Re-shoring or establishing hi-tech manufacturing ! How HR can help.
The last year wreaked havoc with supply chains as international manufacturing and transportation capacity was thrown into turmoil. It became obvious to most manufacturers that they needed to broaden their supply chain to mitigate future risk.
For essential products, establishing domestic manufacturing capacity became a national priority. Many businesses, shocked by the inability to get their finished goods from international manufacturers, decided to build their own domestic manufacturing capacity.
Decades of off-shoring has left Australia short of manufacturing capacity and modern know how, global events have however ignited a push to re-shore and develop new competencies in advanced manufacture.
Whether re-shoring or starting a-fresh, establishing manufacturing operations requires a new set of competencies which require the involvement of a cutting edge human resource function.
Here is where it counts…
Considering a business strategy (including establishing a manufacturing operation) with the human resource issues in mind at the outset allows for the establishment of a critical foundation.
The Human Resource considerations include organisational structure, talent management, workforce planning, compliance, employee relations and budgeting.
Early involvement of the human resource function will identify possible hurdles and factors that need to be addressed early to ensure a smooth implementation.
Reshoring or establishing manufacturing is a substantial strategic development that requires an appropriate organisational structure. Not only does it need to facilitate any new operations, but also integrate manufacturing into the existing business.
The Human Resource function can lead the management to determine the appropriate organisational structure, by taking into account the corporate strategy, the environment in-which the business operates, technology factors, size & life cycle and the general culture of the business, in-line with Organisational Design principles.
Organisational design principles include;
- Specialisation (developing and maintaining specialist / new skills);
- Coordination (how a new unit coordinates with existing operations);
- Knowledge & Competence (responsibilities positioned at level where most knowledge and competence exists);
- Control & Commitment (empowerment of control to ensure best levels of commitment);
- Innovation & Adaption (flexible enough to meet market changes).
Getting the organisational design right sets a solid foundation.
Factoring in the OD principles, the HR function has a number of additional tasks to work on.
Governments offer incentives for re-shoring or developing manufacturing operations as they see it creating new jobs, developing talent capacity and growing technological capability. Which is great for the government, however pragmatic companies need to assess talent availability and available competencies (which may not be present), as they are the core ingredients to a successful re-shoring or manufacturing effort.
The initial activities of the human resource function are in the following areas ;
Evaluating and assessing competency requirements for a new operation, division or a hi-tech manufacturing operation, becomes the first step. Identifying skills and knowledge requirements and then gaps the organisation has, leads to devising a new workforce plan.
Companies usually want to utilise their existing workforce, so need to make decisions around staff redeployment, re-training and management / leadership development.
As an example, one of E.L Blue’s clients had the ambition of a highly automated operation, the requirements of which identified talent shortfalls in management, operational / production and technical knowhow.
To utilise the existing workforce most effectively, talent strategies were developed to include skills training, trade qualification programs / development, management development and skills mentoring. Because this was done early, it allowed the business to develop the existing workforce for a transition into the new operation.
In addition, it was necessary to continue staffing the traditional operation, which required the redeployment and retraining of staff from other departments.
Reshoring should be a process of moving up the value chain, so developing new capabilities in existing talent is an essential activity.
While building from within is preferred, at some point it becomes necessary to look outside the business for talent solutions.
Direct recruitment of the skills and competencies is usually the most effective way. It is possible to pick and choose the specific competencies needed and bring them into the business.
In some cases this is just not possible and alternatives need to be considered.
A client of E.L Blue faced this situation and settled on a novel and cost effective approach. Developing a new manufacturing operation required technical skills and knowledge in a variety of areas including automation, robotics, product design and process design. It was not possible for our client to recruit to satisfied all these competencies. Instead of bringing in the consultants, a strategy to develop internally was established. By recruiting a high potential candidate and supporting them with specialist mentoring from retired specialists, the company developed its own competence in new areas. Not only did this allowed the employee to develop new skills, but also gave a highly skilled retired specialist the opportunity to utilise his knowledge with a dynamic business.
Training and Development
Developing a workforce requires substantial effort. To develop new competencies requires a training and development program that can develop of new technical, operational and management skill across the business.
In the case of E.L Blue’s client, they were building a new function (not just bringing back something they had off-shored), so training was needed from the senior management all the way down. On the back of the workforce plan, a robust Training Needs Assessment was undertaken and a long term training program to meet skill and knowledge gaps was implemented for new and existing operations.
Transactional HR requirements
While the above points focus on the transitional human resource functions, the day-to-day transactional aspects cannot be ignored.
All change in an organisation generates a high transactional workload for the HR function.
Any substantial changes in a workplace require consultation with the workforce. The development of a new division, new operation, redeployment of staff etc, all requires careful discussion with all employees and stakeholders within the business.
Consultation is time consuming and needs to follow a proscribed process under the various awards and employer agreements.
Assessing and maintaining compliance under the various awards when staff move into new positions is important. New contracts maybe required, new compensation requirements might be needed.
New WHS requirements arise with changes in the workplace so it is important to keep all aspects of compliance in mind.
New operational divisions, may require updating of the employee handbooks and review of SOP’s.
It would be important to re-induct existing employees as they move to a new operational function and ensure that inductions for new employees was complete.
Bringing Manufacturing back to Australia
COVID did reignite the interest in manufacturing in Australia, whether it is a matter of re-shoring or establishing a brand new manufacturing operation, the human resource management function plays a critical role in ensuring the new operation can function effectively.
If your business is considering reshoring or establishing a high tech manufacturing operation, the following resources might be useful;