The manufacturing experience
executive research brief
How firms would invest a marginal dollar with their company
There is a significant amount of content
available on the varied problems
manufacturers are facing. And there
is a significant amount of research on
manufacturing outlooks. But there isn’t a lotof information available to manufacturersthat focuses on HOW their peers are aiming
to address these challenges. The Cognizant
manufacturing team thought it would be
helpful for manufacturers to answer thisone simple question: With many options for
manufacturers to invest in, if they had an extra
marginal dollar, where would they start?
That was the beginning of our Marginal Dollar
survey with The Manufacturing Institute,an affiliate of the National Associationof Manufacturers. This study explores thedifferent approaches that manufacturers
take in making investment decisions. If amanufacturer had an extra $1 million (or$10 million or $100 million) to invest, howwould they utilize those dollars? Would theypurchase new equipment? Build a new facility,
spend it on new disruptive technologies,
digital transformation and/or research anddevelopment? Or would they hire new workers
and invest in training existing employees? If
it is a combination of these elements, how is
the pie split up? In addition to the survey, nine
manufacturing executives were interviewed fortheir insights on this topic.

Driving growth
Increasing quality while improving efficiency is, was and will always be a top priority for
manufacturers. The top 3 overall priorities for survey respondents reflect this.

Building a robust,trained workforce

Improving process
and operations

Optimizing existing
equipment

73.7%

60.2%

53.4%

However, when we dive a little deeper into the report, it’s interesting to note is that if budgets arestatus quo, training existing workers is a top priority at 61% followed closely by investing in newequipment at 56%. However, with those extra marginal dollars, new equipment becomes the #1
investment at 61% with training existing workers falling to 50%.
What’s driving that flip in thinking? More than half of those interviewed—Acutec, International
Paper, L&L products, Schneider Electric and Tusco cited automation investment as key
component of their marginal dollar spend and a driver for future growth.
But as the full research study notes, lowering costs and increasing productivity as well as building
a stronger, more resilient workforce should not be considered as competing interests, but rather
as interdependent strategies. Having a trained workforce is crucial to capitalize the full potential ofequipment, technology and facilities. Having streamlined processes, integrated automation andoptimized workspaces in turn allow employees to maximize their productivity.

Common thread: A different workforce strategy
The qualitative and quantitative research highlighted that workforce challenges are much morethan a workforce shortage. Executives across various sized manufacturers noted that workforce
expectations have changed. And in turn, their organizations need to adapt to these new norms.
Quality of life, willingness to work overtime, length of commute, paths for professional growth,predictable schedules, appeal of physical locations, benefits and extras are all considerations for
new hires accepting or rejecting job offers. While 44% of organizations have encouraged possible
retirees to stay longer in their roles, this is a stop gap measure that does not prevent the inevitable.

2| The manufacturing experience executive research brief

Leaders are assessing key roadblocks to meeting their hiring needs and mapping solutions toovercome those objections. Whether it’s introducing more flexibility, adding benefits like daycare
or providing training and education, the consensus is that traditional manufacturing workplaces
need a new strategy.
And an interesting similar point surfaced among leaders. With the addition of marginal dollars,
many organizations would upskill and hire in more attractive, higher paying roles like engineering,product and R&D, while leveraging newer advanced automation and technology to help close
the gap in the shortage. This seems, for many, to be the real path to solve labor issues and drive
continued growth.

With the growth they are seeing, Acutec willneed as many workers as they do today, but
the roles of these employees might shift as newtechnologies and processes are introduced.
Elisabeth Smith, President and CEO. wasparticularly interested in creating a new processengineer role— machinists that would focus
specifically on optimizing production. Beyond
the efficiency gains, this would also serve as
an aspirational role for the more than 200
machinists that work at Acutec, many of whom
could be trained to become a process engineer,setting up an important avenue for professional
growth and increased pay. Moreover, this newopportunity would allow Acutec to tap intocollege graduates, potentially offering a position
that would be more marketable.

Common thread: Technology as a driver of operational efficiency andstrategic growth
Another key area where the research highlighted a consensus was, of course, technology. With
marginal dollars, new technology and automation of processes to increase productivity, productand data quality, speed of delivery and ultimately ROI was high on executive wish lists.
As mentioned in the previous workforce page however, automation and technology were notcommonly seen as a plan to reduce jobs but rather a shift of open roles to higher paying andmore strategically focused jobs—roles that are more attractive to today’s workforce and ultimately
more aligned to helping develop organizational strategic goals like introducing new products,services and intellectual property.
3| The manufacturing experience executive research brief

Aside from the traditional reasons for new technology and equipment, an interesting point emerged.
Technology can retain employees and boost morale. Along with the myriad of changing expectations,
technology can be another benefit manufacturers offer. Manufacturers that consider how technology
can improve the quality of the day to day of various teams can ultimately not only improve efficiency,
processes and insight but increase retention and morale.

With some of his
marginal dollars,
Tom Kleino, President
L&L Products
anticipated investingin new compounding
equipment as well asequipment that his PhD
team would like.

Conclusion
Whether their answers were to split marginal dollars between present challenges and future bigbets or to go all in on current challenges, the research makes clear that most executives feel thatmarginal dollars would be best spent at an intersection of strategy, people and technology.
To use an analogy, the research clearly shows that manufacturing investments are a three-leggedstool. If they lean too heavily toward one leg without supporting the others, the stool will topple.
The ratios of investment might shift from one organization to the next depending on current pain
and future growth plans, but not one executive interviewed, or survey respondent identified one
magic bullet investment that they’d use all their marginal dollars toward.

As a whole, with extra marginal dollars, manufacturers said they would makesmarter hiring decisions that focused on innovation and growth and use
automation and technology to close the gap in the labor shortage.

No matter the mix right for them, manufacturers must:•Identify the roadblocks that are making hiring and retention difficult for their unique situationand then determine a strategy to create incentives, different roles and paths for growth.

•Leverage technology to assist in shifting worker needs and employee satisfaction•

Implement automation to refocus employees into more strategic roles that drive innovationand growth4| The manufacturing experience executive research brief

“What areas of investment would your company consider if you had amarginal $1 million that you could spend on your priorities?”
New equipment

61.54%

Training existing workers

50.00%

Operational and process transformation

42.31%

Optimizing existing equipment

42.31%

Updating existing facilities

33.65%

Research and development

31.73%

Raising wages/benefits

31.73%

Hiring new workers

27.88%

Digital transformation

19.23%New disruptive technologies

19.23%

Supply chain resiliency
Acquiring new facility or business16.35%
10.58%

Other

7.69%

New facility

6.73%

Service transformation

5.77%

Note: Respondents were able to check more than one response; therefore, responses
exceed 100%.
Get the full report

Cognizant (Nasdaq-100: CTSH) engineers modern businesses. We help our clients modernize technology, reimagine processes and transform experiences so they can stay ahead in our fast-changing world. Together, we’re improving everyday life. See how at www.cognizant.com or @Cognizant.

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