Episode Transcript
SD: Hi everyone, and welcome to episode ten of the third season of our Enabling Automation podcast, where we bring experts from across the ATS Corporation to discuss topics that are relevant to those that are trying to scale technology and automation within their business. So actually be our season finale of the third season. So thank you for joining us for all episodes leading up to today. I’m your host, Simon Drexler. I’ve been a part of the automation industry for more than 17 years in various roles at both large and small companies. I’m very passionate about applying technology to problems in scaling organizations, both small and large, and I’m so fortunate to be able to host these conversations and bring in experts to have interesting conversations about the world of automation. Today, we’re so fortunate to be joined by a supply chain expert, which is a nontraditional role, at least inside of our podcast and Enabling Automation. But Michelle Evans is here to share some of her best practices and discussion points around collaboration in procurement and sourcing. Michelle, do you mind giving a quick introduction to yourself?
ME: Thank you Simon. Thank you very much for having me here today. I’m Michelle Evans, I am the strategic sourcing manager for Industrial Automation, one of our segments. And just like you, I have actually been in the world of manufacturing and automation for about 17 years now, lending itself to various different, levels of automation. Small companies as well as large companies, and also had the privilege of seeing automation and process throughout a lot of the suppliers that I’ve toured and visited and had the privilege of sourcing through. And so a good amount of exposure to automation in general. and very excited to be here today. So thank you for having me.
SD: We’re happy to have you. Michelle, in the industry of automation and when we talk about manufacturing, a lot of the attention gets paid to engineering and design and new technology development and for good reason. It sort of dominates a lot of the literature. And that means that a lot of other areas can sometimes get overlooked. And me personally, and a lot of the times we’re talking about, how it takes a village inside of this podcast, it generally takes a lot of different experts, a lot of different people to bring these complex things to life. And so from your perspective, how do you view supply chains role in enabling automation?
ME: It’s a great question. And from my perspective, I think supply chain plays a big role regardless of what type of manufacturing or even bringing products right to your door. So if you consider even your toilet paper coming to your door, and I think we all felt some impact during the course of the pandemic and felt that the hurdles of supply chain and how that how many things need to go right in a supply chain in order to be successful in delivering products. There’s no difference from that to automation in general. So supply chain plays a big role in automation and how automation is designed, developed and bringing automation direct to you. And then also it should be a major consideration when you’re implementing automation.
SD: And so when we’re talking about that implementation, and I know in your role in the work that you’re doing today, it’s around that collaboration, that intersection between expertise. Do you have an example of something that you’re maybe worked on in the recent history of where you’ve seen a good collaboration for supply chain working to bring automation to life?
ME: Definitely. I think, in general. So sourcing with the right suppliers, the right technology provider is being at the forefront with the suppliers and understanding what technology is available. What technology is emerging is definitely key and takes a major role in the collaboration between the supply chain and engineering, supply chain and applications on developing concept, developing design and right through to ensuring successful execution. it also takes a major factor in terms of cost, cost of wins, costs down, cost effectiveness and also just reducing your cost throughout the automation in general, you need to consider, the supply of the products coming into the facility to make sure that you are adequately and effectively designing the overall automation.
SD: You touched on a couple of really key themes there, and we’re fortunate. We work for a large company, has history in a developed supply base. For somebody who’s looking to try to find that first strategic partner or develop their supply base, how would you quantify or how would you guide them to find the right supplier?
ME: On one level, there’s number one right supplier. You need to look across the board and single sourcing and in a lot of cases should be avoided. looking across your supply base and understanding what the core competencies and strengths are across your suppliers will allow you to leverage each one of those, strengths independently and potentially pick up and gain from each one of the suppliers in a different manner. So where you might have two suppliers in the same market space, one might be very strong on that technical aptitude and be able to offer a different level of service in that level than actually providing the products. So when you’re looking at suppliers that have strong performance in on time delivery, quality, costs and all those metrics that may not be the underlying best supplier to consider collaboration with when you’re optimizing or integrating automation.
SD: And in that theme of it, it takes a village. It’s really trying to find those strong collaborators and so another theme that you touched on was those with emerging technologies. Where’s the best place to go find those emerging technologies that might apply to an organization or a person that’s listening to help them scale?
ME: So I think, a major factor is keeping your finger on the pulse within the supply chain, within your supply chain, and also within the market. so one avenue is definitely trade shows, right? To keep your finger on the pulse of what’s going on outside of your already established supply chain. But another one is, is making sure that you continue your engagement with your supplier directly. So going to their facility, seeing their processes, having a discussion about what their market share is in different areas and where their strengths are, where they feel their strengths are, how they feel they could better service you, really gives you a window into that. Also, going over your data in terms of what you have been buying historically and and making sure you have a good indication about where you are buying obsolete products or products that are going towards the obsolete or where they are coming out with new products, in the future, making sure that you keep that level of communication open will ensure that you’re staying on the forefront of the technology and ensure that you’re actually effective in your costing, and you can bring that into your automation solution.
SD: That’s great. Michelle, we talk a lot about emerging technology, and that’s a key part of automation and applying new technologies. But if we take a step back and the theme of today is really about supply chain collaboration, procurement and sourcing effectiveness, what’s the innovation that you’ve seen in supply chain as a whole over the last five years of your career?
ME: So I’ve definitely seen a lot of progression in terms of data analytics and being able to provide key information to the suppliers to be able to better serve you. So that’s very important when you’re forecasting your demands, forecasting all of that, because now we have more data at our fingertips. And automation definitely supports gaining more data at your fingertips in terms of what your throughput is, what your demand is, and being able to better forecast that. As a result, we’ve been able to utilize that data throughout supply chain to better integrate our suppliers forecasting with our demand needs and overlap the two to understand where there may be some gaps, where there may be some opportunities and really come forward with, great solutions and further collaborations to potentially lean into where our suppliers have gaps and they can potentially implement things. So there’s one specific example that I can lean on where we have, a key partner that has actually implemented a piece of automation within their facility to better support us because they didn’t have enough throughput on their end to support our business needs. And through implementing that technology, I was able to see a pick up in their throughput also costs down, and they were able to reduce their floor space, which made room for other emerging products. And it was, a true partnership that we saw in that situation where they had acquired the, automation equipment direct from the company that I was working for. So being able to stand at a suppliers facility under a piece of equipment that was developed by my company was a was a true indication of a real partnership and collaboration and a great way to lean into the fact that automation can extend beyond just your four walls into your suppliers area. And really, with that share data, it enables you to effectively do that.
SD: And that’s an excellent example of building trust across a partnership as well. And sharing data. Sharing data openly allows you to effectively collaborate because you’re then working off the same page. Correct? You know what each other’s doing?
ME: Yes, definitely. And I mean a level of trust is definitely required. I think in general, our supply chains are, our suppliers are an extension of our company. we need to consider the fact that our suppliers and your supply chain really have an impact into your overall competitive advantage, and they are a major player. So just as you would treat, your boss’s boss with that level of respect, just as you would treat your employee as a, as serving them to make sure that they’re successful, you need to view your supplier in the same light. So by providing them with that same level of respect and by providing them with the mentality that, what can I do to benefit you so that you can in turn help the situation and we can land on a win-win is really the collaboration that you’re going for. And that level of trust is I think, at the root of that.
SD: Yeah, I agree. And once you have that trust, you built up that partnership, you can start to leverage and gain access to specialized expertise that you might not have within your own organization. You can reach out to your partner base and learn from them. Have you seen an example of that inside of your recent experience? Where we have reached out to our partner base and learned from them?
ME: Oh, definitely. Definitely. I think, in general, across the board, we learn from our suppliers every day. And the further you are, collaborating with them, the more you can gain from them. So, for instance, looking at how they have reduced waste in their system will allow you to maybe think outside the box and how you can reduce waste in your own system. there’s certain things, touring different facilities, you can see how they utilize automation or even outside of automation. You can see how they utilize other tools such as, job travelers, EDI, those kind of things and how they incorporate that into their overall, strategy to best serve you. By learning from that, you can then take that information and implement it internally to the best of your ability, and then go back and benefit some more from future learnings.
SD: Part of those shared learnings is understanding each other’s businesses so that you can collectively reduce the risk of deploying new technology, deploying capital or investment. How do you look at the reduction of supply chain risk or the utilization of supply chain for reduction of risk inside the partnerships that you manage?
ME: Reducing risk for one, like we touched on, not single sourcing earlier. And that’s definitely, it’s an area that you want to focus on, making sure that you’re not single sourcing within your supply chain. Reducing risk can extend far beyond that, though, because you do need to consider bottlenecks. For instance, where you have bottlenecks even within your current supply. So you may have a situation where you don’t have a single source. However, your current supply base is not sufficient to support increased capacity, and being aware of that up front will allow for a better solution in the end on your automation. But will also eliminate risk, even outside of automation in terms of supply and continuing to, to meet your customer’s demand, there are other levels to consider and risk reduction as well, when you’re leaning into your supply base. Another area where I’ve seen a reduction in risk is really collaborating with the supplier on the design side of things. So reducing the risk level in the design by opening tolerances where possible is a key example and one that comes out pretty regularly, I would say. Looking at the design that you have in comparison to the manufacturing processes that are making it and leaning into your suppliers, knowledge on those manufacturing processes will allow you to be successful in cost down will allow you to be successful in reducing your risk in poor quality parts or on time delivery, poor performance because of rejects that they are actually capturing at their end. That kind of collaboration across supply chain, as a function, the suppliers and engineering is definitely key and reducing risk within the design.
SD: I try to do my very best to wear both sides of the discussion and Michelle, if somebody came and said, but my design is core to my business and my IP is absolutely required to be protected, so how could I possibly collaborate with somebody outside of my business and do that effectively? Would you have some guidance for them?
ME: Yeah, so I think being aware of what your IP is. So IP in some cases gets used loosely. The actual term IP gets used a little bit loosely. And in some cases what we think is IP is actually core competencies. So what we view as a core competency, we are in some cases concerned about sharing. That being said, the more you can expose to your supplier, the better you are enabling them to support you and your overall operations. And the more of a partnership you will establish. There are, generally speaking, IP concerns that you do need to consider upfront and having a very clear knowledge of what your IP is, what your core competency is, And delineating between the two of them will allow you to have a more successful discussion with your supplier. It’s also important that throughout the organization that information is transparent, so that the people that are talking to the suppliers on a daily basis are very clear about what they can discuss and what they can’t discuss, because basically anything that’s not off the table should be open for discussion with the supplier, and that will aim them to better service you.
SD: I think that’s a good example of over focusing on a negative and ignoring the positives. When we get so focused on maybe an IP risk and it’s true, it’s absolutely part of the decision criteria, but it ignores the potential positives that can come from engaging other experts. And so I would encourage those that are listening to any decision that you make is going to have pros and cons, and depending on your own business, you’re the only one who can decide which pros outweigh which cons. But there’s always benefit from engaging with others, and that benefit may outweigh the risk of exposing some IP or some core competency. I think one of the advantages that gets overlooked, and it’s somewhat related to the risk mitigation and risk challenges that businesses have as things scale and adapt, is that by engaging with a good partnership base, you can make the organization more adaptable to changing market conditions. As things scale up, things scale down, markets change. Do you agree with that statement? And is that something that you see in the partnerships that you manage for ATS?
ME: 100% I think in general, with supply chain, we need to be focused on supporting scalability at large. In order to support scalability at large, you need to, in some cases, be exposed in certain areas in terms of what you’re normally building in-house. You may turn and outsource that, for instance, and really making sure that when you’re making that overall decision about what to outsource and what not to outsource, considering the risk, the IP, the core competency all comes into factor. And then obviously then you turn around and consider your overall cost and, and other strategic, areas of alignment when you’re selecting a partner there to outsource to making sure that you have a good relationship with that supplier, that you have clarity, that you are covered with, with the right agreements and, documentation is definitely an area that helps support and cover your risk so you can allow for a more open relationship and more open, sharing of information that, in the end, will support the overall demand base from your customer and the ability to flex and scale to that demand.
SD: And I think our conversation is really building toward supply chain should be a critical part of your strategy. The supply chain partners that you choose to collaborate openly and effectively with can be a major part of how you scale your business, how you scale automation, how you scale technology inside of an organization that’s looking to grow or change or adapt.
ME: Definitely. I 100% think it should be. Supply chain should always. Well, I may be a little bit biased here, but I’m a little bit biased. But, I do think supply chain 100% should be considered at the forefront of the strategy. And you should always be thinking of supply chain as a strategy. The term supply chain is the chain of supply. Right. And if you think about that overall a chain is only as strong as its weakest link. So you can think about the process within your four walls. And where there are bottlenecks, where there are weaknesses, where there is waste. And really consider that within your four walls to make improvements and to increase your throughput or to reduce costs across the board. But if you’re not considering the entire chain, the chain outside of your four walls, then you’re not going to be as successful, obviously, because there will be areas of weakness, areas of, strength that you can piggyback on outside of your four walls. And your production in itself. And there’s also going to be, weak points that you need to alleviate. So bottlenecks that you need to alleviate and getting in front of that in your strategic thinking and in your projections for your future of your company, is very key and important to the success of it, of a business.
SD: Yeah, absolutely. And it’s key. It’s an opportunity that sometimes gets overlooked. And things that happen outside of your four walls that can be critical. And I think we saw that during the supply chain crisis, where we can be focused on what’s happening inside of our four walls, and that can be a big part of our strategy, but we can be so impacted by what happens outside that we need to be paying attention to it as part of our planning. Michelle, you manage a lot of the collaborations for your segment inside of ATS. What do you define or how do you describe an ideal partnership to somebody that asks you what you’re looking for?
ME: Well, I would say we have a few great examples within our supply chain of this. And really key partners, suppliers that are forthcoming is definitely an area that we look for. So ones that are making the recommendations to us for cost down when they see it, and whether it’s through promoting new products that are coming out or through reviewing our designs and saying, you know, this takes an extra process and you could take out cost by cutting out this process if you loosen up this tolerance. Those are key aspects for identifying a supplier. Obviously, performance is another area. So when you’re talking about high performing suppliers, you know, you’re looking at the three really major things that you measure a supplier which is on time delivery, quality and cost. So when they hit that triangle, when they’re really successful and are able to hit all three of those, that’s a key supplier that you then decide you want to focus on and zone in on and grow with. And then the collaboration is very clear from there. And once you start collaborate with your supplier and you get more ingrained in their business, they get more ingrained in your business, then that opens you up to a whole different level of what to consider in a partner and what you see in a partner. It almost becomes at some points where I’m working closer with my suppliers than some of the people internally, and in a lot of cases because, because I’m on that side of the business. And so you really get to know the people, within the organization and in a lot of cases, the people within the company that you’re buying from that tells you a lot as well. We pride ourselves at ATS about being very people focused. And when I’m looking for a partner, I’m looking for, in some cases, suppliers that that are able to focus in on that and definitely mirror our core values as well. And so having that alignment on core values ensures that you’re in the right position going forward. One of the reasons that we focus on people so much is because they are at the heart of the business, and high turnover creates its own level of risk and variability within the organization. So when you focus on a company that also has that same strategy with key people and low turnover, that will ensure that you have a more stable supplier.
SD: Oh, understood. You said that you have a couple of examples. And one of the things that we try to do here on the podcast is for those that are trying to scale their organization, it might be a small organization and maybe not quite at the level of maturity or level of mature relationships that a larger corporation might have. Do you have an example of something that they could expect out of a supplier, like what’s the best example of supplier collaboration that you’ve seen on the shop floor?
ME: Well, on the shop floor that’s interesting is one that was actually interested in, engaged and coming to your facility and seeing is seeing things, especially when things go wrong, how they react when something is not right is a very good indication. Right? So a supplier, if there’s a quality issue and then they come to your facility and see how it’s impacting your business, that’s a good indication, a good thing to look for when you’re trying to select a partner. Another good thing to look for is like I touched on earlier, one that’s very forthcoming about opportunity, right. So identifying opportunity that is beneficial to you, that is a true partnership right there. The focus on that win-win cannot be undervalued when you’re talking about a partnership. So we really need to collaborate with partners that see our shared goals. And we both focus on those shared goals and how to how to proceed going forward effectively towards those goals and building a strategy together. And how to reach those goals is key. And then also, you know, if we’re sharing our information, our data, you know, giving them that insight into our business, we’re looking for that same level of visibility within their organization. Right. So how much they’re sharing in terms of what or where they’re at in their production schedules, how open book they are, and some of their costing models, when there’s an issue and able to work with you so that you can both win business, right? That those kind of engagements, those kind of discussions really lend itself to an overall very effective partnership.
SD: And I think that speaks to companies large and small. It’s someone coming in collaborating and trying to drive win-win mutual value. So Michelle I’m going to switch gears just a little bit on you and just say that I would expect that there’s a supply chain personnel or an aspiring supply chain professional listening to the podcast today and listening to your experience and your background and the application of your expertise inside of automation. If there were somebody listening like that who wanted to get into your world and follow in your footsteps, what advice would you give them?
ME: I would lean in on what I suggested earlier. Really make sure that you’re treating your suppliers as a partner with respect and information sharing and, with that subservient attitude where it’s, you know, how can I help you be successful to support me? Or how can I help you be successful to reach this goal? If you’re going to approach a supplier with that collaborative mindset, that will only lead to success when you go into your negotiation thinking, I need to get the best out of this supplier. And whenever you’re approaching a supplier, if you’re thinking only about your company and only about your company’s needs, you’re really going to potentially leave a huge opportunity on the table. And it’s not going and going to allow for that fluid conversation in terms of what’s the shared goals? And in general, you won’t get the great results.
SD: I think that’s great advice. Michelle, we’ve talked about risk reduction a couple of times and the desire to dual source. What advice would you give to those that that can’t dual source for some reason, maybe the volumes aren’t there. Maybe it’s specialized technology. Maybe the organizational capacity isn’t there to have two suppliers and manage two partnerships. What guidance would you give to those people?
ME: Well, I think in some cases. So you leaned on a couple reasons, but really understanding the reason why you can’t dual source or more than dual source is important. if it is because of the technology and the design, then really, you should be looking internally to see if there are design changes that can be done down the road to eliminate that risk or to reduce that risk if it has to do with lower volumes, then just making sure that you have sourced a company and have them in the background and set up and some level of engagement so that you know that they can provide you the products if your current supply channel fails, if something happens, or for instance, even if they can’t support the level of demand that you grow to in the future. That being said, when you are in a single source position, then obviously, supply chain doesn’t always have control over that. there are scenarios that I’ve been in where it was a single source scenario and, definitely leaning in on that partnership becomes that much more critical to the organization. The better the partnership and collaboration in a scenario like that, the lower the risk, the more open you are with your demand, your needs, what risk factors you have, what risk factors you see that will be imperative to consider with them and make sure that they’re aware of that so that they can potentially offer up some solutions to offload that risk. There are other cases that you can do, such as, you know, providing buffers, buffer lead time, buffer inventory. Those are some scenarios where you can reduce the level of risk with the, sole source supplier. However, really the partnership is is the key aspect to navigating that.
SD: And I think it comes back to business strategy as well and incorporating your supply chain into your strategic development and managing those suppliers effectively and maybe differently. Thank you so much for joining us today, sharing your thoughts on supply chain collaboration, procurement and its role in enabling automation. I really appreciate the discussion today.
ME: Thank you so much for having me. It’s been a real honor.
SD: To those that are listening. Thank you so much for joining us once again for this episode of Enabling Automation. This actually concludes our third season, and we’re going to continue to work hard in the background to prep for additional episodes and additional content, to continue to share expertise and discussion, to drive knowledge transfer and lessons learned inside of the opportunity of scaling automation. Thank you so much for joining us. I look forward to next time.
