Supply Chain Modernization is Facing a Global Shortage of Skilled Workers

The supply chain and overall construction industry is facing a staffing crisis, with nearly one in four construction professionals retiring in the next decade. How are businesses addressing this potential disaster?

The supply chain and overall construction industry is facing a staffing crisis, with nearly one in four construction professionals retiring in the next decade. How are businesses addressing this potential disaster?

“I’ve got someone for that, they’re the best!”

The supply chain and overall construction industry is truly made up of its people. It is common for crews to work together for years, spanning the globe together and learning to rely on one another and the skills they have gained over the years. “I have a great materials manager, expeditor, purchaser, logistics manager … they know exactly where everything is.”

This system has worked for as long as there have been projects and each new generation of workers has grown up through this system. But what happens when suddenly the next generation of employees is much smaller? This is exactly what has occurred globally throughout the construction industry at all levels. According to Axios’ Courtenay Brown and Neil Irwin, nearly one in four construction professionals are over the age of 55. Many will be retiring from the industry in the next decade. Just to keep up with existing demand, more than 500,000 new workers will have to join the construction sector in addition to normal hiring rates.(1)

As many retire or move into different positions, the industry has lost the field knowledge that greatly contributed to its success, exposing gaps in training and processes that cannot be quickly corrected with a new generation of workers. This has left the industry with a “bus factor” problem, the impact on the project at the loss of key personnel. A project’s goal should be to have a high bus factor (needing to lose many people before the project is impacted). This is achieved with good documentation, simple processes, and standardized training. But the supply chain has long been thought of as something that couldn’t be simplified and broken down for easy handover. (2,3)

But the situation is changing. There is a new tool in the toolbox that can supplement the loss in experience, modernizing the supply chain through smart technology.

In 2017, this situation truly reared its head. During the construction of a 725-megawatt combined cycle power plant, the senior material manager decided they were ready to retire. This could have been catastrophic for the job. With more than 30,000 line items already on site, three separate laydown yards, and another 35,000 line items expected over the next year, any method of tracking would be challenged by the departure of a key person. What could the project do?

Where do you find someone else with 20 years of experience? Well, it turned out the project didn’t need to find that person. The replacement was not another experienced material manager, but a student fresh out of college with zero construction experience. The way this was possible (albeit not easy) was by using a smart material system that was directly tied to the procurement and construction data. Smart location data using modern technology to update and capture and simplified digital packing slips kept things moving along.

Starting on day one: receiving continued without issue, withdrawal requests were still being filled, and everything continued without a hitch despite the loss of a key figure. This was the power of a digital and modernized supply chain.

Modern Workers Demand Modern Tools

With all the hiring that needs to occur, the industry faces another key issue: How to attract the same STEM talent that every other industry is trying to attract. New graduates entering the workforce for the first time are expecting things to be modernized. An internal system built off paper processes or in-house software decades out of date are going to do little to attract or retain desperately needed talent to the industry. A generation raised with mobile devices in their pockets that handle most complex issues in their life is not impressed when asked to do something in an outdated way because “that’s how we’ve always done it.”

But this affection for mobile devices and modern systems works to the industry’s advantage because real-time capture leads to more accurate data and saves time.

With the appropriate mobile device and applications, workers can not only signal problems on the spot but also enrich their descriptions with images, a short video, or even a voice recording. Mobile devices can help companies operate more efficiently because they dramatically increase the quality of the data collected.

A survey (4) of oil and gas workers commissioned by Panasonic attests to the range of potential benefits: 80% cite improved efficiency as a primary benefit of mobile devices. Greater connectivity (48%), access to real-time information (40%), and data capture (32%) also rank at the top of the list.

By moving toward a modernized supply chain, companies directly benefit from the quality of work performed while also helping to attract quality workers for the future. With a recent American Productivity & Quality Center (APQC) survey showing that staffing issues remain the top obstacle for over 40% of industry experts to improving the supply chain process; attracting the next generation to the industry cannot be ignored.(5)

If you are being directly impacted by the staffing shortages and want to learn more about how Hexagon can help you modernize your processes, click here.

About Cody Faulkner

Cody is a Senior Industry Consultant with Hexagon’s Asset Lifecycle Intelligence division with more than 15 years of experience in industrial construction. Cody began his career “boots on the ground” as labor at a regional fabricator in the U.S. and worked his way up through different roles spanning procurement manager, material manager, construction manager, and consultant. Cody brings his broad experience with him to advise and consult customers on how to streamline their digital transformation journey.

2 Truck Factor, Berteig 2005
3 Increasing your Team's Bus Factor Eight2Late 2008

Original content piece.

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