Embracing Alternative Sources Parts Designs And Strategies 64d53d4be3111

Embracing alternative sources, parts, designs and strategies

Aug. 15, 2023
Supply chain mini-series—Day 7—Phoenix Contact relies on planning ahead, internal manufacturing, and production in multiple regions

Just as necessity is still the mother of invention, COVID-19 and related shortages spurred users to consider different methods and components for performing their process control and automation tasks.

“During the past two and half to three years, customers became more willing to look at alternative solutions. They’ve been saying, ‘If this product works, get it to me.' So, we’re curious to see if they’re willing to continue with alternatives going forward,” says John MacDougall, industrial channel sales manager at Phoenix Contact, who works with more than 30 distributors. “It’s unsure when everything will get back to normal, but the best estimate seems to be another 12-24 months.”

MacDougall states that a recent “Automation Industry” survey by J.P. Morgan and the Control System Integrators Association (CSIA, www.controlsys.org) found that 83% of system integrators had a positive industry outlook this past May, which was an improvement on the 70% in April and the 65% in March. It also reported the lead time for Rockwell Automation’s PLC is down to 180 days from more than 200 days in previous months.

“The microprocessor shortage continues, but it’s increasingly isolated to fewer products, so the overall situation for intelligent devices is getting better,” explains MacDougall. “For example, for our control technology products such as  PLCs and controllers, through July 19, we’ve already shipped almost double what we did during the entire previous year. Looking at our flagship PLCNext controllers, we’ve shipped two and a half times more this year than we did during all of 2022.”

Manufacture it yourself

One enduring bright spot for Phoenix Contact has been Ethernet switches, which MacDougall reports are “available in abundance” because the company planned ahead. “We made a global effort to source all the components our switches need, so there would be no lapse,” he says. “All of this is helped by the fact that Phoenix Contact is very vertically integrated, so we make the screws in our products, and do our own injection molding. This meant fewer supply chain issues during the pandemic, and let us gain market share in Ethernet switches and terminal blocks.”

Beyond vertical integration, MacDougall adds that COVID-19 also taught Phoenix Contact that it shouldn’t rely on a single geographical region to produce individual technologies because it could create supply chain snags of that area suddenly became inaccessible. “We were already vertically integrated at our U.S. headquarters in Harrisburg, Pa., but also started our two highest-volume terminal block lines there in March and April,” he says. “Plus, we invested more in offering custom-configured connectors, sensor cables and cordsets in the same location, so we can get them to our U.S. customers in just 7-10 days. These are what we think are good supply chain practices. They’ve also allowed us to hire more than 300 new staff in the last two years, as the pandemic began to wane, including 60-70 customer-facing application engineers and salespeople.”

About the Author

Jim Montague | Executive Editor

Jim Montague is executive editor of Control. 

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