How technology can help manufacturing solve its talent shortage issue

Supply chain shortages, inflation and economic pressures have been cited as just some of the key macro-economic challenges facing the manufacturing sector in 2023.

However, one of the most pressing issues is the unresolved labour and talent shortage. Nearly 4 in 5 employers globally have reported difficulty in finding the skilled talent they need in 2023, which is increasing on average 2% year over year. This is having a real impact on not only individual organizations but the economy as a whole. According to Canadian Manufacturers and Exporters

Mark Hickman is Managing Director, Sage Canada

(CME), 82% of companies in the manufacturing sector are facing immediate labour or skill shortages, costing the industry almost $13 billion dollars in investment and economic losses.

So, what can be done to fill the void?

Technology is challenging what manufacturers do, from robotics and 3D printing, to data, cybersecurity, and remote working. But its capabilities in solving the talent crisis are not being fully realized.

Cloud investment for more flexible working
Cloud has become incredibly important for streamlining processes, increasing efficiencies, and unlocking new opportunities for growth in manufacturing. It is therefore one of the top areas of investment for manufacturers, with the Canadian cloud market forecasted to grow to $569M by 2026, a Deloitte report found.

Cloud technology can improve data management whilst requiring little investment or expertise, and cloud-based applications have the ability to return high cost savings with little maintenance. For example, they are often able to be automatically refreshed and updated by the vendor, instead of forcing an IT department to perform manual organization-wide updates. And by providing manufacturers access to valuable data, they can identify patterns, optimize processes, and make more informed decisions about the impact of business operations. For example, ERP software can benefit production by allowing manufacturers to match production levels to sales data and stock levels, and the system can manage pricing and orders and reduce mistakes, leading to a more efficient process and reduced order cycle times.

From a talent shortage perspective, cloud technology improves business productivity, meaning organizations have more cash available to offer competitive pay rates and a more satisfying work environment that is varied and smooth. And, what’s more, in the world of hybrid working, it enables manufacturers to offer remote working as an option. While there was previously a perception that manufacturers needed to operate on-premises to succeed, the pandemic proved that to be false. Thanks to cloud technology, recent research suggests 63% of manufacturing organizations now have a hybrid working program in place which is not only an attractive pull to people entering the workforce, but also allows employers to recruit from a wider talent pool.

Adopting a cloud solution or cloud technologies needs to be considered as part of a holistic digital transformation strategy. And manufacturers don’t need to change all their solutions at once; they can select those that they want to replace and do it incrementally. A big bang approach, although often beneficial, does not necessarily guarantee immediate benefits. Choosing the right areas of your technology ecosystem to move to the cloud will help with change management and successful adoption of new tools and better ways of working.

Building a circular economy
From a talent retention perspective, technology also has a role to play in creating a more attractive and sustainable work environment. Aside from meeting ESG targets and making operational and equipment efficiencies, companies that demonstrate their green credentials are appealing to both the more conscious buyer and discerning job candidate. According to a global study, 68% of people are more willing to accept positions from companies that are environmentally sustainable, meaning organizations that fail to innovate risk being rejected by top talent.

As the world approaches the half-way point of the 2030 UN and COP Agenda, new sustainability targets are being set, making the issue ever more pressing. For example, there is the Canadian government’s integration of sustainability and life-cycle assessment principles in procurement policies and practices, including the government’s supply chain, through the Greening Government Strategy to ensure sustainable production.

As a result, more manufacturers need to start looking at the benefits of a circular economy, from reducing waste to repurposing materials and products. By looking at operational and equipment efficiencies, there are ways to increase the lifespan of machinery and products to unlock cost savings. Research suggests that 32% of manufacturers who have invested in the circular economy can see benefits to adopting this strategy, and IoT, Machine Learning, and Artificial Intelligence will be key to this approach, ensuring organizations have the right data to make informed decisions.

One impactful way for manufacturers to start or enhance their participation in the circular economy and environmental, social, and governance (ESG) is to prioritize collaboration and partnerships. Why is this important? It allows companies embarking on adopting circular economy principles to learn best practices from other organizations already doing work in the space. This might entail partnering with NGOs or academic institutions. Another tip is looking at circular supply chains to optimize material flows, reduce waste and improve how manufacturers utilize resources.

Overcoming the perception challenge
The final area that manufacturing needs to target is a perception issue. Contrary to its historical reputation, manufacturing today is a highly skilled and specialized sector, fulfilled in clean and modern environments. Often, people are unclear about the role of technology in manufacturing and think that at some point their role will be replaced by a robot or automation, exacerbating the perception that manufacturing is not an attractive career choice.

However, as AI, robotics and cloud computing become an integral part of the job description, manufacturers can set themselves apart from other industries and position themselves as compelling and exciting environments where there is the potential to learn new skills. AI and robotics, for example, reduce heavily manual and laborious processes, freeing up more time to spend on high-value tasks.

Improving the image of the manufacturing sector will be key to attracting a new and diverse group of skilled employees. For example, there is a need for the sector to open up the application pool, reforming and encouraging apprenticeship programs, not just for people at the start of their careers but for all ages and backgrounds. There is real benefit in providing proper training, such as the Canadian government’s ‘Upskilling for Industry Initiative’, which will help fund the development and implementation of short-cycle upskilling programs based on industry needs and help more than 15,000 Canadian workers transition into new roles in sectors like advanced manufacturing, digital technology, cybersecurity, AgTech, cleantech, and biomanufacturing.

The modern manufacturer is far from the images of manufacturing depicted in the industrial revolution. Changing perceptions of modern manufacturing to highlight its significant evolution from well over 100 years ago requires a comprehensive approach that focuses on communication, education, and showcasing the advancements and positive impacts of the industry. Showing how technology is changing manufacturing for the better through automation is just one way of improving this perception. Bringing sustainability and circularity to the forefront will help to change outdated and false ideas about the industry. We need to continue highlighting products, services and other examples of innovation through social media and other digital platforms which help reinforce that there is a future for highly skilled labour.

The manufacturing sector is ripe with opportunity. Filling the skills gap will require refocusing on what the new pipeline of talent could look like beyond traditional recruitment and reskilling methods and harnessing the power of technology like never before. Supporting the need for hybrid working to attract new talent and adopting AI and machine learning technologies to minimize manual, repetitive tasks, will be key to taking the sector in a direction that offers an attractive career at the forefront of emerging technologies.