A Strategic Response to Labor Shortages, Productivity Challenges and Change in Manufacturing and Supply Chains

In the face of an accelerating pace of change, escalating workforce shortages and a productivity plateau in the manufacturing sector, QAD is delivering the Industrial Transformation Platform to overcome these industry-wide challenges. This cutting-edge initiative is designed to redefine global business operations and empower organizations on their journey to becoming Adaptive Enterprises.

Recent industry statistics paint a concerning picture: 

• 72% of companies are negatively impacted by labor shortages.
• There has been a 6.5% decrease in labor productivity since 2011, reversing a decades-long trend of 3.5% yearly increases. 
• An estimated two million manufacturing jobs will go unfulfilled by 2030.  
• Nearly 40% of CEOs think their company will no longer be economically viable a decade from now, if it continues on its current path.

The industry has historically followed a traditional systems approach focusing on efficiency. This worked well, until it didn’t. Supply chains broke in the face of disruption in 2020 and remain challenged. Despite significant investments and the promise of Industry 4.0, even efficiency has languished as evidenced by the productivity plateau. 

The Industrial Transformation Platform recognizes that an efficiency focused approach is brittle and systems alone are insufficient. Two similar companies can implement the same software with very different outcomes. Systems are meant to support processes that in turn support people. Having low costs only works if you can produce the right product and get it to market at the right time. 

The Industrial Transformation Platform addresses these issues head-on by emphasizing the optimization of people and processes, as part of its foundational O³ approach. This approach is applied from the design of the product, through prescriptive implementation services, coaching, customer success, and beyond.

The goal is to help manufacturers and supply chains to rapidly respond to change and deliver efficiency, agility and resilience for effective customer service (the promise made from suppliers to customers to deliver the right product, at the right price, at the right time). 

A Focus on the Frontline Worker

It’s not uncommon for manufacturers to apply the following logic: “We need to be as efficient as possible to successfully compete and hit our margin targets. Labor is a significant percentage of our Cost of Goods Sold (COGS). We can reduce the cost of labor through greater automation. High employee churn is another reason to pursue automation over labor. Machines don’t quit.”

But the truth is that machines can’t do everything (we have not achieved Artificial General Intelligence). People are hired to fill in the gaps. People are not machines, yet we tend to treat them the same way. By doing so we are failing to optimize a significant cost driver and limiting the essential benefits of having people, their ability to deal with change and problem solve. Employee churn is high because we treat people like machines. 

Significant efficiencies can be gained by enabling the flywheel of empowerment, retention and productivity. Labor productivity improvements directly impact efficiency. Productive and empowered employees increase the effective capacity of your plant and accelerate time to productivity for new employees giving manufacturers the agility to increase production beyond what was previously possible without having to invest in production equipment or new plants, and reduce the amount and impact of employee attrition. Empowered employees with a growth mindset take extreme ownership of challenges that impact their production goals, creating resilience in the face of disruption.

QAD’s Connected Workforce solution has delivered on average in the first 90 days after implementation:

• 74% increase in employee engagement
• 29% increase in labor productivity
• 32% reduction in employee attrition

Process Intelligence for Continuous Improvement

Industry best practice processes are an important component. The challenge is that processes as designed are often not the processes that are being executed. It is difficult to optimize a process without understanding what that process looks like in practice. QAD Process Intelligence aligns process design and execution for greater efficiency, compliance, and continuous improvement. Leveraging AI, the solution maps your processes as they are being executed with actionable insights around where processes deviate from design, the impact this creates, and the root causes. QAD Process Intelligence has generated outcomes for customers including: 

• 16% boost in customer satisfaction
• 30% increase in maintenance productivity
• $500K savings in the first six months of use

The Role of Pragmatic AI in Manufacturing

QAD’s view on Pragmatic AI stands out in the industry. Unlike the typical emphasis on technology for technology’s sake, QAD’s application of AI is grounded in solving real-world problems, supporting humans, and enhancing processes for manufacturers and supply chains. This practical approach to AI ensures that technology serves as an enabler, not as a replacement for human expertise. QAD delivers productized AI for Intelligence Amplification (IA), not science experiments. AI enabled solutions include:

• Digital Supply Chain Planning
• Process Intelligence
• Product Classification
• Connected Workforce: Collaboration 

A Path Forward with QAD’s Industrial Transformation Platform

The QAD Industrial Transformation Platform offers a robust solution to the critical challenges faced by the manufacturing sector today. By focusing on the interplay of people, processes, and systems, and leveraging the practical applications of AI, QAD is empowering businesses toward operational excellence and world class productivity.

For a deeper understanding of how the Industrial Transformation Platform can help you achieve operational excellence and world class productivity, watch the webinar and take the Adaptive Enterprise diagnostic.