Mastering Disruptive Change in Manufacturing: Labor Relations

This is an excerpt of the original article. It was written for the September-October 2014 edition of Supply Chain Management Review. The full article is available to current subscribers.

September-October 2014

2014 marks the 10 year anni­ver­sary of the Gartner Supply Chain Top 25 ranking. This year we have a diverse set of large, global companies with mature, demand-driven supply chains. There are lessons to be learned from these supply chain leaders, many of whom have led their industries over the past decade.

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Despite increasing automation, human labor remains one of the most important resources in any manufacturing operation. The hype around 3D printing and robotics may be taking up most of the airtime in manufacturing-related discussions, but there are plenty of reasons why management should start paying more attention to interactions with workers.

One reason is that since the financial crisis, unions and workers’ representatives are back in the game. The years-long trend of declining unionization rates (especially in industrialized countries) has recently slowed, with some unions even increasing membership rates and gaining more political influence as a result. In Europe, the effects of union-driven activity on German transportation systems in the past two years have been tremendous, with the cost of some strikes estimated at more than $40 million.

However, it is no longer enough to look only at developed countries. As globalization continues to play out and companies from all over the world set up operations abroad, often in low-wage countries, skilled labor has become scarce, management has become more international (and is often unfamiliar with local rules and customs), and workers’ rights are moving to the fore as labor laws are updated.

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