SCDigest Editorial Staff

It’s an issue that is increasingly discussed along many dimensions: the aging of the populations and workforces in most developed economies.

These changing demographics will have impacts along political, social and economic lines – likely significantly ones – and are sure to affect the supply chain as well.

In fact, when asked about supply chain concerns, human resource issues are often near the top of the executive discussion list, with the aging of workers in manufacturing and distribution usually a key focal point.

So we were very interested in an article in the most recent issue of the Harvard Business Review that discussed German automaker BMW’s creative (and successful) effort address this issue head-on and improve productivity at the same time.

BMW management had growing concerns about its aging labor force. Frankly, among those concerns was the drop in productivity that is generally experienced as a blue collar work force get older; the company was worried that aging employees on the line would be a strong counterforce to its aggressive productivity improvement plans.

Simply replacing older workers with younger ones was not really feasible, especially at the company’s 2,500-employee power train plant in Dingolfing, Lower Bavaria. Tough worker rights laws there, union contracts, and the politically sensitive nature of such a move at Lower Bavaria’s largest employer all served as barriers to for example a plan to buy out the older workers and force them into retirement.

In addition, even if such a strategy were successful, that can’t work for every company – there are real concerns in Germany and elsewhere that there might not be enough younger workers to fill all the jobs, and societies are actually going to need older workers to work longer to avoid a crisis in retirement systems, such as Social Security and Medicare in the US and their equivalents in other countries.

At the Dingolfing factory, projections were that the average age of line workers would increase from 39 in 2007 to 47 in 2017 – a significant increase in just 10 years.

Older Workers are Slower on Average – but Not All of Them

Plant managers at the BMW factory did an analysis of some 100 combinations of worker-job pairs to better understand the relationship between age and productivity.

That analysis revealed that the average productivity score decreased with age, as expected, but the variation increased: some workers remained fully productive, while others experienced a strong decline, leading managers to believe that productivity declines are not as inevitable as aging.

(Manufacturing Article - Continued Below)

In the end, BMW decided to try an experiment on one production line that produced rear axel gear boxes, and usually had about 45 workers.

The company asked for volunteers for the project, with a goal of replicating the expected 2017 age profile for the line workers. There was some derision at first, with the program quickly called the “pensioners line” inside the factory, but nevertheless a team of workers matching the 2017 profile was assembled without too much problem. The team consisted roughly half and half of workers that had already been on that line and new recruits for the program.

The key was an ambitious program where the line workers themselves came up with ideas to improve productivity on the line and/or the ergonomics of the work. Dozens of ideas were developed over time, within an open environment where “no idea is a bad idea” really did flourish.

As the ideas were collected on cards and pinned to boards, over time workers got the chance to vote on the priorities by being allocated a number of “points” that could be applied to a specific set of ideas. Those that garnered the most points were promoted to see if they could be implemented.

The program really took off, a BMS manager said, when an early idea to add wood floors to some of the work cells instead of concrete was implemented.

Source: Harvard Business Review

“People from neighboring lines laughed at first, but after only one day it became clear that it helped,” the HBR article quotes one manager as observing. “At the end of the day, your knees were not aching. This showed us that the 2017 project could make sense.”

With that early success, on total some 70 ideas were eventually implemented on the gear box line. They ranged from giving workers more orthopedic footwear to changing the angle on computer monitors to reduce neck strain to changing the grips on certain tools.

The company also started more aggressive job rotation practices as well, especially not allowing workers to stay on the most physically challenging jobs for long periods of time.

The total investment was quite modest – just some $20,000 euros for the line-related changes, and another $20,000 euros for the time employees spent in the meetings.

While it can never be clear exactly the role the line changes played versus other factors, line productivity in the end improved 7% within a year, reaching the levels achieved by lines with younger age profiles. Line about, per previous targets, was increased from 440 units per day to first 500 and then 530 per day, which was achieved with almost zero defects. The productivity gains meant this could be done with four fewer workers, but that decrease faced challenges – no one wanted to leave the gear box line.

Absenteeism has also dropped.

BMW has since rolled out the program to workers in other factories in Germany, Austria, and the US, where similar results have been achieved.

Perhaps the key point: there kinds of improvements in ergonomics and productivity likely could not have been realized from a top-down approach, but only through direct line workers involvement.

What’s your reaction to the BMW story? Has your company down anything similar? How big a factor will the aging workforce be? Let us know your thoughts at the Feedback button below.

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