Nick Davis (00:00:06): Welcome to today's episode, The Future of Work in Manufacturing, part of our Industry 4.0 Ready podcast series. I'm your host, Nick Davis, Industry 4.0 Leader for Deloitte here in the UK.
Nick Davis (00:00:18): Today, we'll explore the people dimension of smart manufacturing. Manufacturers are increasingly focused on the work being performed, how the workforce will be aligned to that work, and even where work takes place, to fully realise the potential of digital technologies and practises emerging in the Fourth Industrial Revolution. Today, we'll explore some of these topics on what Manufacturers need to consider if they plan for the future, in both the long term and the near term.
To share their views on the Future of Work, workforce and workplace in manufacturing, I am really pleased to be joined by Jan Godsell, Professor of Operations and Supply Chain Strategy at the Warwick Manufacturing Group, and Bruce Finch, Industrials Human Capital Expert here at Deloitte. Perhaps we could start with a few introductions; Jan, it is great to see you again and thank you for joining us as a guest. For those who haven't had chance to listen to your debut on episode two of our series, please tell us a little bit about yourself.
Jan Godsell (00:01:12): As you said, I work at WMG and I head up our supply chain research group. But really, what my work focuses on is really about working with organisations to explore that relationship between productivity, resilience and sustainability. But increasingly, what we have to think about is the future, and that both the Future of Manufacturing, and that of work, is going to be very, very different. And when you think that actually both age expectancy or life expectancy and productivity in the UK have both stagnated but going forward to solve this productivity puzzle, we really need to think about the two together. So it's great to be with you.
Nick Davis (00:01:58): Thank you Jan. Bruce, great to have you with us today. Please tell us a little bit about yourself and why you're interested in the role that Industry 4.0 will have on the Future of Work.
Bruce Finch (00:02:07): Hello Nick. It's my pleasure to be joining you and Jan today. So just a little bit about myself, I've been in Deloitte for 10 years in the Energy, Resources and Industrial Sector, working in Mining and Metals, Oil & Gas and Manufacturing. I'm focusing on transformations and the Future of Work and how we can bring technology in to improve productivity within our clients, looking at every type of technology, whether it's in the workplace or artificial intelligence, robotics, bringing together every lever that we can to improve the Future of Work and the future of output for our clients.
Nick Davis (00:02:50): Thanks, Bruce. And I guess just to start off and to kick off with a little bit of a definition, really, Bruce, what do we mean by the Future of Work?
Bruce Finch (00:02:59): So here at Deloitte, we've been looking at the Future of Work very much through the lens of our Human Capital Trends survey of 6,000 European Executives every year since 2011. And we look at it in three dimensions. The first is work. What is work? What we mean by that is, what is the balance between the parts of work which are performed by humans in the workplace, and that that's completed by automation and artificial intelligence? The second is workforce. What is the composition of the workforce at work and how can we broaden the workforce talent pool by using alternative talent models beyond the traditional employment model? And finally, the workplace. That's become ever more into sharp relief because of the COVID crisis and workplaces, the physical and virtual combination, of where work is done and how we go to maximise productivity and consistency of output in the places where that work is done.
Nick Davis (00:03:59): Okay, thank you, Bruce. And Jan, I think many of those principles apply across industries, but what would they mean specifically for Manufacturers?
Jan Godsell (00:04:08): If you think about manufacturing, it is a broad topic, and one of the critical drivers within manufacturing at the moment is the driver around Net Zero. We did a study last year looking at the link between practises around circular economy sustainability and supply chain manufacturing networks. We started with over 600,000 different sources and whittled that down to what we call a systematic review into the top 108. Now you'll be very pleased to know that Deloitte actually comprised eight of those publications. Your second only to a more general set of the huge publications. But when you looked within those 108 sources in more detail, what we then identified was 53 factors which we use to develop some scenarios for the future. And when we start looking at what the future manufacturing landscape may look like in 2035, it's quite different. Lots of people ask at the moment whether or not COVID or Brexit are going to drive us to a perhaps, a drive towards reinsuring. Actually, what is going to drive us to a more flourishing world by 2035 is actually embracing the principles of the circular economy. And in turn, what that's going to lead to is a very different manufacturing network design or footprint to what we currently have. Because what we're likely to see is a much greater competition between regions who are competing on sustainability, and leading to a much higher level of regional reliance, which will create regional manufacturing hubs, within and across the UK, that will really start to leverage much more closed loop models. So we avoid some of the risks from resource price fluctuations. And the really critical thing about this is that it will lead to different types of jobs. It won't just be the jobs in that forward-facing aspect of manufacturing, but it will be new jobs and things like recycling, reverse logistics and also in secondary markets such as upgrade, repair, and remanufacturing.
Nick Davis (00:06:04): Okay, thanks Jan and I can see a significant macro level, long term trend there. Do you think that's different in the near term? What is it that manufacturers are thinking about in terms of the Future of Work as we emerge from COVID and slightly closer in terms of time frame?
Jan Godsell (00:06:23): So I think if you had to think about this in terms of Future of Work at the moment, then if you think about manufacturing sphere, people are perhaps thinking about the impact of digitisation, so more linking in with some of the aspects that Bruce was discussing. And I suppose understanding, therefore, the difference in skill sets that you may need from potentially introducing some of those more near term digital technologies into a more traditional manufacturing landscape. And what we're seeing that that potentially could drive either the optimisation of individual processes such as manufacturing, logistics, procurement. But also we're seeing the development of more platform based thinking to actually connect end to end supply chains, and this perhaps requires a slightly different skill set in terms of some of those skills around data analytics and decision making.
Bruce Finch (00:07:16): And so building on what Jan has said, I think a critical element of that is reskilling. Reskilling the workforce to provide that skill set to meet the new technology challenges that Jan outlined. And we see versatility as the hallmark of unlocking that workforce potential. One of the big lessons of the COVID-19 pandemic is that when given the opportunity to align their passions and interests with the organisations need, workers step up fulfilling roles often that managers never realised that they could. And just some evidence for that, our Human Capital Trends survey saw that the question we posed of the ability to adapt reskill and assume new roles, as top ranked elements in the Future of Work. 42% of people saw building organisational culture and celebrating growth and diversity as critical to empowering their workforces and 40% of them saw building workforce capability through upskilling, reskilling, mobility, as a key lever to um enable themselves to exploit technology to the maximum. So implementing those new techniques, those new skills for the workforce, is critical to bringing together the Future of Work and the technology that Jan outlined to deliver value.
Jan Godsell (00:08:33): I think that's a really good point Bruce because, we had an event which actually included some young engineers from the WMG Academy for young engineers. It was very interesting to hear their perspectives because they're obviously looking to pursue careers in this sort of space, and I think that there is a sort of presumption sometimes that young people are going to have these very dynamic careers where they move from organisation, to organisation. I think it's a bit like this financial concept of real option value in that the youngsters were really keen to be able to develop a skill or capability set that gave them optionality to be able to pursue many different career paths in the future. But potentially they were quite willing to pursue that career within the same organisation, if the organisation gave them the opportunity to pivot and to explore different opportunities. So I think sometimes these slightly caricatured images that we have of different generations, when you actually get beneath the surface they are caricatures and the reality can be a little bit more nuanced.
Nick Davis (00:09:37): Thanks Jan, and so what skills do this younger generation, the new entrants into the manufacturing workforce need, and I guess at the same time, what is it that the older generation need in terms of digital skills, that highly skilled older workforce as well?
Jan Godsell (00:09:55): So Paul Shakespeare from the High Value Manufacturing Catapult, did a brilliant international study of the sort of different skill sets required for the Future of Manufacturing, and one of the most interesting things that came out for me, was that actually, we've got an erosion of the basic core concepts around manufacturing strategy. And so whilst there are a lot of new skills we need, there's actually a little bit of going back to basics to make sure that everyone has a really, really sound knowledge I think both of manufacturing strategy and I'd also argue perhaps one of the gaps is more around a good knowledge of end to end supply chain strategy too.
However, there's also a newer blend of skills which I touched on before, which is really about the ability to perhaps make data driven decisions and how you could use data to make those decisions. And interestingly, here we see some organisations that are particularly keen to try out new business models, actually setting up spinoff organisations, and there's one particular organisation I was talking to that was faced with a dilemma because they're saying, look, we have very long established planners who don't necessarily want to have their futures determined by these algorithms. They believe that they, as individuals can plan better. And actually, they were almost expressing a preference for younger planners who were more willing to go with the rules-based approaches and the automated systems. And as we reflected upon it, we perhaps realise that in the short term you just need to think about COVID-19 and the sort of peek in demand that was created by panic buying. There was no system in the world that the first time a system saw that would have known how to react to a peak in demand of that kind. So, actually, perhaps it's not a question of, you know, is it you go fully automated and value those skills over perhaps more experienced planners that maybe more reticent. I think that we came to the conclusion that actually the short term it's going to be a real blend of skills and actually it's having the systems in place that that system will quite happily flag when it sees perhaps a decision that is beyond its normal decision making parameters, and actually flag when perhaps more experienced planner is needed. And so, in that way, I think we can see this real blend of skills from those people that may have really valuable experience that could potentially train those algorithms rather than necessarily being replaced by them.
Bruce Finch (00:12:20): And that leads nicely onto one of our concepts that we are working here at Deloitte, which is the ‘superteam’, making workforce real in the Future of Work. So we've been talking about the team as the basis for work for the last few years. And our concept of the ‘superteam’ are groups of people and intelligent machines, whether that's AI or automation, working together to solve problems, gain insight and so create value. And so we see this organisational concept as the prop holding the promise to enable organisations to reinvent themselves and to create new value and meaning in that work, while giving their workers the potential to reinvent their careers and their skills in ways in which increase their value, the worker's value, to the organisations and consequently, their own employability. So we see that as people, machines and technology working together in a seamless but flexible way. Interestingly enough, our Future of Work Human Capital Trends survey saw 54% of the 6,000 executives we surveyed looking at reimagining work in this way.
Nick Davis (00:13:32): Fantastic. Thank you, Bruce. It strikes me Jan that the last 12 months or so have been obviously an unprecedented business and global environment. I hear around, you know, some areas of the Future of Work have been vastly accelerated, you know, the kind of the remote working in different ways for teams forming and working together but equally the adoption of digital and some priorities within business has been quite different. What's your kind of view of the kind of state of the nation around the Future of Work? What have we learnt over the last 12 months? And what opportunities are there to leverage that and address some of the challenges that manufacturers have?
Jan Godsell (00:14:10): Yes. So I am fortunate to be part of the ‘Made smarter’ challenge and interestingly when you look at for instance the adoption of industrial digital technologies… it is not the adoption of the technology in itself that is the goal, it is the outcome that it gives in terms of productivity and competitiveness. And actually, during the pandemic, what we saw quite successfully happen in the UK, is where people were able to repurpose their manufacturing capability to a different purpose. So for instance, the production of PPE or even ventilators. And so, what they were showing was ability to compete through economies of scope which is a really good capability to have. But actually, where the UK manufacturers potentially pivoted and were able to respond to this way and gain a short-term competitive advantage, interestingly over time as China and other sources have come back on board and perhaps have a cost advantage is very very quick for some of those customers that favoured that responsiveness in the short term but in the longer term they go back to favouring cost. And so, I am not necessarily sure that we are going to see a Future of Work that will lead to that 2035 scenario that I previously described happening, unless we can genuinely a competitive advantage. And I think that is going to come about when we start to factor in the cost of carbon, because that will drive us to look at our manufacturing footprints in a very, very different way. And that will drive us towards more distributed forms of manufacturing but equally these more localised forms of manufacturing, that will take us away from just that forward facing view of manufacturing and the types of jobs that support that, to actually more novel business models that better support the circular economy and perhaps create a more a broader range of diverse jobs that look at manufacture but also some of those other things such as repair, refurbishments and so on and so forth. But potentially this will require not just firms to look at their supply chains in a different ways, but perhaps also governments.
Nick Davis (00:16:27): Thanks Jan. As we emerge from the pandemic and so on, Bruce, you and I spoke about some of the real great lessons that have been learnt over the last 12 months and they were reflected in the latest Human Capital Trends report. Perhaps you can share for our listeners some of those most relevant lessons learnt for the manufacturers in terms of the Future of Work.
Bruce Finch (00:16:47): Well thanks Nick. I would delighted to do that because in our survey this year we specifically questioned what manufactures had learnt from the experience of the pandemic and the pivoting of their organisations both in terms of what they produced but also how they produced it. And we found a number of very interesting lessons which I think exhibit an enormous potential for greater value from the workforce as we move forward into the post pandemic world. And I will just break those down.
So the first is around designing work for well-being where workers feel that they're at their very best and that means for organisations they're going to be their most productive. So we found that 40% of executives believe that personal choice is critical in determining where work is done. 39% of executives were looking at enhanced digital collaboration, whether that's on the assembly line or in the office to improve productivity and allow a more distributed location where work is done. And 32% we're looking at new scheduling norms, whether that's in the factory or again in the wider workplace. But most importantly, one of the lessons of the pandemic across industries has been the importance of well-being at work. And we talk about work, workforce and workplace and this about architecting the wellbeing of employees and therefore their future productivity into the centre of the work that is being done.
Bruce Finch (00:18:14): The second lesson we learned was around unleashing workforce potential through beyond reskilling. And that's, um, about investing in skills that bring long term resilience so that in future pandemics and future crises, the workplace and the workforce could be resistant and resilient to any change. So 74% of those organisations we surveyed said that reskilling of their workforce to exploit new technology is either important or very important for their success over the next 12 months. But critically, only 10% of them felt that they were in place to properly exploit that. And some of the things we looked at here were moving from building skills to cultivating capabilities within teams, moving from developing skills to leveraging the passion that many workforces had unleashed as they pivoted to new productivity and also new products within the pandemic, moving from just training to supporting learning in the flow of work, so improving the way in which work is done. A change in the way reward is given to work forces from a focus on output to a focus on gaining new capability. And finally, we move from an internal focus to preparing the workforce with an eye for benefits to wider society. So embedding purpose as central to the workforce and the work done by the organisation.
Bruce Finch (00:19:45): We talked earlier on about the ‘superteam’ and how it becomes a critical workforce strategy and a very concrete example of that which brings in lots of well-known manufacturers in the UK is the Ventilator Challenge which happened early last year. Where on the 16th of March, the prime minister issued challenge out to industry to meet expected demand for ventilators and a PAL industry superteam of Ford, Airbus, McLaren, Pendulum and with some support from Deloitte, moved to scale up ventilator production, which was deemed to be critical from to the NHS from 50 a month to over 11,000, almost 12,000, in fact, in three months. One of the crystal learnings in terms of the work being done and the workforce and the workplace; there were three principal lessons. Firstly, a focus on innovation. So, by way of example, through digital technology, they achieved a 60% reduction in errors. The second thing was a distributed workforce, both virtually and on site across the UK whether they were in support in direct manufacturing. And thirdly, that when the Ventilator Challenge moved from beyond supplying ventilators to the NHS, to more international production, the work force within the superteam were able to pivot to supporting that new product from a variety of manufacturers to deliver the output to their customers abroad. And so what that very clearly demonstrates is an ability to be both productive, innovative, and use the resources of the workforce in the most productive way, to deliver value to the organisation, and we think that superteam example encapsulates the potential of the Future of Work.
Nick Davis (00:21:38): Thanks, Bruce. And I think that's, some, really insightful lessons learned there from the Human Capital Trends report. Looking back over the last 12 months or so through the pandemic just to conclude, I think I'd be great just to perhaps a have one piece of advice from each of you, Jan and Bruce around what you would offer for manufacturing leaders as they planned for their workforce of the future. So perhaps, Bruce, you know what would be your one piece of advice for a manufacturing leader as they looked to the future?
Bruce Finch (00:22:05): My advice is to move from ‘survive to thrive’ post lockdown. You need to look carefully at what innovations you took into your organisation as part of the response to COVID and embed them as part of your Future of Work moving forward. Whether that's speed of delivery, adaptability of your workforce in the face of new challenges or the embrace of the new technology as part of a superteam. ‘Survive to thrive’ is the advice.
Nick Davis (000:22:35): Thank you, Bruce. Very good advice indeed. And yourself Jan.
Jan Godsell (00:22:39): So in a similar vein, I think what we need to look, as we're calling the popular phrase about ‘building back better’, is that competitiveness and productivity go hand in hand with actually delivering sustainability. And perhaps what we can use is that sustainability driver or the need to ‘build back better’ as a way to fundamentally look at how you redesign or think about how your business is going to compete going forward, and fundamental to that will be the way which you consider your approach to manufacturing and you're supply chain.
Nick Davis (00:23:14): Fantastic. Well, thank you both, Bruce and Jan for joining me today. I guess what I would take away is just the huge importance and significance of the Future of Work, both for the long term health of manufacturing as a sector, but also for competitiveness of manufacturers as we come out to this COVID-19 pandemic.
Nick Davis (00:23:35): That brings us to the end. Thank you Jan and Bruce for being my guests today. And thank you to our listeners. Please do take a moment to share a review and any feedback on this Industry 4 Ready podcast. If you'd like to have a closer read of the Global Human Capital Trends report, please visit our website at deloitte.co.uk. I look forward to sharing and discussing more on industry four topics on our next podcast. Thank you and have a great day.
