Digitalizing production – compensating for the skilled labor shortage with MES

Skilled labor shortage threatens the future of the industry – MES offers solutions

In the industrial sector, the shortage of skilled workers threatens the future of many manufacturing companies. Manufacturing Execution Systems (MES) offer solutions for how this shortage can be mitigated through the digitalization of production, while also increasing productivity.

The sluggish economy doesn't bring many advantages. However, it does result in a declining demand for skilled labor, as shown in the current KfW-ifo Skilled Labor Barometer. But that’s only a small consolation, as the data also reveals that the skilled labor shortage remains at a high level. 35% of approximately 9,000 surveyed companies—around 7,500 of them from the SME sector—reported being hindered in their operations due to a lack of skilled staff in Q2 2024. Although only 25% of companies in the manufacturing sector are affected—below average—that figure is still nearly three times higher than the long-term average.

Where is the shortage most acute in the industry?

Shortage in technical occupations

According to the study "Skilled Labor Shortage in the Industry" by Heinrich Heine University Düsseldorf and the "Future Through Industry" alliance, manufacturing companies primarily lack skilled personnel in production and technical fields. The study surveyed around 40 industrial companies, 130 management students, and 40 young professionals in North Rhine-Westphalia. Nearly one-third of companies reported unmet personnel needs in production/technical roles. Almost one in five also struggle to find skilled workers in management and administration—especially smaller industrial firms.

The study differentiates between companies with annual revenues above and below €20 million. For both groups, cost pressure and inflation are the top challenges. However, the shortage of skilled labor ranks as the second-greatest challenge, even ahead of issues related to digitalization and sustainability. In smaller companies (under €20 million), the labor shortage ranks as the top concern.

Forecasts don’t suggest any relief. An aging population, a mismatch between school curricula and the skills needed in modern industry, and immigration policies under populist pressure are expected to further intensify the problem in the coming years, according to many labor market experts.

Digitalizing production to alleviate routine tasks

Companies moving toward Industry 4.0 are responding to the shortage by investing in new technologies and adapting production processes. Automation and digitalization levels are rising, relieving workers of time-consuming routine tasks. MES plays a central role as a "data hub": it collects machine and operational data, compiles it into a uniform dataset, and visualizes it through KPIs for efficient digital production planning. These data are utilized not only in production but also in ERP systems and up to the management level (horizontal and vertical data integration).

MES provides production managers with key insights such as the duration of a task, tolerance compliance, or frequency of repetition. Many repetitive or manual tasks can be digitalized using MES, allowing workers to focus on their core responsibilities. This reduces the need for skilled staff to perform simple tasks.

Industry 4.0 – Independence through knowledge transfer

The relief offered by digitalized work processes has long been gaining importance. To meet individualized customer demands, companies are producing in smaller batch sizes, requiring more frequent machine setups. This makes production planning and worker demands more complex. MES systems help by embedding employee experience and know-how directly into the system, eliminating the need for intimate machine-specific knowledge.

In addition to reducing workload, companies benefit from this knowledge transfer when experienced staff retire. MES becomes a foundation for robust knowledge management, reducing reliance on individual employees. Ultimately, the vision of Industry 4.0 includes autonomous parts navigating their own path through a fully automated shopfloor—boosting efficiency and decreasing the need for human labor.

Digitalization of production – Real-time monitoring and quality management

MES enables real-time monitoring and adjustments to production processes by identifying optimization potential. Once implemented, this increases efficiency, allowing greater output with fewer workers. Real-time monitoring and integrated quality management empower staff to respond instantly to deviations or material shortages—reducing scrap and downtime. It also allows for more stable production schedules, even with limited experienced staff.

Especially when knowledge is concentrated among a few, those experts must be relieved. MES-based quality management reduces errors and pressure on staff. An integrated time-tracking module improves workforce planning, prevents overload and stress, and reduces sick leave. MES also enables flexible working models—enhancing a company’s appeal to skilled professionals.

Historical data analysis within MES also allows predictive maintenance—machines are serviced before failure, improving uptime and reducing repair needs, and thus lowering the demand for technical personnel.

Modular MES for greater flexibility

Even if the current economy has temporarily lowered the demand for skilled labor, this trend won’t last. As the economy recovers, so will demand. The skilled labor shortage is here to stay. The impact of political measures in education or migration will take years to materialize—if they work at all. No manufacturing company can afford to wait that long. That’s why many are already turning to digitalization and the benefits of MES technologies. Particularly in demand: modular MES solutions that flexibly adapt to each company’s unique needs. As needs evolve, the MES can be adapted—without starting from scratch. This deepens data integration and helps mitigate the effects of the labor shortage, allowing each company to pursue its digitalization path at its own pace.

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