Manufacturing Supply Chain Woes
Elisha Tropper, Lori Nevin, Dr. Karen Hardy
and Gretchen Philyaw
Welcome to the Manufacturing Woes show. I am Sarah Scudder, CMO at SourceDay and the show host. I am joined by Elisha, Lori, Dr. Hardy, and Gretchen. They have extensive manufacturing experience and I’ve asked them to share their train wreck and nightmare stories. Today our show’s sponsor is RapidRatings. I’ve been friends with their team for many years, and I’ve asked Eric from RapidRatings to briefly introduce himself and talk a little bit about what his company is doing that’s unique and adding value specifically in the manufacturing space.
Awesome, thanks Sarah. Yeah, we’re happy to be a sponsor, and yeah, it’s been a little crazy, obviously with interest rate hikes, inflation, corporate debt, you know, financial health is still top of mind. And what we’re doing to innovate in the space is produce predictive analytics to leverage AI, so our clients and especially manufacturing clients can look at the short-term view and the long-term outlook as well. And we recently launched our FHR exchange, so Financial Health Rating exchange, connecting buyers and sellers to share their financial health score and gain insights on themselves. So if you’re a private company supplier, you can now see your whole scorecard and all the research behind that and what goes into it.
Awesome, are you in New York today? I’m in Connecticut, it’s a nice balmy 65/68, I’ll take it. So, I am new to Austin, so I had my first taste of your humidity this weekend. It was 98 degrees, and there’s no point in even doing your hair. You walk outside and it looks like a complete disaster. So, I can relate to your weather. Well, Eric, thank you for absolutely thank you sponsoring and I look forward to seeing you at ISM in a couple weeks. Me too.
Awesome. So with that, we are going to kick off our conversation. I want to encourage those of you who are joining us live today to not be shy about putting notes or questions or thoughts in the comments throughout the entire hour. And to kick us off, I’d like to have everyone tell us where in the world they are joining us from today. It’s really fun to see all the different places. Often we have a very global audience, so pop in the chat, tell us where you’re joining us from. And then if there’s something that’s top of mind for you in regards to something that’s happened recently in manufacturing, would love for you to drop that in the chat as well. And that may spur or spark some conversation between our panelists today.
So with that, I’m going to have Lori kick us off. So, Lori, would like to have you do a quick intro, maybe share how you got into manufacturing, and then would like to have you share a personal or random fact about yourself.
Hi, everyone, thank Sarah for having me. I look forward to having this conversation. Early in my career, and then I went into software development and actually became a project manager, implementing ERP systems in state government agencies. And then I got into manufacturing in aerospace, so I have a now 16 years in aerospace manufacturing. I am in Central Washington, so for those of you that are chiming in with where you are in the world today, I am right in the middle of the state of Washington. And a fun fact about myself, I’m an equestrian and I’ve been riding and training and competing on horses since I was seven years old.
Awesome. Well, Lori, thanks for being with us, and it’s really interesting to hear everyone’s journey about how they get into the manufacturing space, and for you, in particular, in the aerospace. So my question for you is, what was one of the most detrimental manufacturing problems you’ve experienced in your career thus far?
I worked for a company, an aerospace company that manufactured monuments. They’re called monuments, they’re basically all the structures that are interior to the aircraft, the galleys, the lavatories, the doors, the bins above your head, the signs that say keep your seat belt fastened, no smoking, and all those interior cabin fixtures are visible to the passengers. And if you think about it, when you’re on an airplane, generally by the time you sit down in your seat, until the time they say, you know, we’ve landed, you can now unbuckle and get up, you’re there at least two hours, even if it’s a short flight.
And so what do you do? You look around the aircraft, maybe you bring reading material, but you see that seat directly in front of you, you go into the cabinet and you’re looking at all these fixtures. And so what became detrimental when I worked in that environment of manufacturing is if there was any mar, nick, scratch, discoloration in any of the materials, then it didn’t pass inspection. And you know, it may be something so small and in the corner, and you would think, oh, it’s not a big deal, these are the kinds of things I have in my house, I just ignore them. But in order to get our parts to pass final inspection and what it’s called source inspection, when the aircraft manufacturer itself will send someone out to anything, anything that they can see that shouldn’t be there, it won’t pass inspection.
And so if you back that all the way up to the supply chain and where we’re getting materials when materials coming in, we had sample color matches and swatches and coupons that had to be matched, and the lighting then had to be just right. So you think about how that ripples out through that supply chain and what we’re getting into our business. And it’s really can be very detrimental if something comes in and we miss it on inspection, it goes into the manufacturing process and then all the way through at final inspection it doesn’t pass or it gets damaged in the process of manufacturing.
So, it’s very impactful. All right, Lori, thank you.
Dr. Karen, great to have you with us, love the bold fun color in your office. We’d like to have you share with us a little bit about your background and how it is that you’ve come into this crazy world of manufacturing. I know you have a very unique and different perspective, and then also would like to have you share a fun or personal fact about yourself.
I’ll be happy to. I’m really excited to be with all of you today to talk about a fascinating time for manufacturing. I’m actually not a manufacturer, okay? I’ve never produced anything. I’ve been more on the end-user side of manufacturing, but I do come from government policy that indirectly and directly impacts how manufacturers are successful. I served as the former deputy chief risk officer at the U.S. Department of Commerce, and one of the programs there is the manufacturing program that they actually have, have instituted extension program for some time. So my background may not be hands-on in terms of, you know, right there on the spot doing the manufacturing processes, but it’s important to have policies and programs by the government in place to help those small- to medium-sized enterprises that are occupying that space and for them to know and be confident in knowing that the government is on their side and their partner in being successful even during some of these difficult times. So from a policy perspective, I’ll talk a little bit later about what the Commerce has been doing during my time there and post my time there and continue to do to inspire people to be successful in manufacturing.
In terms of a fun fact, one of the things I realized when you asked that question and it was a couple of days ago and I didn’t tell you this was that in high school I was actually a paid musician, and I didn’t have a chance to actually share that with you because I had a summer job in D.C. and we used to go around and cheer people up during the summer and play music, and I actually got paid for that. So I can actually say now that I was a paid musician at one point in time in my life. Favorite instrument? Saxophone. That’s why I play. Singing as well or just playing? We’re going to stick to playing. We cannot sing.
So would like to have you share, what are some of the government initiatives and challenges in manufacturing?
Well, one of the initiatives is the Nest, it’s called the Nest manufacturing extension program. Again, that’s something that’s instituted right now within the Department of Commerce, and this is one of 12 bureaus within the Department of Commerce. And this information is public domain; you can just go to commerce.gov to find out more about it. But when I was the deputy chief risk officer there and now in my post my new life outside of government, they continue to support manufacturers. They help small- and medium-sized enterprises with some of the struggles that they’re facing in terms of identifying pursuing opportunities to actually just grow their business. They understand that these companies have limited bandwidth when it comes to just managing the daily operations and then making time to develop new products that meet the changing needs, as you know, of the customers that they actually serve. So in addition to smaller companies, they also help with skill sets and knowledge to help identify new market opportunities and help those SMEs consider new paths for diversifying their markets as well.
So when they’re encountering technical challenges, and I know that a lot of manufacturing outfits are facing technical challenges in developing new products, you know, the government department of commerce knows that they need help to expand their networks. And it’s all about networks now, especially post-pandemic or the endemic; we just have to find a better way of doing business and being productive given the challenges like the problems with the supply chain and things like that. So finding existing technologies to help them solve those types of challenges is what they’re actually doing. And this manufacturing extension program is there to help them enhance their productivity and their technical performance.
Awesome. Well, Dr. Karen, thank you for being with us today, and later on, we’ll have to learn a little bit more about your podcast.
Sounds good. Gretchen, awesome to have you.
I’ve been following you on LinkedIn for a while, so excited that you were able to come on the show today. So we’d love to have you introduce yourself, tell us how you got into this crazy world of manufacturing, and then share something personal about yourself as well.
All right, well, yeah, thanks so much for having me. It’s an honor to be with you guys. Everyone knows me for my organization, USA loves manufacturing, and you know that was a very organic reach that I created to help celebrate manufacturing because I entered manufacturing after being in cellular forever, and I had had cellular agencies, etc. But when I came into the manufacturing world working for a small company, I just really fell in love with it, and I love the people that I got to meet. And right before COVID hit, I started my own company again, and that’s Magenta Technologies where we do automation and robotics. We also do industrial repair. So I’m right there in the midst of the supply chain issues, but just continuing to try and create that growth in manufacturing because I think we are in a special time with the technologies, and I’m excited to see where it goes. But we’ve got to jump over a couple hurdles as well.
So you mentioned you’re involved in robotics and automation. What are the biggest challenges you’re seeing in your space today as it relates to manufacturing?
Well, it’s definitely that time-sensitive issue where we’re just having the issues with getting parts. Like one of the biggest things that we see with the industrial repair is, you know, again, very much so on that component level, it’s difficult to get the parts that it used to be one to two days to complete a repair or a system. Now you’re looking at sometimes three or four weeks, and you get to the point where you’re just about ready to get that in and complete the repair, and then suddenly it’s extended out two weeks. So that has been interesting, and it’s interesting that I started it right when COVID hit because I laugh about it with colleagues and I say if I can create this company and it’s doing well in COVID, you know, once we have some better issues with supply chain, you know, what is that going to look like? So it’s been a great, I guess it’s a learning process too, but that is the biggest issue, and you know, that’s where again the reassuring process is super important for all of us here in America.
Thank you, Gretchen.
Elisha, you’ve got quite the fancy bookshelf behind you.
And would like to have you introduce yourself, tell us how you got into manufacturing. You have a unique and different perspective than everyone else on the panel, and then also share a fun fact about yourself.
But we didn’t get to Gretchen’s fun fact. Way to call that out, Gretchen. Let’s put you back on the spot.
I don’t know, there’s just all kinds of fun things now. I… I fun facts. I gave you a couple that I thought, you know, afterwards maybe we shouldn’t tell that, but I love candy. I, you know, I have some. I think I put on there that I curse a lot. That probably was not the best one to put up there. But, you know, I don’t know, I just… I’m out there trying to live life and I love any type of new experience, so I guess my fun fact is, you know, I’m open to trying just about anything out there to have that experience.
Okay, all right. So I’ll pick it up from there. Okay, yeah, you’re up next.
So my name is Elisha Tropper, and I’m the CEO of Cambridge Security Seals. And contrary to what most people believe, I didn’t grow up and go through school with this yearning desire to manufacture security seals. It was just an opportunity that came along. This is about my third or fourth different career, mostly in manufacturing or in surrounding sectors. I got into manufacturing really coming from the consulting world, which followed business school, which followed some other sales positions. And I got in kind of right at the time when digitization and automation were really taking off.
I got into the package printing industry, and this was right at the time when digitization was replacing the analog and actually physical hand art that was being used to create artwork, to create plates, to do printing. I got involved very early on with HP’s burgeoning digital printing equipment. I sat for several years on their international digital product advisory council as a user and someone helping to shape the technology.
But basically, personally, I’m very into in all aspects of my life, as my family can tell you, efficiency and I hate waste, whether that’s wasted time, whether that’s wasted just driving down an inefficient route to get somewhere, or, you know, whatever it is going to a supermarket and going back and forth between aisles instead of hitting an aisle and moving on and never coming back. Straight, the straightest, the fastest way is always, you know, the straight line is always the fastest way between two points. And that impacts a lot of how I think about manufacturing in a lot of ways, and certainly lean manufacturing and other manufacturing techniques. But what I have really tried to do in United States manufacturing is find those products that we can that have that are predominantly being manufactured overseas and use automation and digitization and maybe, you know, just good management and techniques to be able to manufacture them here.
And my mantra has always been, if we can’t make it better, or less expensively, or faster, or provide some kind of value that no one else out there is doing, you know, if we can’t do it better than anyone else, then there’s no point in making it just to be another me-too manufacturer. It’s always to find something that you can do better, different, lower cost, whatever it is. And I find, I take great joy in finding products that are only manufactured overseas and being able to manufacture them here and bring that kind of value to manufacturing here and to consumers and businesses here.
I’ve primarily been only B2B in my entire career, just the way it’s worked out. It’s always been supplying other businesses. And as a result, I’ve been very, very intimately involved in supply chain issues for the last 30 years or so. And I think that familiarity with the supply chain helped our business over the last two to three years, and we were positioned pretty well when all these problems started arising. I mean, obviously there’s still problems, but compared to many others in our industry, we did pretty darn well as far as dealing with the supply chain problems and had procedures and plans in place when the things started really getting, you know, going bad. And, you know, that’s just something that we didn’t set out to do. We were just in that position because we kind of were aware of what was going on around the world as it was happening.
So we’re going to start calling you Mr. Efficiency.
I would like to hear about the single worst manufacturing disaster that you oversaw.
Well, the one that comes to mind, have you ever heard the term pencil whipping?
I’ll tell you, you know what it’s about, but I learned it front and center several years ago. I heard it once or twice, never really understood what it was until it affected me.
We work in a business, we took a repeat order for about two million pieces, two million seals, and each one of our seals, they’re all unique in the sense that by definition with a security seal, if it can be reused, it’s defective, and if it is identical to another security seal, it’s also defective. So every one of our seals is alphanumerically or bar coded or in some way, shape, or form distinguishable from every other seal that we make. And we have several different families of seals, but a lot of the seals have unique characteristics in terms of the construction when we’re molding them or finishing them.
So we took an order, a repeat order for about two million of these seals, and about 800,000 or so pieces into it, we just – which was about seven shifts into it – we discovered that there was a major construction mistake that had been made. When putting it together, there was just… think of it in terms of a certain switch to produce – you know, hadn’t been switched on. And they had run eight hundred thousand pieces the wrong way.
And what infuriated me, as you know, the owner of the company, as someone was, that not only the person setting up the job set it up incorrectly, but the person running the job on the ship signed off on it, ran it incorrectly, the shift supervisor signed off on it, ran it incorrectly, and six subsequent shifts, each signed off on it. Both the line operator and the shift supervisor all signed off had to sign off on it, that it would, you know, from a QC standpoint. And they all – and that’s when I heard the word ‘pencil whipping’ for the first time. Was we have these sheets and pencil whipping just means you said you just, you know, whip your pencil through the sheet and sign off on it. And it was, it was pretty disastrous. I mean, it was, it was a week’s work – well, almost a week’s worth of production down the line. But also all the costs involved as far as that goes, and threw us off schedule and he goes everything. So that was, that was kind of, from just a pure manufacturing disaster, that was about as upsetting as, as one gets, because it just shouldn’t have happened.
All right, Lori, question for you about the design process. So tell me about a time when you had grief in the design process before you even got to manufacturing.
And I think she’s a bit delayed today, so we’ll see if we can hear her. All right, we’re going to come back to Lori. Dr. Hardy, as an expert advisor, what strategies do you recommend to help manufacturers manage risk?
Thanks for that question, Sarah. Well, again, we can all agree it’s pretty apparent that the pandemic has really rattled a lot of our feathers in terms of how we move about and move forward in a post-pandemic way. So risk management plays a big part in that because it’s about looking forward and looking at what emerging risks could impact your organization before it happens. And I think that a lot of organizations – we all have to look at ourselves as organizations – and begin to think about, is there a better way to get in front of these things? Is there a way to, you know, shore up or position our organization so that we can minimize the impact these events have on our organizations and companies?
I mean, we can’t eliminate risk unless we have tons and tons of money. You can never get rid of it, and it doesn’t mean that things won’t happen because that’s unrealistic. But we can’t control how it impacts and how much it impacts our organizations. And risk management is a discipline, it’s a management practice that needs to be really pushed to the forefront. Because I believe that if we were doing a more effective risk management prior to the pandemic – and who knows what the next pan thing is going to be – we need to be, you know, prepared for that, we need to decide now what those scenarios could look like and could be, and how we plan to respond to those events when they do happen. So that it’s not so much a surprise, we’re not caught off guard, but we’re in a better position to at least feel some level of control. Because I think with the pandemic, it’s about losing control and not having the sense of being able to own or control the situation to make it better for ourselves. So in that sense, risk management, I think, needs to be applied more within organizations as an ongoing practice, not one of those one-and-done exercises with an organization. And I’m hoping that now, they want – we on the other side of the pandemic, people will take a moment to just sit down and do a full assessment of the organizations and think about what those new scenarios could look like in the future, or short term, and how are we going to respond and deal with that if those scenarios should actually happen. I think that would make us a lot more flexible and agile and resilient during these extraordinary times.
Gretchen, question for you about keeping production lines up and running. So maybe start by sharing if a train wreck or nightmare story that you’ve lived through in regards to a company not being able to keep their production line going. You know, I think that – Dr. Hardy had some excellent points, but I think that is actually kind of what we’ve seen throughout COVID. Is some of these train wreck stories, you know, we always had that in the industrial sector because of the way you know it was developed, I guess, because a lot of companies – a lot of manufacturing companies – they approach maintenance from a reactive way of thinking versus proactive. And we saw when COVID started that it actually is a big detriment. And I think that is the biggest piece of what has happened with COVID and how we move forward, and whether or not we’re going to learn from it. But if you know, if I look at one of my specific instances, again, it’s this lead time situation. You know, if you’ve got a robotic system or you know a fairly large repair and there’s issues with supply chain, that definitely can create large issues where the customer is down for much longer than they anticipated. And of course, that turns into dollars or you know fines from maybe a larger supplier – automotive supplier. So again, I hope we learned with COVID what needs to change. And that’s why I created my company Magenta around that culture of reliability. And that’s what I see a lot of the successes coming from is adopting that reliability culture and knowing that we have to be proactive versus reactive. And that means like manufacturing plants and the maintenance, you know, having those spares And that way, when you do have a down situation, you’re not waiting on a repair. You’re not waiting on a new piece of equipment. You know, it may be a remand that’s on the shelf, but that remand is going to be as solid as a new piece of equipment, especially when you’ve got a time and service warranty. So, that’s a lot less expensive than a downtime situation. And again, it’s just, I think adopting that culture and almost a complete change in thought process.
All right, Lori, we’ll see if your internet connection is better now. I had a question for you about the challenges in the design process. If you could share a train wreck story that you’ve lived through where you had a problem with the design process before you even got to manufacturing.
Alrighty, I think her connection is not cooperating today. Elisha, I’m gonna spin the next question over to you. Can you describe a situation where your company had to perform manufacturing heroic acts to bail out a customer’s self-inflicted supply chain emergency?
Yes, it happens sometimes where your customers don’t intend to do it but they end up shooting themselves in the foot sometimes. And then they look to you to just kind of help them out. A long time ago, this goes back to probably the late ’90s maybe. I had a company, Prestige Label, in Wilmington, North Carolina, and we had a rapidly growing customer that was in the process of changing all of their labels and label designs, just doing…doing. And along the way, you can never tell when your sales are going to come in or when the orders are going to come in. And before they had completed the change of all their labels, they got a gigantic order. I don’t remember the volume, but hundreds of thousands of labels of products that needed the new labels on them, and these labels hadn’t even been the designs haven’t been completed yet. We received the order from them along with the completed artwork Friday afternoon, about 4:00. And they had a production run that was scheduled to run at 8 a.m. the next morning in Durham, North Carolina, which was about 120 miles away from us. And what we had to do was to convert the artwork, make plates, run the labels, finish the labels, package them up, and get them to Durham by 8 a.m. the next morning. We put a team together to do just that, and basically took two presses, made two sets of plates, ran the product on two presses, finished it, and I think we got it done somewhere in the area of about four or five in the morning. And our plant manager took, I guess it was about 6-800,000 labels. I remember exactly how many it was. Put them in the back of his pickup truck and hit the road and drove the 120 miles with the product, with the shipment in his truck, to get there. So he was there, roughly about 7:30 in the morning, so they could have it in time to get started at 8 o’clock the next morning. That’s the one that just kind of jumps to mind. Of course, it really encapsulated what I’ve always tried to drive home in any company I’m involved in, and that’s a results-oriented mentality or culture. Because after all is said and done, people just remember the results. They don’t really remember what went into it, how it got there. That’s not…they remember, did they get it or not? Was it right or not? And as long as you’re working with the mentality of understanding, like, it’s almost like there’s no such thing as ‘but it’s not my fault.’ Like, no one cares about whose fault it is or whether it’s your fault. They just care, did I get what I want? Do I have what I need? Did it work? Is it the right quality? And that’s, I think, the best mentality that you can instill among a team to understand how to get things done. I think customer-inflicted supply chain woes are things that manufacturers are living with daily, especially in the last couple of years. So I think a lot of people can relate to that, and I’m sure we do it to our suppliers as well sometimes.
Dr. Karen, back over to you. We’re talking about risk and would like to have you expand on what manufacturers can do to better handle emerging risk. Maybe talk a little bit about what that means and why that was important in your role when you were working with manufacturers.
Well sure, because I think that it’s easy to manage the things right in front of you, that you’re involved in day-to-day, rather than the things you don’t see. This, we have the tendency to manage the things we know about, rather than the things we don’t know about but can know about. I think that’s one of the tricky situations to be in. We seem to naturally navigate to those things we know about, but that isn’t true risk management, that’s issue management. You now have issues to manage. Risk is all about looking forward, looking at what does your manufacturing company look like in a downtime, and then what does it look like in a good time? So, because success can come and continue either way. If you create those scenarios and form a scenario around that type of company, right, because there’s going to be flexibilities and times where you shrink back, and you grow, and there’s a time we just stand still. So, you have to create a scenario for that type of company at that particular time. Make those adjustments, and it’s interesting what Gretchen was saying in terms of cultures. It’s interesting to see how even with the pandemic, we still have companies not moving as fast as they should be, not the urgency is not there, and it should be because they just don’t believe it can happen to them or they believe that when the time comes, they’ll be ready for it. And that’s just isn’t true. The behaviors have to change with leaders of the organizations. They have to be much more proactive in terms of taking time to do an assessment of what those risks could be, what are the trade-offs, right? For pursuing the opportunity that comes with those risks, and then being in a position to plan out what would be my response if these things actually happen. And at this point, we can think of the most ridiculous things that can happen because we have seen that something we never thought of can actually happen. Those black swans can happen. So thinking outside the box, coming up with what those scenarios could look like and getting people on board to actually look at risk for the organization as a positive activity, not something that’s negative or that would cause the company from progressing.
Elisha, we had a question come in from Larry. Hello, Larry’s joining us from Canada today. And I’ll have you address this first and then Gretchen, if there’s anything else you’d like to add. Is there a number of FTEs that should be looking at non-day-to-day fires based on revenue, other than or other attributes?
I mean the quick answer is I don’t know if there’s a fixed number. There are certainly, it’s you should always be aware and of things that have that you know that can have the potential impact. You know, especially like what Karen was talking about, is there are things you know about and things you don’t know about. Most of us, whether overtly or subconsciously, we have a good handle on the things that we know about and what can happen for that. And you know, I think that it’s you have to be imaginative in some cases to really come up with the scenarios of things that you don’t know about or you know, things that haven’t happened to you before. What if this happens? I think that you almost work backwards and start with kind of what are the key metrics, your key performance metrics that you work with as a company and what could interfere with those and therefore, what you know, if any one of those things were interfered with or something like that, then how, what would your metrics look like or you know, how would you respond to that? I think so. I don’t think there’s any fixed way. I think depending on what your business is and what you do, you have to come up with it. But most companies probably have two or three, at least two or three major…major, what’s the word when you’re talking about major risks? I’m drawing a blank on the word, but the possibility of one or two or three things going wrong that really could cause tremendous damage to you. I think that if you focus on what those things are, managing the risks around them or coming up with alternatives if something happens to those, I think that’s where your activity or your efforts best put in. But I don’t think there’s any specific number or you know, I don’t think there’s a silver bullet that’s just going to help you say, okay, now I’m covered and we’re good.
All right, Gretchen. One of the things that you are known for and you post a lot about it on social. I think you have outfits and flags and things around this is being an advocate for manufacturing in the U.S. What is the biggest challenge today facing companies trying to do manufacturing here versus overseas?
You know, in reality, I think again, it’s a lot of it’s mindset and a lot of it’s education because when we think about manufacturing in the U.S. and reshoring, we think, you know, that there’s a huge cost involved and there’s actually not as much of a cost involved as you might think. Yes, I mean, of course, there’s a difference, but you know, I think we have to balance the trade deficit. We’ve got to have as much exporting, importing, and you know, the cost involved. A lot of times when say procurement or someone of that nature is looking at that cost, they’re looking at that final designated one number, but they’re not looking at hidden costs and they’re not looking at, you know, this umbrella that really is around that. And you know, that could be everything from again, supply chain communication, you know, being able to communicate in the same time zone or, you know, being able to effectively communicate because you speak the same language, so to speak.
Also, the fact that the time length to get things and what’s the cost of losing a customer. And I don’t believe that we’re looking at that full picture, and if we do, the cost difference between, you know, having it made elsewhere or here in the U.S. is really only about five percent. But, we can make that difference up with a lot of the emerging technologies that we have in place and that we haven’t even really begun to explore: automation and robotics.
I personally believe, you know, that that’s going to be one of the key answers to our problem, and I believe it can really help us, assist us with reshoring. And it’s not that robots are going to take the jobs. We don’t have enough people for the jobs anyway. So when we automate, we will be able to see that increase, and the ROIs on some of these robotic systems are less than a year. And you know, people always think about the most difficult process that they have in the plant, but what we try to do is we go in and we create solutions for your easiest problems. Almost like, you know, I always joke about retrograde analysis in chess. You look at the end result and you work backwards, like Elisha was saying. I totally agree with what you say, by the way. Fantastic thoughts on that. But you go from the very end, and you start working backwards to the solution. And I believe we can do that with robotics and automation, which thus creates those savings. And you know, we could, we have to bring back about 40% of what we’ve lost. I think that’s something like 5 million jobs. And we don’t have the workforce, but it’s attainable with these technologies that we have. So I think, again, it comes down to education and getting that word out of the reality of reshoring. And we’ve got some amazing people who can do that, but it needs to be conversations. And when we start to have those conversations, then they see it’s not as difficult as a solution, and we can start implementing it. That’s kind of what my thought is on reshoring as a whole, and you know, it’s going to be difficult, but I believe we can do it. We have to do it.
Elisha, your thoughts on automation and robotics?
I’m all for it. We, you know, Gretchen’s right. We don’t have enough people. And not only do we have enough people, we don’t have enough of a skill base. Because the people who have the skills in manufacturing are retiring or have retired, and there isn’t that next generation that’s kind of come up through the ranks with the skills to manufacture, at least manufacture the old way or the traditional way, the conventional way. But what robotics and automation enables us to do is to utilize a core set of technology skills to overcome some of those skills gaps. And I think that that’s really, you know, what’s very important. The government and society tends to measure manufacturing in the U.S. versus manufacturing in terms of jobs, and jobs lost and jobs gained and things like that, and that’s a political number, and it’s important. But if you just look in terms of output, in terms of productivity, in terms of things like that, the U.S. never really declined in terms of output. It just declined in terms of the number of jobs, okay? And what we’re saying is that we should be arithmetically going so much higher. Our output should have been driven so much higher. It’s not that we didn’t regress, we didn’t lose output. We just simply didn’t increase as our automation and efficiency increased. And if we could just take advantage of what efficiencies are out there through automation and robotics, the productivity levels will skyrocket. You know, just instantly. Any company that can tell you that the difference between, you know, I’ll just give an example with our company. Okay, five years ago, it took us 77 people to produce X amount of revenue. Okay, today we’re producing X times 1.25 with 43 people. Okay, and we didn’t do that because oh, everyone’s working harder or everyone just got better at their jobs or, you know, I mean, we did it because we invested in automation and we invested in technology and we invested in better ways of doing things. And there’s always going to be, you know, automation and digitization. These are things that in robotics, there’s no end zone. You don’t reach a point you say, okay, we’re done, we’ve got it automated and we’re done. You can always improve on it. You cut down a half a second on a process, that’s significant. You cut down a half a second on four processes, now you’ve got two seconds. You have 20 lines, now you’ve cut, you said, you know, there’s just a productivity enhancement that just gets magnified every time you do the slightest bit of improvement. And I think that it’s much more easier, it’s much easier to improve when you’re automating, when you’re, you know, these are things because you’re constantly monitoring the numbers, you’re monitoring the technology. There are always advances coming out on these things. And as long as you don’t take your eye off the ball and you’re just continuing, you’re never satisfied, you’re saying we can always do better, then digitization, automation, robotics, these are things that should be kind of like in the toolbox of every manufacturer going forward. So I’m going to ask each of you the same question. What is the biggest supply chain issue for manufacturers in 2022? Dr. Karen, we’ll start with you.
Thank you. You know, that’s an interesting question. It’s interesting because it seems as though the pandemic just illuminated supply chain, even though supply chains always had problems. And during one of my podcast interviews, I interviewed one of the professors from North Carolina State University, and I asked them that specific question: why is the supply chain such a big deal now, as if it just started? And in actuality, he said that it’s big because of the perfect storm, the perfect storm in that the war, the oil prices, and the labor shortages, and when you put all these things together, not to mention the Great Resignation and reset, all those things combined together created this very unique situation that we’re facing right now. I think it’s going to take the rest of this year to untangle the problems in the supply chain. It’s going to take time to unravel all of those things. And then once it starts to whatever normalization looks like, then I think everyone’s going to make some readjustments because the back in the head is that this could happen again. So I mean that’s just my perspective based on some of the folks I’ve had a chance to actually talk to. And then I did want to add just a, you know, add on to the conversation about the robotics and all the other stuff. I know that prior to the pandemic, there was some panic about, “Oh my god, AI, robotics, they’re taking our jobs.” But the truth of the matter of now is that we’re used to seeing two types of workers, the white-collar workers, those who desk jobs, and the blue-collar workers, the labor folks. But now they’re saying that there’s a new collar, and it’s called the new collar. These are the hourly people who are leaving their hourly wage jobs, going into technology. So, Gretchen and Elisha, they’re coming your way by choice, that they’re actually leaving those prior industries and now ready to get into what the future is going to be. So, this is just my take on what it’s going to look like in 2022 in terms of the supply chain. Gretchen?
Yeah, again, thank you for the question, Dr. Hardy. Excellent points, and it’s so true that we’ve got a lot of work to do, and I feel like with COVID, one of the biggest issues was that, you know, most people, for quite a while, were frozen, and there was not action because, you know, it created that situation like it, like you mentioned, it was a perfect storm because not only did we have COVID, but we had the fact that it seemed like everything was coming at us, and a lot of people felt frozen, and that created a lot of inaction. And now we don’t really have that, I don’t think. I think people are starting to see that if we don’t do something and do something fast, we’re going to go down a path we are going to have a little bit more trouble getting back from, and that’s what we have to do is create this action. It can’t be something where, “Oh, you know, COVID is on the wane, and let’s go back to how the world was.” We’re not able to do that, and we shouldn’t because, again, we had the issues before. I think one of the biggest pieces of this is, you know, and everyone talks about it, is workforce, because we’ve always, you know, I graduated from college and, you know, I developed this mindset that I realized that, you know, it’s great that we have people, you know, that we pushed for that, but why did we do away with all of the jobs and the focus on the trades that we should have been not only making trades more and more accepted, we shouldn’t even really be saying trades, we should be lifting those people up because if we did not have the people like welders, machinists, etc., that keep our whole world running, we would be in a lot of trouble. And you know, we kind of throughout history, we put a de-emphasis on that, and these people should be celebrated just like I believe manufacturing should be celebrated. So again, it’s creating a different mindset to move forward, and I think again that inaction that we had for a period of time was not the greatest, but if we change that train of thought and we take the good from what happened with COVID, we are able to make America stronger, which in turn makes the world stronger, and I think we’re in a good position to really see some exciting things moving forward.
Awesome, yeah, I’ve seen more companies bring manufacturing to the US this year and last year than ever before in my career, so it’s by no means done, but it’s a nice first step. It’s just beginning.
Elisha, biggest supply chain challenge for you and your company personally this year?
Well, first of all, I’d echo what both Karen and Gretchen both said. I mean, they really nailed it. We’ve been… The whole problem, the supply chain problems, it just exposed the vulnerabilities that have been sitting dormant that we’ve had for years, most specifically transportation. I think really got exposed, global transportation and the delivery systems around the world and even within the United States, our reliance on truck drivers, our reliance on trains, our reliance on ships coming in from overseas and having places to port and get unloaded when they arrive. All these vulnerabilities, where, you know, it wasn’t that much stress on the system that broke it, it was just a little bit more stress than they had they had before, and the system collapsed, you know, like a house of cards. And you can’t catch up to that quickly. I don’t, you know, it’s optimistic to think that in 2022 we’ll catch up, we’ll get it fixed. I think we’re looking at, you know, 2024 probably, and we’ll still be kind of dealing with sorting some of these things out. You know, hopefully for our company, the manifestation of a lot of these problems, in addition to just the transportation and delivery issues, was the pricing. The prices of treated commodities or of converted commodities, in our case plastic resins, but you know, in other cases, corrugated steel, aluminum, the price has shot up so hard because it’s a supply and demand industry, right? It’s you know, disappointing demand. And when the supply of these things gets curtailed, all of a sudden the prices shoot up. And that has a boomerang effect on everyone because all of a sudden now raw materials cost more, that means the end product is going to cost more. And when you combine, you know, it’s just, there’s a cycle to these things and you can’t kind of, it’s very hard to get out of that cycle of things unless you have, you know, this ability to just kind of press pause and say, okay everyone catch up. No one has that ability. We can’t all just press pause and say, okay, let’s just take a breath and everyone catch up. So, you know, again, you have to take a long-term perspective on it, but I think that really, you know, if you think about it, the narrow channels which are now, you know, we’re using the same size channels that we use as an economy half our size and we basically haven’t increased those channels that much more in terms of the delivery system. We have to expand that, and that to me is the biggest challenge in 2022 and beyond, and it’s going to be a continuing problem for many years down the line.
Thank you, Elisha, for joining us. She’s been putting some comments and stories, and she says paper for packaging shot up and keeps on going. There does not seem to be an end in sight. So, with that, we are just about at time. So, I want to thank all of our listeners who were able to tune in today to listen to our panel and contribute some thoughts and insights. Gretchen, Dr. Karen, Elisha, thank you for being with us today, and I look forward to seeing everybody on our show next month.