If your job falls anywhere in the industrial manufacturing sector—from chemical plant manager to paper mill operator—odds are you’ve played whack-a-mole when balancing your budget and ensuring site safety.
The root causes of some manufacturing woes are global. Think wars, pandemics, and supply chain disruptions. Others are more local—like a skilled labor shortage in your backyard. Mix in inflation and rising interest rates, and it becomes a perfect storm of uncertainty for everyone in manufacturing.
But some of these challenges are self-inflicted if plants and sites fail to embrace and implement digital automation tools.
The right digital automation tools—from cloud-based software to wearables—can make a night-and-day difference—especially in uncertain times. Having at-your-fingertips data will help whether your biggest hurdle is meeting project timelines or maintaining a safe job site.
Manufacturing: Big Risks for a Big Sector
The manufacturing sector in the U.S. covers a broad range of businesses—from plants, factories, and mills to companies that transform materials or substances by hand, including bakeries and tailors.
As a result, the manufacturing sector is huge—13 million workers in March 2023, which was a 14-year high, according to the Bureau of Labor Statistics. Not to mention—manufacturers contributed $2.9 trillion at the annual rate to the U.S. economy in Q4 2022, according to the Bureau of Economic Analysis.
And it’s not getting any smaller. Deloitte and The Manufacturing Institute predict 4 million manufacturing jobs will likely be needed—and 2.1 million—will go unfilled if more people aren’t inspired to pursue modern manufacturing careers.
With so many large projects failing to come close to project completion dates, making the most of your skilled labor force is key. Industry insiders point to a variety of labor issues—from a lack of qualified labor to out-of-control labor costs to poor work ethics.
“Demand for projects and skilled workers remains high and may even have intensified for skills required for massive manufacturing, infrastructure, and energy projects,” Ken Simonson, chief economist of the Associated General Contractors of America (AGC), told Reuters Events in April.
Reuters notes how tighter worker availability combined with some key construction materials shortages may impact new petrochemical plans or maintenance projects this year.
Also, the White House announced in May 2023 a new initiative to help with this skilled labor shortage. This includes a new advanced manufacturing workforce program and five workforce hubs, which would help create various pathways leading to jobs in manufacturing sectors.
While supply chain bottlenecks may have eased or improved in the last year, Simonson notes delivery times for specialized electrical equipment and spot shortages for cement are causing slower completion times.
Echoing these concerns: An Endeavor Business Intelligence survey of 120 IndustryWeek members.
When asked about their top challenges, 59% of respondents cited supply chain disruptions; 51% said the need to do more with less; and 48% noted a lack of labor as their biggest pain point. Some of the write-in responses to this question included “data reorganization” and “lack of component inventory in the market for building new machines for production or maintaining existing equipment.”
Balancing Safety & Savings on Site
Even without skilled labor challenges and material shortages, the manufacturing industry battles its fair share of complexity daily.
From a safety perspective, sites must ensure employees and contractors coming onto job sites have been trained on the proper safety procedures and make sure they have the right PPE.
How can plant managers, maintenance managers, turnaround managers, and procurement managers balance all the safety challenges on the sites they manage? With the right automation tools, operators can improve safety when they:
- Know the location of all personnel to reduce muster time and ensure OSHA compliance in an emergency
- Eliminate safety blind spots and decrease time to safety by tracking equipment usage
- Get alerts when contractors are nearing their fatigue limit status
Instead of using digital automation tools, many project owners will rely on headcount and manpower reports. This can be dangerous from a safety perspective, but it also reduces visibility when managing budgets and cost savings.
Consider who and what is involved in a typical outage or turnaround project:
- Dozens of contractor firms providing resources
- Thousands of open Purchase Orders/Work Orders/Activities
- 500-1,000 or more contract workers daily
- Two to three shifts, operating seven days a week
Beyond the safety issue, imagine not receiving the job progress and cost information until after the job is over. This is what happens when manufacturers fail to standardize processes and apply best practices with automation tools.
Automation Tools Support Best Practices
As described, many manufacturers will have hundreds or thousands of craftsmen with specific contract permutations coming on sites. Managing these contractors have traditionally been based on manual time methods, causing errors, disputes, lack of visibility, and control.
By comparison, choosing to use digital tools can support these best practices:
- Using real-time metrics gives you visibility into real-time headcounts by contractor, skill, and shift. Plus, you’ll know which equipment and materials are required by contractors and shift.
- Using access control systems to prevent unrestricted access. This is critical for security and safety, and access control systems can eliminate billing errors and help with a company’s insurance and risk management.
- Using smart contracts to match work risk to contract type. Smart contracts match work risk to contract type, with Lump Sum contracts, ensuring good scope; Unit Rate contracts, to improve productivity and control costs; Time & Materials work, to address labor, equipment, and materials.
- Using ERP integration for data entry. After the software approves the invoice for payment, it generates electronic charges that can be updated in the ERP system for settlement.
Moving Manufacturing from Legacy to Digital
Asset-heavy industries, whether oil and gas, industrial, or aerospace, have their own unique set of challenges when managing contractor spend and preventing safety incidents. There are so many variables on any project—from long-lead time items to site-specific training requirements.
Despite the complexity and economic uncertainty, many plants and sites are heavily invested in paper-based processes. Transitioning from legacy paper systems to digital can seem quite radical. Entrenched resistance to digital automation flies in the face of safety and productivity best practices.
On a positive note, the Endeavor Business Intelligence survey of 120 IndustryWeek members, found that (71%) said their companies have made progress in their digital journeys, including 32% that have digitized a good portion of their operations over the last few years.
However, just 17% of companies have a single, unified system to run their operations on, yet 45% of manufacturers view a single technology ecosystem as either “very” or “extremely” important. The cloud is also gaining ground in the manufacturing sector, where 23% of
companies are using it for all their software applications and 85% have adopted cloud technology for at least some of their applications.
Driving the implementation and adoption of new digital tools can be tricky without strong corporate support. For example, technology and processes are key enablers of downstream operations, but people are the most important of all, said Alex Shelton, director of rotating equipment at Phillips 66, in the Downstream Industry Report: 2022 and Beyond. “You can have the process, you can have the technology, but they’re doomed to fail if you don’t have the right people involved,” he said. “The bigger piece of that is not just finding the synergies, finding the connections, finding the KPIs—all extremely important—but having good leadership.”
Take the Next Step with TRACK
The software market can be an overwhelming space, but the TRACK® Platform is uniquely positioned to benefit manufacturing operations. Using real-time data, automated tracking, and integrated contract compliance, TRACK gives unprecedented visibility into your workforce, productivity, and spending through a comprehensive set of capabilities.
Here are some of its benefits:
- Reduce delays in productivity with oversight, including proper skill-mix evaluation
- Prevent overspending with the ability to calculate and manage budgets electronically
- Increase contractor visibility – manpower, maintenance, and scheduling in real time
- Standardize and manage contracts, including variations in agreement terms
- Gain insight for favorable negotiations
- Manage purchase orders integrated with Enterprise Resource Planning (ERP) systems
- Deliver pre-audited hours and costs for auditors
- Run accurate budget reports using real-time information.
