How Worker Shortage Has Disrupted the Manufacturing Industry

Supply chain disruptions and global labor shortages are now a big problem for businesses around the world. Many aging workers are retiring and countless people are voluntarily leaving their jobs just as the demand for workers rises.

Demands for better pay and more job flexibility are some of the reasons given for workers quitting. While many markets are experiencing difficulties, it’s really problematic when it has such a great impact on manufacturing and distribution.

Difficulties in attracting and retaining workers

Manufacturers are having ongoing difficulties attracting and retaining workers and they expect this to continue. The main consequences of this are that they are unable to maintain production levels to satisfy demand and cannot increase revenue growth.

The reasons often given for not having enough workers is that many of them are retiring and fewer immigrants are coming into the U.S. Other reasons are generous unemployment benefits funded by the government and fears of contracting the virus.

Remote HR positions are available for HR professionals who are equipped to help manufacturers attract and retain top talent. Smart HR Inc. offers flexible work arrangements to these individuals who will support clients and have the ability to make a difference as a trusted advisor to them.

Shortages of raw materials

U.S. manufacturing activity picked up this year with pent-up demand boosting orders. However, unfinished work piled up not only due to the shortage of labor but of raw materials too. Manufacturing is being affected by record long lead times and shortages of critical basic materials.

It is very frustrating for factories to see a surge in demand but not be able to take full advantage of it due to a lack of parts. Delays at ports continue to strain inventory levels.

A shortage of the semiconductors used in the production of electronic goods and motor vehicles resulted in more backlogs. Transportation equipment manufacturers reported that they had diverted chips to their higher-margin vehicles and stopped or limited lower-margin vehicle production schedules. Manufacturers of computer and electronic products reported extreme delays and that getting anything from China was very difficult.

Rising inflation

With mismatches of supply and demand, higher prices are being charged for available goods. With shortages elevating input prices, it is fanning inflation. There are also concerns that higher commodity prices could squeeze profit margins, although lower inventories do offer companies more pricing power.

Some manufacturing companies have tried to increase their marketing efforts in attempts to sell more products but they need to first build pricing power and then align marketing and sales strategies with this to ensure sustainable revenue growth in the present and the future.

Lack of automation

Manufacturing companies may not yet have enough automation to help with repetitive tasks that could help to offset labor shortages. With more automation, companies would be able to focus on their most precious resource, which is human talent.

Human talent is required for higher problem-solving that requires cognitive skills. This includes analyzing data for optimizing automation and maintaining technology to ensure operations remain effective.

One of the problems is that cost is often a hurdle when making the leap to automation. Robots as a Service (RaaS) could become an option and allow operations to incorporate robotic solutions at an affordable price.

Using Robots as a Service

Deploying autonomous mobile robots (AMRs) is possible without changing infrastructure. Solutions can be easily adapted to businesses and particular areas to help alleviate the current labor crisis. This would help to provide more predictability that could help companies to stay flexible and adapt in the face of ongoing challenges and changing conditions.


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