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Supply chain uses multiple strategies to fight COVID-19 disruption

Sept. 9, 2020
Strong Links: Part 1

Read more in the Strong Links mini-series!

There are hiccups and tweaks, and there's planet-peeling chaos and scrambling madly to maybe survive. So which scenario is the process control and automation supply chain facing right now? Right, the same one that blindsided everyone else.

"Remote work is the first option, and is mandatory for some activities and vulnerable people, such as those over 60 years and/or with previous health issues. We've had overhauls postponed, and some investment and upgrades were cancelled," says Felipe Gabriel Kuhn Soares, maintenance engineer at Braskem's chemicals and polymers plant in Rio de Janeiro, Brazil. "People on the factory floor are at minimum levels, but onsite workers have constant support from remote personnel. We're also using Microsoft services like Skype and Teams, as well as mobile tools like WhatsApp.

"Because safety and people come first, we follow the World Health Organization's recommendations," adds Soares. "Next, we pay attention to critical process and operations, maintain a good priorities list for them, communicate properly what's expected, share lessons learned with teams, make risks clear to everyone, empower people, and eliminate waste of time and resources. So, even as safety continues to come first in the future, remote work is also here to stay, and critical process and priorities will keep getting clearer."

Upheaval and context

While not nearly as decimated as the hundreds of thousands who died and the millions more sickened or left jobless, most process industry users—and the suppliers and distributors who serve them—have watched the COVID-19 pandemic turn their applications, plants and businesses upside down. Where suppliers and distributors used to wrestle with the shift to online sales, or more recently tried to mimic Amazon's fast delivery methods driven by consumer expectations, they're now hip deep in a health crisis that's disrupting all aspects of their organizations, businesses and markets.

"COVID-19 is testing the quality of supply chains," says Uma Pingali, business president of Newark. "The process industries are often too conservative, so if a user typically spends $500,000 per year on products and services, the pandemic is forcing many to play with their pipeline and inventory models for the parts they need each month, and maybe build in a buffer of a week or two or more. If something happens with an upstream supplier in China or elsewhere, lead times of four to six weeks for a buyer can suddenly go to 20 weeks. Consequently, manufacturers that don't have supplies beyond two or three weeks can see their inventories unbalance, and find themselves unable to compete.

"On our downstream side, many manufacturers are finding products such as airplane devices or oil and gas equipment aren't in demand because COVID-19 has stopped so much travel, while food and beverage, consumer goods and groceries are up because people are at home so much more. In addition to finding scarce items, these changes also raise the question of who's going to take delivery if some products aren't needed, and can they shift to other finished devices like parts for ventilators or do more maintenance when there's less demand for their usual items? This means everyone has to investigate and understand their risks better."

Ken Engel, senior VP for Schneider Electric's North American supply chain, adds that, "Even though COVID-19 is impacting everyone and all supply chains, we feel we're prepared due to the digitalization we already completed, and the redirection to local sources we've done over the past 18 months to respond to recent tariffs. This includes shortening existing supply chains, multi-sourcing products, and reexamining the capabilities of Tier 2 and 3 suppliers, which were particularly hard hit by the pandemic, especially in Mexico. We run 36 factories and six distribution centers, and there have been some disruptions, but they haven't been prolonged. Plus, we're also keeping safe by meeting and exceeding OSHA and CDC protocols for washing hands and cleaning workstations. We're also using PPE, including some masks we make ourselves and checking body temperatures. We're more devoted to resilience now because customers need us to help sustain them."

Engel reports Schneider Electric dropped to a low of about 75% staffing utilization during the pandemic, but has since returned to more than 90% by adopting social distancing. The company also used its digital control tower in Nashville, Tenn., and seven control towers worldwide as part of its overall Smart Factory and Smart Supply Chain program. These efforts will further shorten and multiply its supply chains, and keep it on schedule to fulfill its 2017 promise to reduce its carbon footprint by 25% by the end of 2020. The control tower is staffed by as many as 30 experts, including 10 from Schneider Electric's carriers, who monitor for disruptions and expedite shipping.

"Because we're doing all our meetings virtually and saving time, my customer touch-points have doubled since the pandemic started. We also converted to an all-digital sales team for a short time, who trained during some of the recent downtime," adds Engel. "Likewise, we usually did onsite, face-to-face factory acceptance tests (FAT) for large switchgears, even though we had virtualization technology available for years. However, since COVID-19 started, more than 95% of our FATs have been done virtually. It seems that our customers just needed a good reason to go virtual, and now they love it. Our cameras let everyone see the equipment and onsite technicians, who can turn everything on and validate it. This method works well, so I think it's going to stick, and we won't go back to the old way. We're also using eSim software for short-interval management meetings, which helps critical messages cascade throughout our facilities."

Right mix for small, medium, large

Pandemic or not, Pingali adds, "Process and other industries are continuing to evolve to using more online and digital solutions, so we take a broad approach based on customer and product lifecycles. We learn whichever fits their needs best at whatever stage of their journey they're on from initial manufacturing to maintenance to end of life. For example, while small-batch manufacturers don't maintain product inventories and usually need quick online access and deliveries, mid-sized manufacturers need accurate forecasts to order and schedule shipments, while large-batch manufacturers and their contractors need more individualized strategies, so we set up multi-channel responses that can address the needs of each organization's size and operating style. However, when a customer that usually buys 10 pieces shifts to ordering 1,000 to offset a broken supply chain but can only get maybe 200, this situation begins to drive up prices and impact what the customer can produce for its clients."

Taking its own advice, Pingali reports Newark is rebalancing its own supply chains, and seeking alternative suppliers for regularly ordered and replaced products like connectors, electromechanical components, cables, temperature controllers and others. "We handle thousands of technologies and suppliers, but it's still difficult to maintain the right mix, especially if it's not local to one area," says Pingali. "We offer everything on our website, and we've worked to enhance its capabilities lately, which helps us get deliveries to customers, even with COVID-19 going on."

About the author: Jim Montague
About the Author

Jim Montague | Executive Editor

Jim Montague is executive editor of Control. 

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