Coping with a Skilled Labor Shortage

Labor trends in US manufacturing

As we mentioned in the Megatrends post, US manufacturers are facing a number of headwinds when it comes to sourcing their labor.  These manufacturers differentiate themselves by employing a skilled labor force to create products.  However, Most US manufacturers are small firms with 75% of them employing 20 people or less.

The competition for skilled labor is only going to increase over the next 10 years as 3.5 million workers will be needed in the sector.   The small manufacturing firms are powerless to push back against the Megatrends.  The workforce is changing as Baby Boomers are exiting the workforce, and more and more people move into cities.

All the external pressure on the workforce creates a difficult environment for a company to grow.  A business will find it challenging to meet demand, implement innovative solutions, and increase productivity during peak demand.  This means the business must get the most utilization out of their skilled labor to just keep up.

Skilled Labor Levers

When charting a strategy, a business has three options to select from:  1) Do nothing and maintain the status quo with limited to no growth potential, 2) Hire skilled labor and start a price war eroding profit margins or maintain the same rate and likely hire the low quality labor remaining in a tight labor market, or 3) Increase productivity with the Veryable on-demand labor marketplace.

The Veryable platform is a new operational tool for businesses to capitalize on growth opportunities by flexing general labor into the workforce without the constraint of a long-term commitment.  To keep skilled people mission focused, the Veryable platform provides an easy option to find general labor.

Recommended Approach

Shifting non-value add work to general labor frees up capacity for skilled labor to focus on their work.  If you take a hard look at a skilled labor person’s day, you will find that they spend a good chunk of the day not performing skilled work.  A welder spending 20% of their day welding has the opportunity to increase their welding output 4x by utilizing general labor to prep, clean, and move materials.

Veryable is the on-demand platform to find and flex general labor to better utilize skilled labor.  In a tight labor market, getting more out of the people you have is the most accessible and scalable avenue at hand.

Lean vs. Six Sigma

Many people today tout Lean Six Sigma as a common tool to drive process improvement across industries and functions.  You may think that the two are one in the same, but Lean methodology and Six Sigma are two distinct tools to achieve performance improvement smashed together under one banner: LSS

Six Sigma

Six Sigma is oriented towards identifying and removing causes of defects and minimizing process variability.  The six sigma name references 3.94 defects per million, which is six standard deviations between the mean and control limits. Conducting a Six Sigma improvement project involves collecting data on the process, inputs, and outputs.  The practitioner then statistically analyzes the process data to understand capability and improvement opportunities.

This approach makes sense for a stable and repeatable process that serves customer needs and is not anticipated to change.  Six Sigma is not well suited for updating a process for changing customer demands or a technological disruption.

Lean Methodology

Lean is a method and tool set focused on creating or re-defining a process, so it’s more capable to respond to changing customer demand and to eliminate waste.  While executing a lean process design, the project leader will lead the team through process mapping analysis to define the future state and then compare this against the current state to identify and quantify areas of waste and barriers to change.  

In lean, waste definition extends beyond the obvious material consumption or wait times and into reducing handling and touches, ahead of schedule production, and wasted effort such as re-work.  The lean framework will cause a critical look at the entire process and certainly question the time and effort tied up in quality control processes.

In a manufacturing environment, the lean process is setup to accommodate the needs of the customer as reducing their waste is a logical focus and result of the lean project.  A lean process methodology grounded in serving the customer what they want and when they need it will win that customer for the long term.

Future Vision

As a first step, companies need to think of their desired outcome of the project.  Lean and Six Sigma are both means to performance improvement. However, they both lead to different types of results and continuous improvement mindsets.  Six Sigma will deliver the process improvement, and Lean will create a process toward satisfying the customer needs.

With Industry 4.0, the real possibility of LSS methodology is here.  The automation of real time data acquisition and analytics to identify the appropriate process sequence, to schedule preventive maintenance, and to drive out bad lots of raw materials.  The Internet of Things is the piece that will truly allow the convergence of Six Sigma and lean into a unified tool for performance improvement.

At Veryable, we have a flexible, on-demand labor solution to capture the operating gains and incremental revenue identified by a rigorous process improvement project.  Check out how you can use on-demand, flexible staffing to improve your performance at www.veryableops.com or let us know if you are interested in Veryable Operation Services (VOS) to drive performance improvement.