Workforce Development: The Overlooked Link in the Supply Chain
Torsten Schimanski
Chief Strategy Officer | Workforce & Business Development Leader for Consulting Organization | Driving Impact & Innovation
Torsten Schimanski, Chief Strategy Officer, NJ Manufacturing Extension Program (NJMEP)
Executive Summary
Workforce development is a critical yet often overlooked component of supply chain management in the manufacturing sector. Just as disruptions in material sourcing or logistics can bring operations to a halt, talent shortages and skills gaps create bottlenecks that threaten efficiency, quality, and growth. This document examines why workforce development should be treated as a strategic priority, drawing parallels to supply chain planning and providing actionable strategies for organizations to address this issue. By embedding workforce planning into supply chain strategy, businesses can enhance resilience, drive innovation, and remain competitive in a rapidly evolving industry.
Workforce Challenges in Manufacturing
The manufacturing sector faces significant workforce challenges that threaten its long-term viability. Labor shortages are exacerbated by an aging workforce, a lack of interest among younger generations, and widening skills gaps due to technological advancements. According to Deloitte’s 2022 report, the global manufacturing industry could face a shortfall of 8 million workers by 2030, potentially resulting in a loss of $1 trillion in revenue. In the United States of America it is likely that 2.1 million jobs will go unfilled.
These challenges are not merely HR issues; they are operational risks that disrupt production schedules, delay deliveries, and impact customer satisfaction. For instance, 74% of manufacturers in a recent survey by IndustryWeek reported that labor shortages directly affected their ability to meet production goals. Additionally, the skills required in modern manufacturing—such as operating advanced machinery, understanding data analytics, and maintaining automated systems—are evolving faster than traditional education systems can adapt.
The result is a growing mismatch between available talent and industry needs. The industry must adopt a proactive, strategic approach to workforce development to close these gaps. Viewing workforce planning through the lens of supply chain management can provide a framework for addressing these challenges systematically.
?Workforce as a Supply Chain Issue
Workforce development shares many characteristics with supply chain management. Both require proactive planning, long-term investments, and the ability to adapt to disruptions. Just as companies diversify suppliers to mitigate risks, they must diversify and strengthen their talent pipelines. Failing to do so results in bottlenecks that ripple through the organization, from production floors to delivery schedules.
Workforce Bottlenecks and Operational Impact
The lack of skilled workers often results in production delays, increased overtime costs, and quality issues. For example, U.S. manufacturers reported losing an average of 3% in annual revenue due to labor shortages, according to McKinsey’s 2023 workforce study. For manufacturers operating on tight margins, these inefficiencies can quickly erode profitability. Moreover, talent shortages hinder the ability to scale operations, innovate, and meet customer expectations. This cascading effect mirrors the impact of supply chain bottlenecks, where one weak link disrupts the entire system.
Workforce Pipeline Vulnerabilities
Much like supply chains rely on upstream and downstream partners, workforce pipelines depend on educational institutions, training programs, and internal development initiatives. However, these pipelines often face vulnerabilities, such as outdated curricula, limited access to training resources, and inadequate industry collaboration. By addressing these vulnerabilities, manufacturers can build a more robust and reliable talent supply chain.
The Business Case for Workforce Development
Investing in workforce development is not just about filling positions; it’s about building a resilient, future-ready organization. The return on investment (ROI) is measurable in both the short and long term.
Short-Term Benefits
Long-Term Gains
Strategies for Workforce Development
Educational Partnerships
Collaborating with schools, colleges, vocational institutions, and public-private partnerships is a cornerstone of effective workforce development. These partnerships can help align curricula with industry needs, ensuring graduates possess job-ready skills. Programs such as apprenticeships, internships, and co-op placements bridge the gap between education and employment while providing businesses with a pipeline of trained talent.
In-House Training Programs
Developing internal training initiatives allows companies to address specific skill gaps and prepare employees for future roles. Effective programs include:
Cross-Industry Collaboration
Industry-wide initiatives can amplify the impact of workforce development efforts. By sharing best practices, resources, and training programs, manufacturers can reduce costs and accelerate progress. Regional manufacturing alliances and trade associations are excellent platforms for fostering collaboration.
Technology Integration
Leveraging advanced tools such as AI, virtual reality, and simulation-based training can enhance the learning experience and improve outcomes. For instance, virtual reality training allows workers to practice complex tasks in a safe, controlled environment, reducing the risk of errors on the production floor.
Addressing Common Challenges
Financial Barriers
Many organizations hesitate to invest in workforce development due to perceived high costs. However, there are several ways to mitigate financial barriers:
Cultural Resistance
Change often meets resistance, especially when it involves adopting new processes or technologies. Overcoming this resistance requires:
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Adapting to Rapid Change
In a fast-evolving industry, regular updates to training programs are essential. Companies must stay informed about technological advancements and industry trends to ensure their workforce remains competitive.
Policy Recommendations
Advocacy for Funding
Governments and industry associations must prioritize funding for vocational training and workforce reskilling. This includes grants, subsidies, and tax incentives for companies that invest in employee development.
Regulatory Alignment
Policymakers should work with industry leaders to establish standards and certifications that reflect the skills required for modern manufacturing roles. This alignment ensures consistency and facilitates workforce mobility across regions.
Industry Standards
Encouraging the adoption of certifications and standardized training programs creates a baseline for skills and knowledge. Industry-wide standards improve quality, safety, and efficiency. Establishing educational and certification standards in the U.S. manufacturing industry is essential for enhancing clarity and driving improvement. Standardized certifications validate competencies, ensuring that workers possess the necessary skills for their roles. This uniformity not only boosts product quality and operational efficiency but also facilitates mobility within the workforce. Moreover, consistent standards help bridge the skills gap by aligning training programs with industry needs, thereby attracting new talent and fostering continuous learning. Implementing these standards is a strategic move to strengthen the manufacturing sector's competitiveness and adaptability in a rapidly evolving market. Credentials are valuable if valued by industry.
Understanding the Risks and Costs of High Employee Turnover
?High employee turnover in the manufacturing sector significantly impacts operational efficiency. The costs associated with turnover extend beyond recruitment and training, affecting productivity, product quality, and employee morale.
Common Reasons for Employee Turnover in Manufacturing:
Implications and Costs of High Turnover
Example: Financial Impact of Employee Turnover
Consider a manufacturing company with 100 employees, each earning an average annual salary of $50,000. If the company experiences a 10% annual turnover rate (10 employees), and the cost to replace each employee is approximately 50% of their annual salary ($25,000), the total annual turnover costs would be $250,000 for 10 employees only. This example illustrates that the company incurs a quarter-million dollars annually due to employee turnover, underscoring the importance of addressing the underlying causes to enhance retention and reduce associated costs.
Addressing the root causes of turnover through competitive compensation, career development opportunities, positive management practices, and a supportive work environment is essential for mitigating these costs and enhancing organizational stability.
Call to Action: Embedding Workforce in Supply Chain Strategy
To truly address workforce challenges, organizations must integrate workforce development into their broader supply chain strategy. This includes:
By doing so, businesses can build resilience, drive innovation, and maintain a competitive edge in an increasingly complex manufacturing landscape.
Integrating supply chain strategies into workforce development steps is essential for building resilience and maintaining a competitive edge. Here's a plan to guide manufacturers:
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Conclusion and Future Outlook
The manufacturing industry stands at a crossroads. Workforce development is no longer optional; it’s a necessity. By treating talent as a critical supply chain resource, organizations can overcome current challenges and position themselves for long-term success. Looking ahead, trends such as automation, sustainability, and digital transformation will only heighten the importance of a skilled and adaptable workforce.
The time to act is now. Investing in workforce development is not just about addressing immediate needs—it’s about securing the future of manufacturing.
References
About
Torsten Schimanski serves as Chief Strategy Officer for the New Jersey Manufacturing Extension Program (NJMEP). In his role he oversees and steers projects for workforce development as well as supply chain management improvements for the manufacturing industry sectors.
The New Jersey Manufacturing Extension Program, Inc. (NJMEP) has been the State’s premier training and consulting provider for over 20 years, offering the latest innovations in technology, standards, and practices. NJMEP’s mission is to help New Jersey’s small to medium-sized manufacturing businesses access the resources and develop the skills they need to grow, innovate, and expand. The network, tailored solutions, and engineering know-how give manufacturers the resources they need to stay competitive in a rapidly evolving market. NJMEP offers a full range of consulting and training services that help to evolve manufacturers into an innovative, market-driven, and more cost-effective operation. These services allow company leaders to reduce costs, increase revenue, and untap their employees’ full potential. NJMEP services are categorized into the following three areas:?Operational Excellence,?Innovation and Growth?and?Workforce Development.
Client Success Partner
1 个月Excellent piece. When you have properly trained talent, that has the knowledge and skills the supply chain is a well-oiled machine. Too often those knowledge/skill gaps, whether thru attrition, promotion without a plan, or lack of training, will cause a stop in the supply chain. If only employee development was thought of the same as preventative maintenance - scheduled with a clear career pathway - when one leaves the next stepping in is both prepared and present. A culture that values this is one that will succeed.
Project Manager | Career Navigator Inspiring the next Generation | Customer Relationship Management (CRM) | Advocate for collaborative workforce solutions
1 个月Good article. Strategies inclusive of collaboration, partnerships and adaptable policies that strengthen the workforce network may establish best practices.
Founder & President @ Spotlight Content Marketing | Marketing & Communications
1 个月This is such a great take on workforce development and its critical role in supply chain strategy. The way you highlight talent shortages as operational bottlenecks really resonates—just like supply chain disruptions, they can slow everything down and hurt productivity. I really like your focus on proactive workforce investments, whether through education partnerships, in-house training, or cross-industry collaboration. Treating workforce planning like supply chain planning makes total sense, and it’s something manufacturers need to prioritize if they want to stay competitive. You also make a strong case for seeing workforce development as a long-term investment rather than a short-term fix. Companies that embed it into their overall strategy now will be in a much better position to adapt, innovate, and stay ahead.
Chief Strategy Officer | Workforce & Business Development Leader for Consulting Organization | Driving Impact & Innovation
1 个月I appreciate the first comments. Please engage in the conversation and add your point of view. Thank you Aixa López-Santiago, PE and John W. Kennedy, Ph.D. for getting the discussion started.
Supervisor, Work Based Learning at New Jersey Department of Labor & Workforce Development
1 个月Insightful