that leaders and stakeholders haven’t committed to embracing digital methods. Conversely, when managers connect digital transformation directly and concretely to their company’s business or production goals, corporate executives prove more willing to support it.

Choose digital transformation technologies that align with your business strategy.

Companies should select specific digital transformation technologies according to their larger business goals, especially in terms of how each initiative will increase profitability.

“The reality is that most of these processes are still being developed and perfected for the most common use cases in manufacturing.”

Begin your firm’s digital transformation by introducing relatively simple digital technologies – such as tablets and mobile devices – to improve non-technological processes. These upgrades can improve employees’ productivity and job satisfaction at relatively little cost.

Manufacturing’s future is digital.

Digital transformation can benefit your company through lower expenses, increased flexibility, and better reliability. Each of these gains can lead to greater profitability, but achieving them requires carefully designing and executing your digital transformation.

“Today’s manufacturers operate in a highly competitive and complex marketplace. Those that see the fastest time-to-value from digital transformation adopt a data-driven strategy that starts with identifying the biggest bottlenecks to efficient production.”

If you aren’t optimistic about how quickly or efficiently your company could execute a major digital transformation, a gradual, piece-by-piece approach may be the best way to produce profitable results. Because manufacturers tend to be experts at manufacturing, but not at technological transformation, bring in an expert consultant to provide guidance.

About the Author

Studio ID, Industry Dive’s global content studio, offers expertise, first-party audience insights, an editorial approach to brand storytelling, targeted distribution capabilities, and a Return on Investment tool kit.