Transcript 0:01 We're seeing disruptions across our supply chain every day, and we have to recognize that. 0:07 We need to be prepared to address the next big disruption that comes, and we need to recognize the next big disruption is coming and is happening all around us. We need to deal with the change as it happens. 0:23 [upbeat music] Welcome to The Peggy Smedley Show, your voice for our connected world, with your host, Peggy Smedley. 0:41 Hello, listeners, and welcome to today's edition of The Peggy Smedley Show. I'm your host, Peggy Smedley. 0:46 This month on this show, I've been talking all about sustainability in manufacturing, and today I actually want to narrow in on supply chains. We all know the supply chains are broken. 0:57 The COVID-19 pandemic shined a light on just how broken they are. 1:03 But if we really are being honest with ourselves, our supply chains were broken long before the quarantine, toilet paper, and microchip shortages became household phrases. 1:14 We have all long needed legislation and standardization of data in order to make our supply chains more resilient, and I will discuss that in the first segment today. 1:25 But before I get to that, let me tell you about the guests I'm going to have on the show. I'll be talking with John Dyke, Chief Executive Officer of CESMII, and Bob Willig, who's the Executive Director and CEO of SME. 1:38 The two of those will join me in the second segment. And then I'm going to wrap up the show welcoming back Heidi Roop, who's the Assistant Professor at the University of Minnesota. So I hope you'll stick around. 1:49 But let's get started. We all know manufacturers are faced with many disruptions as a result of the COVID-19 pandemic. That became a pivot point for supply chains. 2:01 If manufacturers want to survive in the bigger scheme of things, they need stronger supply chains. 2:08 If they want to be resilient in the face of pandemics, natural disasters, labor shortages, then they need a strategy for how to approach all of this. Now, let's be honest. It isn't an if a disruption will occur. 2:23 This is a when. And it seems they are happening with this greater frequency today than ever before. The need, if I'm talking about this honestly, was clearly evident at this year's Inland Transport Committee Roundtable. 2:39 And it was really interesting because the panel identified three critical challenges facing the global supply chain: labor shortages, equipment availability, and the ripple effect of global bottlenecks. 2:55 Now, I'm guessing any of you listening right now are not disagreeing with any of those point. What do we need to do, though, to address these challenges are the greater point we need to address. 3:08 I would suggest there are a few other things here. First, we need action on the part of lawmakers. 3:15 Now, I know typically just the thought of increasing or adding additional legislation makes the hairs on a manufacturer's neck stand up and executives very nervous. 3:25 However, we're beginning to see legislation actively happen, and the good news is the US government signed the CHIPS and Science Act of 2022 into law earlier this month, and the objective is to bolster US leadership in semiconductors by providing funding for research, development, and manufacturing, and workforce development. 3:49 The new legislation also provides an investment tax credit of twenty-five percent for capital expenses for manufacturing of semiconductors and related equipment. Now, let's look at this. 4:01 Basically, the goal behind these incentives includes securing domestic supply and creating new jobs in construction and manufacturing. 4:11 Another critical component of the new act is its restrictions on overseas manufacturing for recipients of funding for ten years from the date of funding. 4:21 Now, this is something I've been preaching for more than two decades. 4:25 I wrote the book Mending Manufacturing: How America Can Manufacture Its Survival, and it was very important that we look, that we bolster American manufacturing. So this looks like we're hoping to address that. 4:38 We need to bolster what we do here in the States. 4:42 The act will also promote US innovation and wireless supply chains via its funding for promotional and deploying wireless technologies that use open and interoperable radio access networks. 4:55 So this is another point I have been preaching for quite some time now, actually for many years. We need an open and common data exchange if we want to fix our supply chain. It's pretty basic. 5:07 There's no real science to this if you think about it. We need to share information. We need investment in order to be able to make a difference here. 5:17 We need legislation, but perhaps as important, we need technology and a seamless flow of data. We need the open visibility of all of this data. 5:29 Now, CESMII has been tracking the smart manufacturing market for more than five years with qualitative and quantitative primary research. 5:38 The twenty twenty-two Smart Manufacturing Market Survey was released earlier this year, and it suggests that smart manufacturing continues to follow the one-third rule. 5:50 Roughly one-third of respondents indicate their company has no formal strategy. 5:55 Another one-third of respondents indicate that their company is preparing a strategy, and that the final one-third of respondents indicate that their company is currently implementing or testing a strategy. 6:09 So there also seems to be a mismatch be-With operations and supply chains almost two-thirds of respondents indicated that their manufacturing operations are an integral component of their organization's digital supply chain strategy. 6:27 However, if you think about this, only two in five respondents indicated that their organization had dedicated headcount for smart manufacturing initiatives. Now think about that. 6:40 What's more, three-quarters of respondents indicated that smart manufacturing will increase their company's competitiveness and that the company leadership understands the value of digitization and smart manufacturing and the need to invest. 6:58 However, only half of the respondents, and this is important, indicate that their company is willing to invest the financial resources in smart initiatives. I mean, all of this is vital when I look at these numbers. 7:13 So based on this survey and these results, it sounds like manufacturers recognize the importance of smart manufacturing but aren't able or willing to invest the time, the money, or the resources needed. 7:27 So think about that for a moment. The survey suggests the biggest challenges to smart manufacturing include a lack of skilled talent, complexity of system integration, cost requirement to implement, 7:42 lack of technical expertise, lack of a clear ROI. How many times have we talked about a return on investment? Cybersecurity. We know the bad guys are out there. They're waiting. They're waiting to pounce. 7:56 And the time required to implement. Those are just a few of the big, big hurdles that are holding manufacturing back. We're not just talking the big ones, we're talking the small and the medium-size. 8:09 So which brings me to my opinion for today, which is very important. We need data to flow through the entire supply chain. We need that visibility. We need transparency. 8:23 We need the scalable, reliable solutions. 8:28 And it's a lot easier said than done based on these things that we're just talking about, a lack of technical expertise, complexity of system integration, a lack of skilled talent. 8:38 When we put all these things together, it's very difficult to get the visibility, the transparency, the scalable, reliable solutions. We get that, we understand that, but these are the concerns that are coming together. 8:51 The industry needs an ecosystem of partners to enable this, to communicate, to make this happen, and that's the challenge. So this is something I've been talking about for a long time. 9:04 It's something the industry recognizes in both manufacturing and construction. So it's not just one industry that's challenged with it, it's many industries that are challenged. 9:13 We still have these silos of data that exist that are a challenge that we can't overcome easily. 9:21 Smart manufacturing will never be truly successful unless we can find a way to share data, openly share that data, securely share that data, and fairly share that data. 9:33 Now, that's what we're talking about, openly, securely, and fairly so everybody gets it. 9:39 Now we're talking blockchains, we're talking all these different ways of doing it within very verticals, within those silos, within those individual communities within the supply chain. 9:51 We need data sharing if we want our supply chains to be resilient in the face of rapid change. We're seeing rapid change every day, and it's not just because of COVID. We're not just because of the pandemic. 10:05 The COVID-19 pandemic was simply one example of this. Simply one example. It's not the only example. So we have to recognize this was just one that put us all on our ear. It was one that really created havoc for us all. 10:20 We get that, but it's not the one that created it. It's just a part of many things that's happening. This disruption, again, was only one example. 10:29 We're seeing disruptions across our supply chain every day, and we have to recognize that. 10:35 We need to be prepared to address the next big disruption that comes, and we need to recognize the next big disruption is coming and is happening all around us. 10:47 We need to deal with the change as it happens, and we need to look at these things that we talked about already. We need to have the talent, the skilled talent, the complexity of system integration. 11:01 We need to have the technical expertise. We need to be able to make ROI work. We need to start looking at how our operations, our IT, OT, again, looking at plant floor and how are we making the money. 11:16 We've looked at all the technical side of this, but we have to go back to how are our operations making money. If we are not making money, the technical side of it's great, but we've gotta get back to making money. 11:29 And how do we do that? And in a secure way. But we have to share information openly, securely, and fairly so that all of us are feeling that this is working for all of us, and we can make it work for all of us. 11:41 So as we look at all of this, we need to be prepared, we need to look at ways that it's gonna work, and we need to be able to do this in a way that everybody says, "Am I ready for this next disruption? 11:53 Is this next disruption going to take me out of business? Am I not gonna be able to compete?" Because if one part of that cog of that wheel doesn't work, we talk about this all the time, the wheel doesn't work. 12:07 Well, we're not rowing in the same direction. We talk about all these analogies, but the point isWe need everyone in the supply chain to be functioning large, medium, and small together because we need everybody. 12:20 We need to deal with the change as it happens. We need everyone to succeed. The industry needs to support each other. Again, small, medium, and large, they all need. 12:30 So those large corporations need the small ones to succeed together. It needs to be a community that works together. So here's my tip. Do your research. Understand how to create a smart manufacturing strategy. 12:44 We have been saying it, and we've been saying it's a journey. It's not gonna happen overnight. It's a journey of disruption. In fact, in my blog this week, I'm highlighting how to do this. 12:55 I've learned over the years from talking to many in the industry that the journey takes time, but you must be patient. You must innovate. 13:04 And I give examples of the challenges manufacturers are facing, and I even make some recommendations on how to solve it. So before we go today, let me pose a few questions to you that I want you to think about. 13:16 What steps are you taking to fix this broken supply chain? How are you making your supply chains more resilient in the face of change? How are you making your supply chains more secure and visible to all your partners? 13:31 What role is data playing in the process? And how can you come together to do this together? If we don't, our supply chains will continue to be broken, which we all know ends up impacting everyone. All right. 13:45 Well, as you know, that's all the time I have for today. But what I want you to do is share your thoughts with me on social media. When we share our thoughts, we get smarter. We share, we're better. 13:55 Share your thoughts with me at Connected World. All right. We're gonna take a quick break, but we're gonna come right back. 14:00 Check out our website at connectedworld.com, our show website at thepeggysmedley show.com, and make sure to share and subscribe to our episodes each week, and we'd love for you to, you know, pass them on to your friends as well. 14:11 All right. This is The Peggy Smedley Show, your voice for our connected world. And remember, with great technology comes great responsibility. We'll be right back after this commercial break. [upbeat music]
