Navigating labour shortage impacts on global manufacturing supply chains

A tight labour market is proving to be a challenge for many organisations. Companies are struggling to find the right talent for specific roles, such as in the procurement function. This, in turn, is causing supply chain issues.

The IDC Manufacturing Skills Gap: 2022 Talent Management Survey Highlights found that 43 per cent of manufacturing organisations have encountered supply disruptions due to labour shortages.

Organisations face increased pressure to examine recruitment and retention practices, as well as their external workforce strategy to minimise disruption.

So, how can they face this pressure head on and navigate this labour shortage?

Mitigating talent risk with automation and technology

To address immediate talent needs while exploring opportunities to increase future resilience, organisations can use automation as a tool to assist with fulfilling orders and moving products through the supply chain.

Automation of manual tasks reduces the impact of labour losses in fulfilment functions while relieving personnel of repetitive and potentially harmful tasks – a factor that may impact recruitment and retention. Automating tasks also has the added benefit of reducing human error while increasing accuracy and quality.

Recruit from the inside

Organisations can look for ways to retain talent by meeting the needs of current employees. Through sustainability programs and technology adoption, companies can increase engagement, enable transparency, and build a culture of trust and innovation.

Further, to enable their employees to upskill and explore different career pathways, organisations can “up” their investment in training and certification courses for current employees. This would also help in filling existing skills gaps with internal talent.

By focusing on internal talent development and recruitment, organisations would be adopting a win-win approach. Armed with this strategy, businesses can soften the labour shortage impact, but it also means existing staff will be able to gain new skills and move into more rewarding roles.

Hire out

Another alternative solution is to use an external workforce.

As stated in Looking out: the rise of the external workforce and its impact on internal functions, “Growing dependence on the external workforce is among the most important drivers for digital transformation in companies, according to an Economist Impact survey—picked as a top-three driver by 24.5 per cent of respondents.”

As organisations continue to navigate the current labour shortage, they will look to different strategies to help minimise the impact.

Chris Willcocks, vice president and head intelligent spend management at SAP Australia and New Zealand