Five in 5: Strategic workforce planning

1. Attracting, retaining and developing a quality workforce is a primary business challenge for manufacturers.¹ What are some of the business impacts of poor workforce planning, and how can clients mitigate these risks?

Across industrials, we find our clients realizing that they don’t plan for their people with the same rigor and precision as they plan for their parts. That capability to translate product demand into current and future people requirements is an area where many clients lack maturity. While most of our clients do some level of workforce planning, there isn’t a strong linkage between what the workforce requirements are to actually meet their product demand. This is exacerbated by attraction and retention issues across manufacturing, but the root to the answer is lack of a cohesive talent strategy dictated by true labor need. Immature workforce planning will permeate the business and manifest as missed schedules, delayed deliveries, limited throughput, not delivering on transformation goals, etc.

There’s a real business impact to people planning. The ability to plan labor requirements based on both realized and unrealized product demand helps build a complete picture of workforce needs over time.

2. Is it fair to say that difficulty with attraction and retention are symptoms of poor workforce planning?

Not necessarily. The demand for manufacturing jobs has never been higher but at the same time, the pipeline has never been smaller, especially for higher-skilled labor. If you’re thinking about a smart manufacturing environment, looking for someone who not only knows demand planning but also has an advanced analytics skill set means you’re not just competing within your own industry but across several industries. Manufacturers tend to be working with a geographical disadvantage already, so the labor environment is just getting more and more competitive. This goes back to the ability to more accurately anticipate labor needs—we have clients who overhire, which leads to margin erosion and avoidable costs to support hiring and onboarding. We also have clients who struggle to hire or get the right people in the right place at the right time, which can lead to customer misses. They’re two sides of the same coin.

3. Do clients tend to look for operating models or technological solutions for their workforce planning challenges? How can clients use technology systems to enhance their understanding of workforce needs?

The most successful clients are thinking about the process and the enabling technology hand in hand with operating model changes. We’re seeing this lived out in the big push to integrate planning efforts across the business with integrated business planning or enterprise business planning. Clients have started connecting their customer relationship management systems to product life cycle management to understand their business development strategy, and to their enterprise resource planning solutions to understand real product needs. Historically, these planning efforts were centralized around the finance function, so human resources (HR) and HR systems often don’t have a seat at the table. The truth of the matter is that labor is just as critical a component to production as material is. Long-term planning is informed by all current and future demand and supply needs across people, parts and dollars.

We’re starting to see a movement to integrate workforce systems (HR information systems, etc.) into the overall planning landscape. But if HR isn’t partnering with the business through the operating rhythms of demand planning, no technological solution will ever solve their workforce needs.

4. In light of rapid technological advancements, how have you seen clients invest in upskilling and reskilling their workforces?

With how competitive the labor landscape is these days, clients must find alternative ways to develop talent instead of just acquiring. A robust, mature workforce planning capability becomes a critical input to informing your talent strategy and looks across the business to build, borrow or buy. It considers subdisciplines and skills needed for concrete labor requirements both today and moving forward. It looks across programs, functions and geographies. The requirements for manufacturing labor are changing. Roles of the past aren’t the same as roles of the future. We’re helping clients to define those role requirements, create the job taxonomy to attract labor and put the supporting structure around them for development.

5. How are manufacturing companies adapting their workforces given recent shifts toward artificial intelligence (AI) and automation?

There’s been a big a shift in the way organizations are seeing AI from a workforce perspective. Five to 10 years ago, there was this perceived threat that automation would be replacing labor. Today, automation in the manufacturing environment is being used to supplement and support labor needs, as well as drive insights that lead to better decision-making. That said, often the biggest barrier to using those insights across all functions is trust in the data. Understanding where the data comes from and who has decision rights and governance of that data is critical.

Get in touch

Briana Martin Senior Manager Deloitte Consulting LLP brianamartin@deloitte.com +1 312 486 2101		Luke Monck Managing Director Deloitte Consulting LLP lmonck@deloitte.com +1 703 251 1459

Endnotes

¹ National Association of Manufacturers, 2023 third quarter manufacturers’ outlook survey, 13 September 2023.