The Resilient Factory

This is an excerpt of the original article. It was written for the November 2019 edition of Supply Chain Management Review. The full article is available to current subscribers.

November 2019

We hear a lot about emerging technologies like artificial intelligence, machine learning and robotics. We hear less about one of the enabling technologies that makes the others possible:

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A global trade war with China has been grabbing headlines, but most manufacturers are dealing with more immediate threats in their own workforces. First, there has been an unprecedented fall in national and local unemployment rates. Second, there has been continued a growth of high-paying jobs in the manufacturing sector. Finally, the onset of Baby Boomer retirements has created daunting skill gaps in the shop workforce.

States in which higher shares of the workforce are in manufacturing—such as Wisconsin and Iowa—have had unemployment dip below 3%. This creates a unique problem for employers in these states: Employees have many other job options, so attracting and retaining talent is increasingly more difficult. Traditionally, a situation like this would require companies to raise wages to stay competitive in the labor market, however, in low-margin industries, even slight increases in wages make products unprofitable.

Now, digital tools allow companies to invest in a digitally enhanced workforce, which keeps both wage structures and production costs competitive. The onset of Industry 4.0 should not be viewed as a replacement to workers, but rather, as an opportunity for enhancement.

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