Kevin Kane:
Welcome to another First Business Bank Podcast. Today's episode is the fourth and final installment in a series of discussions dealing with workforce solutions for manufacturers given today's challenging labor market.
Kevin Kane:
As a recap, the series began with an overview of current labor environment issues and some bigger picture insights around how employers can think about the issue and deal with it. From there, we covered a topic of recruitment strategies. And then in our third podcast, we talked about employee retention. So that brings us to the concept of redeployment, which is the theme of today's podcast. And that will touch on themes related to building capacity in the manufacturing environment by increasing productivity and efficiency through automation and process improvement. And the punchline behind that is to do all of that, hopefully without adding incremental staff. So to help with our discussion today, I'm joined by two of our friends from WMEP, Carol Crawford, transformational service leader, and Colin Wilson, senior consultant for automation. Carol, would you mind telling us a little bit about your background?
Carol Crawford:
Sure. Thank you. So I'm Carol Crawford, transformational service leader and senior consultant at WMEP. I've been here five years, and prior to joining WMEP I have 25 plus years of experience in manufacturing, both with large and small manufacturers. Some of the larger manufacturers are 3M, Rockwell Automation, Brady, and the semiconductor manufacturer Microchip. And then also I've worked with small manufacturers where the challenges are maybe more difficult from my experience. I was in the touch screen industry with a small manufacturer for a number of years. So always been in supply chain operations or manufacturing in this area, and I've seen a lot of changes both in the manufacturing operations, but mainly in the people process and automation, which we'll be talking about today.
Kevin Kane:
Perfect. Thank you, Carol. Colin, how about you?
Colin Wilson:
Yeah, thank you. My name is Colin Wilson. I'm the service line leader for automation consulting at WMEP. My background, I'm a mechanical engineer. I've spent my career in automation, kind of cut my teeth in field service work and technical support for a value added motion control components distributor. From there, I transitioned into custom automation equipment where I spent the bulk of my career making custom pieces of equipment really for the consumer products industry, for the appliance industry. For a lot of very large manufacturers that are here in the state of Wisconsin. I appreciate you having me.
Kevin Kane:
Thank you, Colin. So maybe to kind of do a quick refresh on the root cause. So again, redeployment, automation, process improvement, things that will help manufacturers do more with the same human resources. One of our earlier podcasts with Joe Brown, we talked about some of the things that led us to this point. So at a higher level, this idea that the combination of the Baby Boom generation heading toward retirement age, so more and more workers leaving the workforce. We talked about changes in other demographics, the migration of folks from Wisconsin's point of view perhaps into other geographies, and then the whole impact driven by things like COVID that changed people's perspectives around work and what that had to do with the number of folks in the labor pool.
Kevin Kane:
So with that again high level context to get back to our theme for today and get started, this idea of building capacity or increasing output without increasing staffing levels. Given how tough it is for companies to find new workers, this sounds like magic. So I guess my first question to lead us off for either Carol or Colin would be, what's the first stage or the first step in that journey to improving and building capacity without necessarily increasing staff?
Carol Crawford:
So what we like to do is first look at an organizational assessment, look at the enterprise at a holistic level, and try to see where there's opportunities for improvement from let's say quote to cash or source to shipment. And we do that through a number of means. Value stream mapping, assessments, and other tools. And then we start to see where we can bring in efficiencies and there's opportunities to close gaps. And oftentimes automation or incremental automation enters the equation at that point. But without looking at it from an organizational standpoint, you can miss opportunities or kind of improve in a silo that might be at the detriment of some of the other interdependent processes. So taking a step back, looking at a high level, determining where the opportunities are getting back together, reassessing and planning is really the first step that we take for the overall process. And then we start to look at automation. Colin, what do you think?
Colin Wilson:
Yeah, Carol, you hit it right on the head. We like to say that automation is your first floor that you build your productivity improvements on. It's not your foundation. Your foundation is a culture of continuous improvement and best practices. And at the end of the day, if you automate the wrong process or a process that isn't mature, you can just make a bad product faster. So we like to start with the easy wind stuff before jumping right into automation.
Kevin Kane:
Okay. Sounds good. And that may be a topic or a part of our conversation that we can return to a little bit later on as well. So kind of continuant with the idea of, if we think about us from a big picture point of view, you've already talked about the integration of some of these pieces, but how do companies help ensure that their investment in automation is strategic? Meaning in part that the decision where those dollars are deployed will maximize the ROI or the return for a particular business. Any thoughts on that?
Colin Wilson:
We like to understand where a business is and where they're going before we really start talking about investing in automation. We want to make sure that the value streams are appropriate, that we're not going to be investing in the manufacturing of Betamax tapes, for instance. And that's where Carol and her team really come in and help a business understand what direction they're headed and how they're going to get there. From the kind of strategic investment in automation, we want to understand where labor is actually being spent, right? We want to save labor hours. That's what this whole redeployment is about. At the end of the day, we want to develop a risk versus a reward matrix to understand which products could be the most impactful, which ones are going to have a best hit to the bottom line or productivity and output. And then from there, we really start to develop a kind of three year automation investment plan, not only from the capital expenditure side, but how we're going to support that equipment and keep it running.
Carol Crawford:
And we see a lot of pieces of equipment, automation equipment that's brought in, that's used as a coat hanger or where the shop towels are drying out because people haven't planned for it, just like Colin said. They see maybe a piece of the operation that they want to automate and quickly jump to that without taking a step back and looking at it holistically and planning for it. And part of the planning for buy-in is to make sure that all of the employees, all the stakeholders are engaged, understand the why behind automating, even if it's a simple auto step. Because usually it's the beginning of a journey, and that they are part of that process, decision making and implementation process, so that it becomes an integral part of a workforce plan. And that you don't have challenges with the adoption from the people that have to work alongside the automation as well.
Kevin Kane:
Yeah, that makes a ton of sense. I mean, this idea, it's that human element around change management. You used a couple words there that caught my attention too, Carol, which is this idea of integrated workforce planning or a plan. You sort of touched on, the two of you have touched on the key elements there, but can you talk a little bit more about who the stakeholders are in that integrated workforce plan beyond just the immediate environment on the shop floor, for example, can we drill into that a bit more to give our listeners a sense of who they would bring into that conversation and make sure that they're starting off in the right place?
Carol Crawford:
Sure. From the work that we do with the organizational assessments, we bring in all of the key stakeholders from the leadership team and all the functional areas that might be affected, but then the next level is probably the most important. As you take functional areas and look for automation, bring in the people that would interact and interface with that automated process. And it's not always the shop floor. Sometimes it's a business process that's automated. Automatic invoice payment, quoting, resume review. So it just depends on what the client and WMEP together have mutually determined as the next best step to consider automation. But that buy-in early stage planning review and kind of the beta step through of the early implementation is key with anyone I would say that is on the tier one or tier two of the interaction with the automation process.
Kevin Kane:
Okay. So as a banker, some of the things you just described makes sense, some of them are worthy of maybe further exploration. So when you talk about tier one, tier two, I think more in terms of functional areas within a company. So for example, would HR be involved in this process? You mentioned the leadership team, but again, if I think more in terms of function, who are some of the folks that are sitting at the table to make sure that, again, you get off on the right foot?
Carol Crawford:
Well, I'll just build on that a little bit and then turn it over to Colin. So yes, definitely HR, and that's who you think of when we talk about strategic workforce planning. Of which, by the way, automation is a critical part of. It's humans and machines together. It's not just people only. So to have a long term view of what strategic workforce planning resources you need, including automation as the start, but then branching that out into the areas that are affected is key.
Carol Crawford:
So if you're working in a certain let's say a cell in a operation, bringing in all those cell leaders and operators into the process, help them be part of the process of laying that out and planning for automation would be important. Also at the high level of planning to make sure you have capital expenditure planning that crosses all functional areas, specifically finance, and the leaders who need to plan for the expenditure and the implementation. So you really can't go wrong by over communicating about needs for process improvement and automation with the stakeholders both let's say horizontally and vertically.
Colin Wilson:
Yeah. Carol, I think you covered a lot there. At the end of the day, when I think about an organization implementing automation, whether it's for the first time or for the 50th time, it really is critical to communicate internally as to why we're doing this, how we're doing this. There's some methods you can use to contrast your organization against some of your competitors and say, "We're behind the times already. So we want to bring in equipment, we're going to upskill our workforce. You guys are going to get more skills at a higher pay rate for us to be able to accomplish this." And at the end of the day, I think one thing that maybe hasn't been talked about yet is the maintenance department. Certainly there needs to be a support side of this. And whether that's identifying people internally that have maybe not the direct skillset already, or the direct experience, but the ability to learn a new technology and identifying those people before you bring anything in house. So that the first year or two years of having equipment on the floor, you can keep it running and really keep it productive.
Kevin Kane:
And I'm glad you touched Colin on upskilling, because I know that's a term we've heard from time to time. And so, again, what you're talking about there is in the context of this automation or process improvement journey, assessing different roles and responsibilities, and does the team that you have in place, do they have the skill set to take on a slightly different role in the context of where you're heading? Do I have that right in the way that I sort of described it there?
Colin Wilson:
Yeah, very much so. When we're talking about upskilling, we're talking about taking employees who may not have that skillset directly, but they show an aptitude. And at the end of the day, when we're giving the training to these employees, we're really giving them an opportunity to advance their pay level and also advance their skill sets. And showing that investment in your employees really tells them that you're there for them in the long run. And at the end of the day, if we're all more productive and we're getting more product out the door with the same number of people, then we can redeploy people away from processes that they really don't like to do anyways. I think that all kind of builds upon this story of upskilling our workers for a more successful manufacturing environment.
Kevin Kane:
Okay. I'm with you. I think that that really does touch on something that certainly from the banking side we observe in conversations with companies, customers, prospects, about the idea that as you talked about, okay, what parts of our process, what we're doing today can we change to become more efficient, that can sometimes provoke some anxiety or concern about, okay, is my job going to be eliminated? What's in it for me? And I think you've just described some aspects of that that are going to help incentivize the workforce, help drive buy-in, that type of thing, which leads me to this idea of just overall employee engagement. So do either of you have any thoughts about how to effectively drive employee engagement, because in some respect that's really what you're describing, it seems to me.
Carol Crawford:
Right. Well, you need to win the hearts and the minds of the people who are working in the areas that will have the automation brought in, or it won't go smoothly. So you're absolutely right about employee engagement. We talked a little bit about stakeholders and understanding the why and things like that. But I wanted to quickly comment that robots will actually increase human employment, not decrease it. So the fear of losing your job can statistically be discussed as that's not going to happen. The World Economic Forum has a lot of data on it, but also predicts that automation will result in a net increase of 58 million jobs across the board. And when you go by sector by sector, each one of those is broken down, and examples of our clients who implement automation prove that out. So not only do the employees get to have a chance to increase their skills, choose and do more of the things that they enjoy doing that are potentially safer for them, but they also get to learn new skills and there alone drives engagement. So they're part of the process and part of the solution.
Carol Crawford:
And the skills that are needed can be very different than what people expect. You need technical skills, but you also need those human skills that a robot or an automation will never bring to the table. Things like cognitive flexibility, empathy, emotional intelligence, creativity, innovation, quick decision making and critical thinking. And those are the areas that are part of the upskilling revolution that employees need to be trained on and then will help accelerate automation adoption and augment the output. So it's not all now you have to go to a boot camp to learn how to run this computer. It's very holistic in terms of developing the employee. Therein lie a lot of opportunities for engagement. You're really investing in the whole employee.
Kevin Kane:
Okay. I can appreciate that if you execute on that approach effectively, it's sort of this virtuous kind of circle if you will, right? So upskilling leads to greater job satisfaction leads to more employee engagement. Productivity improves both from process changes, perhaps the introduction of robotics or automation, but even more so just the ability of the company to do more with the same amount. Human resources, bring more to the bottom line, all of those good things. As I was reflecting, Carol, on some of the things that you described a moment ago, I'm also wondering, I'm thinking in terms of, okay, if I imagine I'm a leader at a $15 million annual sales manufacturer here in Wisconsin, the upskilling, the training, some of this sounds really good, but it also sounds like it may be more challenging for me because I don't have the bench strength or the depth within my company necessarily to help manage that process or execute on that. So can you talk a little bit, maybe this is a lead into is that where the WMEP comes into play? Or how can the average company out there, who can help them embark on this journey and do so in an effective fashion?
Carol Crawford:
Sure. Certainly the WMEP can help them with that. There's a lot of entities and ways to help employees come along with this revolution and digitalization of the workplace and automation. So training is definitely one. And WMEP offers a host of services and support to help employees develop as we automate. In Colin's world, people go along with the equipment always as you've mentioned, and there's a lot of ways to train. You can bring in outside resources, there's online resources. There's the technical college system offers a lot of great opportunities. You can start to do training internally. So you have your own internal hub of training and you don't have to continually go outside, but you can develop your own group. That really is very effective because you can not only reap a lot of rewards from that as people then have career paths that include training, but also you can customize the training for your own culture, values, and a lot of times it's your own language. We go into a lot of clients where it takes a little while to get all the acronyms down and they use different words, things like that. So you have an advantage in that respect as well. But continuing that training and making organizations become learning organizations is really what we try to do when we bring in automation and do process improvement overall.
Colin Wilson:
Carol, you brought up some great ways to go about obtaining training and getting people the skill sets that they need. And I just want to throw out some examples of manufacturers that we've worked with where really some highly technological you would expect equipment was implemented. Then people that you wouldn't have guessed can take over that equipment and run with it were really flourishing. So marketing aside, right? Universal Robots does a great job of telling anybody that can work a cell phone can program one of those robots. Now that's not exactly true, right? It takes a little bit more training than that. But at the end of the day, it doesn't take a lot of training to become effective with some of these newer technologies out there.
Colin Wilson:
In one case, we worked with a machine shop where their tool room setters were delivering tooling to each machining cell. Were spending a lot of time actually delivering the tooling rather than setting up tooling for new jobs. So they achieved quite a big gain in throughput and even were able to meet their growth demands without having to add more tool room centers by implementing an autonomous mobile robot, which sounds very technically advanced, but in the course of a couple days of hands on experience, each one of those tool room centers now can say that they are programming on a daily basis an autonomous mobile robot to go out and deliver tooling. I mean, that's just a phenomenal success story.
Kevin Kane:
I like that, Colin, a very specific real example of applying some of the things that you and Carol have shared so far about the process and then bringing it into a real example, which even I can understand what you just said. So that's good. What else haven't we covered at this point? I mean, we talked about thinking holistically to start off with, not immediately rushing to a specific and potentially obvious place where you think automation would be helpful, but rather taking a bigger picture view, integrating different stakeholders in the process. Are there any other maybe more tactical dimensions to this effort that are worth talking through, or other specific examples that either of you might share to kind of tell a story about where you saw this happen and what the outcome might have been?
Carol Crawford:
Sure. I think to build on Colin's examples, a lot of manufacturers now have pressure on profitability. Costs have gone up, supply chain, raw material costs have gone up. Labor costs as they compete for the limited pool. So although top line sales might be doing well, many manufacturers are struggling to maintain profitability levels. And automation can help with that value add element. So one way of measuring the impact is on value add revenue change before and after. And we have a client where we put in a simple conveyor system that allowed the machine operator then to be freed up to run several machines while the conveyor system took care of that process. And so as a result was able to become a lot more productive and efficient, and their value add revenue increased dramatically at this particular organization.
Carol Crawford:
Not only was that important for the productivity improvement, but it also allowed everyone to see how something like automation could improve productivity, allow the operator to have, it was actually more interesting to do the job that was enabled by automation, and kind of paved the way for an automation roadmap and allowed the organization to say, "Well, we really need to start planning. We need to start somewhere and start planning for bigger and better things and create a one, three, five year automation roadmap and strategy," that they then put on the lunchroom walls. Everyone could see what it was. It was demystified. It wasn't intimidating. And people were able to continually suggest improvements or ask questions about that roadmap. So it served a lot of purposes all at once. But that was an evolution of starting very simple and small, and then just kind of infusing it into the organization for buy-in and acceptance and adoption.
Kevin Kane:
What else haven't we talked about so far that ties into process improvement, automation, some of the change management considerations, maybe even some of the financial, how you measure progress so that you've got measurable benchmarks to say, "Okay, are we on Track?" Any thoughts to share with our listeners on those topics?
Colin Wilson:
Kevin, I'd like actually like to build a little bit on what Carol said.
Kevin Kane:
Sure.
Colin Wilson:
About kind of alternative, what haven't we talked about with automation yet. We've talked a lot about upskilling our employees, about the benefit and the value to them, and it's up to us to communicate that value to them. Right? But we haven't talked about really automation in another light, as an enabler. We're here to talk about redeployment. We're here to talk about positions that are hard to fill. We were working with one manufacturer that had over 100 welder positions open and unfilled. So when we look at that strategically, we start to think, well, how can we fill those positions potentially with something other than a highly skilled welder? And so a lot of times automation can fill that gap. We can take what used to be a highly skilled position, and we can turn it into a... we'll say a lower skilled, we'll say operator tended position.
Colin Wilson:
So we've got the automation to take over the task that used to be a very high skilled task. And we're going to attend it with really an operator from a much larger labor pool. With the unemployment where it is, and with the existing workforce challenges that everybody's facing, we need to do everything we can to either take this person that used to have to be a 400 pound linebacker to move the parts around, and can we use automation to a system so we can hire somebody's grandma to fill that spot. Really automation, it's enabling us to redeploy people from places we never would've thought before.
Kevin Kane:
Got it. Thank you for bringing forward the enablement part of it. You described it very simply, and it's this idea that certain skill type positions, there are fewer folks in that cohort, if you will. And so, as you make a particular job accessible to a broader group then your ability to get those folks increases as a result. So thank you for bringing that forward. Anything else in terms of the softer skills or the human element here that helps drive success in terms of redeployment?
Carol Crawford:
So, Kevin, you mentioned change management, and that is part of what Colin and I have been talking about all along. With having people understand, being aware of the change, having the desire to change, and moving through the phases. So we understand what's required for managing the people risk side of change and helping to adopt automation in an accelerated and productive way. So having automation introduced with kind of a change management philosophy is really important, and also incentivizing people to accept automation. And I'd like to turn over to Colin, because I think he has a good example of a client who used a creative way of incentivizing their employees to accelerate the adoption of automation in their facility.
Colin Wilson:
Yeah. Thanks, Carol. I mean, it really is a great story. They're a manufacturer who's in a small town. I think most of their employees drive over 30 minutes to get to work. So at the end of the day, if they're willing to drive 30 minutes to come to work for you, they're willing to drive 30 minutes in the other direction. So one of the problems they were having is absenteeism, right? And so they've got a small limited labor pool, their workforce that they had was absent. And so at the end of the day, their production suffered. Their numbers. They couldn't ship out as much as they wanted to ship out. So they kind of moved forward with a multifaceted plan to tackle all those issues kind of at the same go. So they implemented a bonus program based on a production goal for the month.
Colin Wilson:
This in hindsight has helped them meet some of their growth demands and growth targets. But ultimately if the output for a month, if they shipped enough product, then everybody who met their attendance goals participated in a bonus pool. And so not only did it encourage attendance, you get money at the end of the month if you show up to work and a bonus pool of money, but it also tipped the scales in favor in automation because they can't find more people, but if they can implement automation and get more product out the door at the end of the day, then the bonus pool is larger for everybody to participate in. So it incentivizes people to accept the automation, and they had phenomenal results.
Colin Wilson:
The first month that they implemented the program, they met their shipment goal, the absenteeism dropped by 60% that month. People showed up to work, they were excited about implementing automation. So there are some creative programs that people can implement in their facility, not only to help boost the morale of bringing in automation and talking about automation, but if the plan is right you can kind of tackle other issues within the facility as well.
Kevin Kane:
Yeah. I love that story, and I can imagine too after that first successful month, the belief and the confidence, and this is the way forward, it just builds on itself again. So then I can imagine the team beginning to think, okay, how can we do better this next month and the month after that? Helps with morale, which back to one of our earlier podcasts touches on this idea of retention. So it doesn't matter how many great new employees you bring in if you have other employees leaving at the same time. So that is another big plus as well. So I think it really kind of amplifies the point, so to speak. Any other thoughts as I kind of look at the clock here, and we're getting close to our time, but any other thoughts on the topic that you'd like to share, and that might provide a little more into how this can help?
Carol Crawford:
Well, I think it's a question of not if but when a process can be automated, right? So we all look at what we do. I know the OECD, the Organization for Economic Cooperation and Development predicts that 14% of the jobs are likely to be fully automated and 32% partially automated as we go forward. So in the next five years, there's going to be an automation wave. So to prepare for that and look at what you can do as an organization to plan for it, both from that workforce planning, budgeting, and then the people side of it. And make it part of your regular planning dialogue and process so that it's something that you're addressing proactively, and that you can take advantage of opportunities then for introducing automation.
Carol Crawford:
And it can be incremental. As Colin mentioned, there's different priorities assigned to automation opportunities that weigh risk, investment and return. So you don't have to all of a sudden become a completely automated operation. You can introduce it in an incremental fashion, take advantage of the efficiencies and learning curve that comes with all of it, and start to move your organization down that path to automation and digitalization in steps.
Colin Wilson:
That was a great summary, Carol. The only thing that I think I could possibly add to it is, when people think about investing in automation there's a lot of heartburn. It's a very big capital investment. But at the end of the day, there are a lot of methods to go about bringing automation into your facility. And it doesn't necessarily always lead to writing a big check to a bank, right? So I encourage you to go out and talk about how you can creatively implement and finance automation, because there's a lot of manufacturers doing it.
Kevin Kane:
That's great advice. We certainly have clients who in the last couple years, for example, and even before that, for sure, but some of the things that everybody has been challenged with in the last couple years in particular have accelerated the thinking on this. And we have a number of clients that we work with where they were looking for a solution, they found an opportunity to introduce some automation. And this is a place where other external partners that companies may have, it could be their banking partner, it could be their accounting firm or other consultants, can help with that. And certainly from a banker's point of view, introducing or bringing robotics into a manufacturing environment, typically that does spark some type of a financing need. So it's in our interest to assist with that process as well.
Kevin Kane:
So there's a lot of good that comes out of it, and it drives more productivity, brings more to the bottom line. There are just many, many aspects of this that are positive. And an opportunity to take what on the surface again is a challenging situation relative to the workforce and demographics and challenges, and use that as a catalyst to reevaluate how you do what you do and actually get to a better place. Not saying that it's easy, but there are ways to use those challenges and turn them into a positive. Carol, Colin, thank you so much for your time today. Been a super helpful topic. I think it's a great way to kind of cap off the podcast series with WMEP. It wouldn't have been possible the last four podcasts without the help and support of the WMEP, so we're certainly grateful at First Business Bank for our partnership with you and for all the talented people that are part of your organization.
Kevin Kane:
And the other aspect of this that I've been reflecting on is we're really lucky to live in Wisconsin. I mean, it's a state with a strong manufacturing tradition. Really has been one of the key drivers to our economic vitality in the region. If you look across the US in terms of the number of employees and the percentage of state GDP that's driven by manufacturing, we're certainly I would say in the top three or four. So this is a very relevant topic. Finally, with that, I'd like to thank our audience members for listening and be sure to visit us at firstbusiness.bank to explore all of the different resources we offer business owners and leaders to help them succeed. And we invite you to experience the advantage with First Business Bank.