As double-digit revenue growth continues to become rarer in the world of manufacturing, the goal to maintain profitability becomes more challenging. In this business goal alignment post, we discuss how L&D with business goals specific to the manufacturing industry.
At the close of 2016, only 2% of manufacturing organizations yielded revenue growth above 10%, while 80% were operating between 0-10% sales gains.
L&D can help.
So how do manufacturers continue to operate and grow while keeping stakeholders happy? Aside from innovating product offerings that draw new revenue streams, two options that come to mind are:
- gaining more market share to increase revenue, or
- reducing cost in order to increase profit margins.
Okay, so if profitability is always top of mind regardless of the industry, we need to ask ourselves:
- How does this relate to learning or organizational priorities?
- How can we contribute to increased revenue or profits?
According to research reports by IQMS, PwC, Sikich, and Cerasis, a few key organizational priorities continue to show up for the manufacturing industry—and they all center on efficiency and adaptability.
Let's see some examples.
Keep in mind, these are top-level illustrations of areas in which you can develop programs to improve skills and knowledge that align with organizational priorities. We recommend working your way backward. Start with the overarching organizational goal, investigate which part of the organization is deficient in contributing to that goal, and then identify what area of the deficiency can be remedied by L&D intervention.
Increase sales by focusing on competitive advantage.
If increased sales are a key priority for your organization, there are several ways in which L&D can contribute. Identify areas of improvement that may impact the customer experience, and, ultimately, result in higher satisfaction of in-the-moment needs.
For example, if ERP data shows a high number of last-minute purchase orders or rush shipments are occurring on a regular basis, focusing on enhanced supply chain integration skills can contribute to a competitive advantage. Specifically, your supply chain department may benefit from developing skills in operational analytics and data mining—which helps them better forecast customer needs, identify cost-savings in sourcing, and improve production of rush orders.
If additional technology or a focus on new skills aren’t up your alley, work with what you have. Partner with your quality and operations department to evaluate product quality logs and returned purchase orders. You may be able to pinpoint product lines that exhibit the highest occurrence of issues or complaints. Provide additional training to production workers on how to accurately test and report issues on the assembly line. This training can help reduce the occurrence of substandard products in the market, which improves consumer confidence and provides the sales team something to sell on—reliable products.
Reduce manufacturing costs with automation or efficiency.
Increasing profit margins don’t always require a price increase of the top-selling product line. A reduction in operational costs have impacts well beyond the price of goods. In 2017, a growing area of focus for this industry continues to be integrating robotics and automation, which effectively lays the foundation to Industry 4.0. But even computers need an overlord.
Proactive training is needed to manage the skills gap of the changing workforce. As unskilled labor is replaced by machines and automation, those who will be responsible to operate and service these systems require extensive training, while those on either side of these production lines will require knowledge on how this new technology will impact their departments—that means engineering, supply chain, finance, shipping, and even marketing.
In addition to implementing robotics or automation, there are other areas where improved skills can trim wasteful spending. For example, preventive maintenance helps reduce the likelihood of machinery downtime and the resulting loss of labor, increase in backlog, and additional spending on fixing machinery issues. Build programs to reinforce knowledge on machinery reliability and improve processes and safety training on maintenance and operation of equipment. And, considering the cost of one hour of lost production is $1.3 million, you’ll be the hero who saves your company more than $100,000 in losses simply by helping prevent just five minutes of downtime.
It's time to realign.
While you may already have programs in many of these areas, it’s still important to regularly evaluate the their effectiveness, realign them with organizational priorities, and track how they actually impact those priorities. And if you don’t have any programs aligned with organizational priorities, now’s the time to get started.
Up Next: L&D Focus on Retail
Join us next time, as we discuss how L&D can align learning programs in the world of retail. Don’t want to miss out? Subscribe to Watershed Insights and get the next post sent straight to your inbox.
Take the first step.
Not sure how to get started with tracking and measuring the impact of existing or new programs? Take a look at the 5 Steps to Start Using Learning Analytics eBook.