Blake Moret thinks a lot about supply chains. The chairman and CEO of Rockwell Automation—the world’s largest company devoted exclusively to industrial automation and digital transformation—Moret is helping other manufacturers navigate the disruptions of the pandemic and the painful shortage of semiconductors.
On his way back from sharing his experiences and best practices at the World Economic Forum in Davos, Moret spoke with the NAM about the current state of the industry, his predictions for the future and what manufacturers should do to prepare.
What’s happening: Moret sees a few “overarching trends” in manufacturing:
- First is the historically high levels of demand, which had been pent up during the pandemic and is also caused by businesses trying to expand their market share.
- Second, there is also a historic shortage of components, especially the very disruptive shortage of semiconductor chips.
- Last, of course, labor and material inflation is putting additional pressure on manufacturers’ operations.
The chip shortage: The shortage of semiconductors poses the biggest near-term problem for Rockwell and the industry, Moret notes. But the demand for chips isn’t just as simple as supply chain snarls and post-pandemic rebound; it is also caused by manufacturers working to make their products “smarter than ever before”—an industry trend that isn’t likely to change anytime in the future.
- Rockwell’s solution, says Moret, is to reduce pressure on its customers by “strengthening long-term relationships, tightly aligning technology roadmaps with existing suppliers and deploying our engineering resources to find alternatives for the most severely constrained types of chips.”
Redundancy: To cope with supply chain disruptions, Rockwell has also been adding redundant capacity into its worldwide network.
- The company is increasing the number of products that can be made in more than one facility around the world.
- “Just-in-time principles are very efficient when every link in the supply chain is doing what is expected. But with disruptions like the pandemic and chip shortages, that sort of efficiency is not totally possible,” Moret says.
- “Elements of redundancy that in the past were not able to attract funding will get funded now.”
What should manufacturers do? Moret has some advice for other manufacturers seeking to build more resiliency into their operations.
- He recommends developing a “product resiliency index,” which accounts for factors that affect production—the value of the product, its manufacturing complexity, how distributed the manufacturing needs to be, how many vendors are needed and more. Manufacturers should consider this right from the start of developing a product, Moret says.
- It’s also important to talk to key suppliers “to understand what their roadmaps are.” You need to know when you are relying on suppliers for products that aren’t “strategic” for them, he explains—as that could pose a problem for you down the line.
- Moret also recommends conducting this audit on both new and old products. “We’ve had to go back [to established products] to assess them with this resiliency index to make sure we’re not vulnerable.”
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