Disrupted Supply Chains & Demand
Today’s news headlines are dominated by supply chain disruption. There are widespread worker shortages across the supply chain – in everything from agricultural roles, to production environments, and transport and logistics.
Worker shortages are in part due to continued self-isolation and sickness, as well as reduced capability to travel across borders leading to demand for local worker reskilling. In addition, many industries have experienced higher staff turnover rates over the last 18 months, as the disruption caused by the pandemic has led to workers rethinking career choices – leaving gaps in employment, as well as knowledge and experience.
Prior to the pandemic, US statistics revealed that 38% of manufacturers had trouble finding candidates with the right skills; a number that today sits at 54%, according to the Workforce Institute at UKG. In addition, global labour productivity growth is at a 20-year low of less than -2% – negative growth for the first time since the global recession of 2008.
We also are facing a global shortage of shipping containers, inflated shipping and energy costs, and significant fluctuations in demand across industries – all of which combine to drive demand for local products and increase pressure on local supply chains.
In March last year, during the height of the pandemic, King Arthur – American’s oldest flour company – sold approximately 6.1 million bags of all-purpose flour – a 268% increase from the previous year. Fast forward to today, and while flour demand seems to have stabilised, supply and demand variabilities are causing issues in many other sectors.
In the UK, high demand for CO2 is putting pressure on food and beverage supply lines, there is ongoing disruption in industrial sectors with extruded plastic goods facing delays, and shortages of aggregates, cement, and plaster. Equally, on a global level, we are seeing increased demand for microchips (for automotive, home appliances, consoles, and mobile phones), furniture, and high-end luxury goods.
In many industries, fluctuations in demand, including seasonal demand (e.g. toy production in the ramp up to Christmas, and ice cream production for summer months), have traditionally been addressed using short-term, largely unskilled workers to dynamically increase and decrease production. But today, these workers are not necessarily available. So, what is the solution?
The last 18 months have demonstrated the real value of Industry 4.0 with businesses embracing automation to help mitigate disruption caused by COVID-19, and other unprecedented challenges including the blockage in the Suez Canal, and an ever-shifting geo-political climate. Indeed, governments around the world are increasingly recognising that investment in manufacturing infrastructure, including smart systems and automation, is imperative in order to drive innovation, promote growth, improve GDP, and to navigate the many and varied disruptions to supply chains.
When it comes to managing the most recent supply chain disruptions, these same solutions can also lend a hand in helping manufacturers flex production up and down, while reducing the reliance on short-term labour. By utilising Industry 4.0 processes, and automating systems to work with limited operator intervention, manufacturers can take care of routine, manual tasks and reduce the number of workers needed on the plant floor.
Printers can be networked together to streamline product changeovers and allow for more production runs in a single shift, increasing productivity and allowing for greater adaptability to varying demand, while new vision inspection systems can ensure all product codes are correct, without relying on manual – and error-prone checks. Integrating plant machinery and utilising the cloud can also provide options for remote visibility and operation allowing managers to work away from the line and yet stay on top of all production activity.
Finally, social distancing’s continued impact on the ability for workers to interact on the production floor means that connectivity can be a powerful tool for manufacturers to keep production moving, ensure the continued safety of their staff, and minimise the amount of time existing staff need to spend training temporary workers.
Talk of automated solutions, and Industry 4.0 inevitably brings about questions of worker replacement – but if we look beyond the current crisis these systems have a very real role to play in the day-to-day running of factories, alongside production staff.
In the current climate, automated systems will help manufacturers cope with volatile demand and worker shortages. At times when demand is ‘normal’, factory workers will have more time to invest in adding value in other areas of the business. This could be in looking for systems and processes which can be improved or upskilling in certain areas of work.
In this way, embracing automation can allow companies to embrace a culture of continuous improvement – the Kaizen philosophy.
Using the data now available through connected, cloud-based systems also allows for the easy identification of areas where bottlenecks arise. Introducing automated solutions to identify these issues can help to streamline processes, very quickly unlocking additional benefits from automation. The key is to start small – implement these processes on a micro-level and the improvements will help to justify introducing additional automation farther down the line.
In the run-up to the COVID-19 pandemic, the idea of Industry 4.0 was gaining traction as a system of ideas and processes which manufacturers could utilise to remain competitive and make the most out of their manufacturing operations. With coding automation, automated code inspection and better visibility of data, manufacturers can overcome issues of worker shortage and volatile demand associated with the pandemic, and can also place themselves in good stead to handle current and future supply chain disruptions.