How to Thrive Amidst Constant Disruptions
Full transcript below:
Jill Jusko
Good afternoon and welcome to today’s IndustryWeek webcast, How to Thrive Amidst Constant Disruptions, sponsored by Arena, a PTC usiness. My name is Jill Jusko, and I’m Executive Editor with IndustryWeek.
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And with that, I’d now like to introduce today’s speakers.
Joining us today is George Lewis. George is a CAD/CAM/PLM industry veteran with over 20 years of experience at product development companies. As the VP of Corporate Strategy for Arena, George worked to provide business alignment with customers and technology partners. In his current role as VP of Product Strategy, George drives the strategies and processes to optimize the product and customer experience.
Also joining us today is Cindy Lalowski. Cindy is Senior Quality Systems Manager at AEye incorporated. Cindy has been involved in change management and quality for the past 30 years. She has used Arena PLM for the past 19 years and has benefited from its evolution into a world-class tool that has allowed her to provide excellent support to her employers. Cindy has expertise in product change control, quality management systems, and compliance requirements for regulatory bodies such as International Standards Organization and the International Automotive Task Force.
Also joining us today is Jeff Rosen. Jeff is VP of Planning at Tonal. Jeff has extensive experience working with innovative companies in personal health and fitness and clean energy to help them deliver their solutions to market. He brings broad and deep experience in driving operational scale and capability which has included creating partnerships that provide substantial competitive leverage, identification implementation of innumerable business processes and tools, and hiring and upscaling resources in support of company core competencies. In addition, he mentors young professionals who face incredible complexity as they enter and seek to advance in a dynamic workplace.
And also joining us today is Michael Keer. Michael has over 30 years of experience bringing high-tech electronic products to market. As the founder of the Product Realization Group, Mike helps guide the world’s most innovative companies to accelerate delivery of their products, from concept to full market scale. Mike shares his expertise through mentoring and lectures at universities and industry events. With that, welcome everybody, the floor is yours.
George Lewis
Great, thank you, Jill. The past two years have brought more disruptions than ever, not only with the pandemic, but with natural disasters, political unrest, part shortages, and more, and they’re continuing to this day.
This has changed the way we get work done and how product companies design and develop products. We’ve learned that disruptions are inevitable; they can come at any time. In this uncertain environment, it’s become necessary to reimagine how we communicate and collaborate in every aspect of our business.
Today, I have the pleasure of speaking with three industry veterans who not only survived during these tumultuous times, but they thrived. Let’s get their insights on how they’ve navigated their way and how companies can prepare for future events.
First question I have for the group is learning about the biggest disruption or disruptions you’ve encountered in your careers. Was it the pandemic, a natural disaster, supply chain issues, or other unforeseen events?
Mike, let’s start with you.
Michael Keer
Thank you, George. During my 30 years of industry experience, I’ve seen a lot of industry up and a lot of industry down, but I’m going to focus on four major ones that come to mind. The first is geopolitical realignment. This is the increasing tensions between the U.S. and China. And this has caused companies to consider relocating outside of China and also caused the resurgence of reshoring back to the U.S.
The other is the impact of the pandemic, which everybody is familiar with. But this has really, from my experience, caused teams to shift from much more of an in-person mode to much more leveraging cloud-based tools, such as PLM systems and ERP systems.
The others are around supply chain, and I know a lot of people have been experiencing major disruption in the supply chain. Some of that I would say is caused by the pandemic, but some of that would also be caused by the increase in demand from things like EVs, increasing electronics and health technology, 5G, IoT.
You really got the worst of both worlds, you got a pandemic causing shortages, and then you also have increased uptake in the usage of components. And this has caused, in some cases, components to be 52 weeks or greater.
So it’s really a current challenge and that’s going to go on for a little while. And then the final is resources. This is more of what I would call a long-term demographic issue, whereas there’s less skilled workers in the workforce and it’s getting harder to find and recruit talent to run businesses.
George Lewis
Yeah, I think that’s a common theme these days, especially around recruiting talent like that, Mike. Cindy, what’s the biggest disruption to AEye?
Cindy Lalowski
For us at AEye, our biggest disruption really has been in the supply chain, but that goes hand in hand with the pandemic. We experienced or saw that manufacturers had to shut down, they reduced production, and it impacted not only the industry as a whole, but for AEye, our ability to meet our schedules and forcing, in some cases, redesign.
And then for supply chain, it was due to component availability. We had to scramble and find additional exact matching sources. And in some cases, even alternates. We have been able to bank off of the substitute alternative additions in our bills of materials, and that’s proved invaluable for us to be able to move forward with our production.
George Lewis
I think that’s a pretty common theme there, Cindy. I mean, I’ve heard the same thing from our customers that they’re even designing in alternate chip sets, so they’re prepared when chip shortages begin to happen in the future.
George Lewis
How about you, Jeff? What major disruptions have you encountered?
Jeff Rosen
I always love the walk down memory lane, George. I can summarize my disruptions into three buckets, a couple have been talked about already. One is economic, just historically large cyclical disruptions, from the bubble in 2000 to the crash of 2008, and then really about till the pre-pandemic time period, is just a lot of growth and then flattening and growth and then flattening. These factors drove the classical boom-and-bust supply chain semi-cycles that we’re all used to. Michael talked about the disruptive technology pieces that changed the fundamental buying habits.
Things like EVs is one of them; the second piece he also touched upon was really about the whole digital transformation, including cloud computing, and remembering that both of those, while disruptive today, are still early on in their cycles.
So those are going to continue and even increase. The last, when it comes to pandemic that we all talk about most, is the massive end-to-end disruption in many through transportation. But I want to highlight the two other really important disruptive elements that the pandemic had on product realization and supply chain. Michael touched on one of them, the whole collaboration disruption.
You’re managing global supply chains via Zoom, not being on-site, it’s a very 2D model. Developing products and work from home silos that have … my view is really greater efficiency and effectivity of working, resolving problems in a timely matter.
And then the second one, which you haven’t hit upon yet here, is really the accuracy and velocity of information flow. The pace impact to the supply chain have just sped up so dramatically, but our ability to keep pace and understand what’s going on not only hasn’t kept up, I believe it’s actually slowed. I mean, the amount of data in the system has really grounded down and we spend so much more time today reacting, working through data, and using outdated methods. And oh, by the way, we’re doing this with employees who really are new to companies, who really haven’t been onboarded in a proper manner, because we’re all remote.
George Lewis
Thanks again everybody for sharing your experience. It’s no surprise that the pandemic and associated supply chain disruptions impacted all of you. And I’m sure it’s similar for our listeners. With these disruptions, companies have had to take steps to mitigate the risk of missing product targets or launch targets, not being able to deliver products to customers, or even worse, closing their doors.
This leads us to our next question: What did you do to overcome these disruptions both internally and externally? Jeff, let’s start with you this time.
Jeff Rosen
I always want to lead with, there was no magic bullet and I view a lot of these. I go to a lot of these webinars and I think you always want to pull the key things away, but no magic bullet, right? Let’s be honest. It’s not been easy or fast.
I think pre-pandemic, operationally things got pretty loose in the global supply chain and product realization world, years of steady growth. And I don’t think people were responding to it. And I think we all thought this was going to go away in a relatively short period of time, but so what have we done differently?
Internally, we had to move a lot faster with less information than any of us are comfortable with. Remember, I’m the planning guy. And so that’s the ability to take that information to make decisions—we’ve moved from a proliferation; we’ve had to move from a proliferation of limited point solution applications and tools to something that’s more streamlined.
It’s all about information, getting information in common data sets. So you can understand it faster to keep up with the pace of change. This may not make people happy, but we put in place more content-rich cadence of meetings, reviews, KPIs that were constantly refreshing, because things are constantly happening so quickly.
And then the last thing as it relates to internal is remembering everybody’s physical distance, always pushing for employee connection and alignment, because it doesn’t happen naturally when everybody’s far away.
Externally, on the customer side externally, much, much more customer contact to keep them in the loop on disruptions and status. And that has been painful, as you can imagine, especially even though the customers know what’s going on in the global world, it’s a very painful experience to be constantly late with things.
With suppliers, it’s more options at risk mitigation. We’ll talk more about that later on in the discussion, whatever buffer we thought we had, it was never enough. We’ve had to add more over a longer period of time. It’s not free, but it’s become business critical.
And then we went hard at just the things you can expect. Vocational diversity, partner diversity, expanding our supply chains to create risk management. And then, last, just communicating with partners much more often, much more frequently, and giving them long-term visibility, even though a lot of us don’t have that.
George Lewis
That makes a lot of sense, Jeff. Mike, what actions have you taken at PRG?
Michael Keer
Yeah, its a great summary there, Jeff, and interesting to see how, let’s say, a client deals with things versus a consulting company. As clients adapted, we as a consulting company also adapted. We were a combination of online and in-person, we did a lot of product development support so that tends to be more in-person. The impact of the pandemic on us is really shifting dramatically to online tools internally, we went from say half and half to an online finance system, CRM system, and document sign-off system.
And then really expanded the usage of tools that we were already using—things like Zoom, Google Workspace, Dropbox, et cetera. I’d say a full tilt to really all online tools with the internal team, and then externally we have expanded substantially our supply chain capabilities, especially when it comes to countries like Asia, where you can’t easily get into those countries.
So we have dedicated resources in-country that we’ve expanded, as well as increasing partnerships with companies like Arena and other PLM ERP system companies that are really controlling the data that is needed to run supply chains.
George Lewis
Thanks Mike. Cindy, how about you?
Cindy Lalowski
For us at AEye, I think our biggest thing was with the supply chain disruptions. We were lucky to already have our PLM system integrated with SiliconExpert, which is, it proved invaluable. It allowed us the visibility when we had component shortages to give us the opportunity to add additional sourcing, again, when it was available because we still continue to see the 55-week and even up to 99-week lead times on some components.
It’s still impacting us, but we were able again to add the substitutes and using SiliconExpert. That was basically internally. We did have to switch to using Zoom for communication or Teams, whatever communication tools that we had. And it worked out really well for us internally.
Externally, we were able to reach out to our suppliers and our contract manufacturers both here in the states, as well as abroad. And we were able to bank off of their resources. So that helped us a great deal as well.
George Lewis
Excellent. Y’all shared some great strategies to help you overcome disruptions. Cloud solutions certainly played a role in your success in your organizations and all embraced a digital transformation.
It’s now been two years since we had to jump into action and change how we get products developed. How has your perspective changed since the initial work from home mandates were put in place versus today?
Cindy, let’s start with you this time.
Cindy Lalowski
When we were all sent home, we thought, oh, two weeks we’ll be back to work. Well, we all know that didn’t happen. We didn’t know if we were going to have a company to go back to, and I believe that there are some companies that didn’t make it, because they weren’t prepared.
We were actually able to release our first prototype, pre-production product during the shutdown. I think that says a lot for actually how prepared we were with our cloud-based tools. Everyone was engaged, we already had those tools in place. And so pretty much for AEye, I think it was smooth sailing. The only big change for us, again, was integrating to Zoom or Teams for our communication protocols.
And once everyone got used to that, we were all really well engaged.
George Lewis
Yeah, that’s true, Cindy. I mean, I think that was Microsoft Teams for us. I think most of us expected a much faster return to office and saw this as temporary. Like you said, Cindy. Mike, how has your perspective changed?
Michael Keer
Yeah, I think it was a good perspective and I’ll follow the thread of really perspective has changed to leveraging online tools, to run product development, and to run businesses. We are much more adept at working with tools like PLM systems, ERP systems, online project management systems to support our clients’ product development and supply chain needs via remote support.
So a lot of our activities really used to be sitting embedded in Teams, sitting in-person. That’s really all shifted. Not only does it mean we moved a little bit away from Silicon Valley local, but we now have clients really all over the world that we can support without much trouble.
The perspective has changed from the product development process, as previous to the pandemic thinking it really needed to be an in-person activity, to at this point, it can really be a combination of remote and in-person with a heavy tilt on the remote support. And that was a surprise to me.
George Lewis
That’s fascinating, Mike, on how product development has changed. Jeff, do you want to add to this?
Jeff Rosen
Sure, consistent themes. We just had an executive off-site where we discussed this at length, the future of work and its evolutions. And what was clear is, and Cindy, if this question was asked to us three months after this thing started, nine months after, 15 months after, and 20 months after, we would’ve all, I know I would’ve had a very different answer at each one of those time periods.
So here’s where we’re at. What’s the answer in where we’re at today? I see a sustained hybrid approach. I’m going to take a bit more of a people approach here. We’re not going back, there’s this question, are we going back? But we’re not going to go back, but we’re also going to not stay in the static work from home environment. And so our product development cycles are going to need to be able to manage a proper mix of all work styles and locations.
Companies have hired people everywhere, that’s where things are right now, and we’ve got to adapt to that. We’re actually going back and putting more people in-region versus relying heavier on travel, just because of the disruptive nature of that.
We’ve really focused now. Staffing people who really learn to adapt effectively in this hybrid approach, it’s not for everybody, especially in product development, product realization, and supply chain. And some things we can no longer stay on the fence with. Before this, you kind of got away with marginal tool sets and poor master data management, you kind of made it work, but in this environment, it’s just not going to work anymore.
And so I’ll leave it with your building infrastructure for the long term now and not just making it to the next cycle, because we know … we don’t actually know what that next cycle is and it will be very different than what we think it is.
George Lewis
That’s some great dialogue. We’ve discussed what you’ve all faced in terms of disruptions to your product work and how you dealt with them at the time and how perspectives have changed. I’m curious to hear where you think we’re headed. Cindy, you want to take the lead?
Cindy Lalowski
Really, from what we have and continue to experience, I think we’ll continue to see the worldwide component shortages and long, if not longer, lead times as we see now, 52-to-99-week lead times.
With the pandemic though, I feel we will continue to have somewhat of a disruption in the workplace as we continue to settle into the blended work environment. And that is with people both in the office and working remotely. For us at AEye though, it is the blended work environ seems to be working out really well because we have a great team and we do communicate very well.
George Lewis
That’s interesting. It’s a giant return to office experiment to figure out how we’re all going to change the way we work.
Mike, any thoughts to add here?
Michael Keer
Well, I’d focus a little bit on the people side of it. I mean, really I’m continually amazed at the adaptivity of both people and companies to respond to changes in the world. For example, if you had asked me two years ago if I thought we’d still be wearing masks and still be working from home today, I think I probably would have laughed at you. But within a few weeks, I mean, my experiences, people were on Zoom, they were still getting things done, and they adapted quite rapidly and quite well at most companies, right?
And a few had challenges and those are the ones that struggled, but in terms of where we’re headed, I see that it seems like disruptions are going to continue. And I would say potentially even increase in frequency. I think you look at things like climate change, climate change causes personnel disruption, causes geopolitical instability. I mean, all these things in some ways relate together and then you’ve got shortages of materials and labor. I think these increased challenges are going to be an opportunity for some companies to adapt, change, thrive. And other companies that are a little bit more behind are going to have challenges.
George Lewis
Uncertain times are ahead for sure. And Jeff, where do you think we’re headed?
Jeff Rosen
I’ll echo some of that. And this is, again, the planning guy’s lens on all of this. So it’s a bit of always the glass half empty look of things, because that’s how we have to look at it. But listen, boom-and-bust cycles really are the nature of the industry. And I don’t see that changing. And we talked about that over the last 20 years we’ve seen these. The cycles though, however, I think what we’ve seen and what we can expect will be more pronounced, longer, and more disruptive.
That’s my sense. The pandemic really has highlighted the fragility of the global supply chain that we all live and work in at a level that we never even thought possible. And of course, as Mike stated, the climate change layered on top of that just adds an additional huge amount of complexity and challenge.
The evolution to a potentially more stable, global infrastructure, whatever that might look like, is going to take a generation. And that’s how big and complicated it is. Until then, and what’s been said here is, it’s embracing change and always being on the lookout to manage risk.
George Lewis
Thanks for sharing your thoughts on this, Jeff. I think we all agree that companies need to be ready for continued disruptions. And for our final question, I’d like to ask what advice you have for the listeners to best prepare for unforeseen events. What’s your strategy for manufacturers to thrive despite constant disruptions? Mike, let’s have you kick this one off. What advice do you have for manufacturers?
Michael Keer
For manufacturers, and I would just say people in general, is to embrace change and be flexible and be adaptive, I think is the nutshell of all this. I think by doing that, you can actually potentially take advantage of these disruptions and improve how you operate as a person and improve how your business operates.
I think a key piece of that is leveraging core online tools. You think about systems like PLM systems and ERP systems and tools that really integrate a business together. And I think those tools are going to be more and more important as we move towards more disruption moving forward. To summarize, I think people that embrace change can thrive and adapt and come out the better. And I think we all need to be ready for the next disruptive event, and we potentially could be in the middle of that even now as we speak.
George Lewis
Good advice. Cindy, how about you?
Cindy Lalowski
My advice is to have these cloud-based tools in place to be able to access those tools—also to have robust processes in place to have the employees trained to use those tools. And I want to say that since the pandemic hit, our company has tripled in size and having the processes and being able to train those employees has proved invaluable for us. It’s the only way that we were able to thrive in this environment during the pandemic. Currently, most of our workforce is still remote.
When the pandemic hit, we did have a few people. Of course, you have to have the essential people in the office, but we were able to really work together on this being hybrid. And again, I think that’s something that we’re all going to continue to see.
George Lewis
I think that’s good advice, Cindy. Jeff, what tips do you have to share?
Jeff Rosen
Similar to Cindy and similar experience. We’ve gone through hyper growth over the last couple of years. So you can imagine that there’s some definite similarities in what we’ve experienced and what we would project that we need.
Obviously, invest in your tools and processes. Cindy, you talked about this other piece as well, you got to put rigor into everything. There’s just not a lot of room for error when you get into these types of cycles.
In my world of planning, it is scenario planning constantly, constantly looking at alternatives things that can happen, looking at your data, running it, looking at alternatives, looking at things that might have different scenario outputs.
We’ve talked about this common word, build flexibility. And I’d say, wherever you can afford it, and wherever you perhaps cannot, seriously think and assess and determine whether you actually can afford not to.
Foundational elements that were never in place, focus on them. We’ve talked about this, I talked about this before. Master data management, a common source of truth, connected interfaces, less data latency, in a period of time where you just need to have information coming at you at very uncertain times. Otherwise chaos reigns, and without these solutions and approaches and we’re migrating out of, it’s things like Google Sheets. And I will tell you it’s a great product, but it’s not scalable for what we do, and that’s not really where we want to be.
George Lewis
Look, thank you everybody for a great discussion and for sharing your experiences. Three words really resonated with me throughout the conversation versus flexibility, right? The ability of the business to be flexible to whatever might be changing around it. Cloud-based solutions enable that flexibility and then business processes, which are repeatable. You can train employees and you have tools that will support those processes.
All will help align with the digital transformations that are necessary today. I hope our listeners gained useful information to consider for their organizations.
So we’re going to answer questions now. We encourage you to stay for this dialogue. Jill, I’ll hand it back over to you.
(Q&A)
Jill Jusko
Okay, thank you very much everybody for a great presentation. If I could just make a comment or two in that, at IndustryWeek, obviously we write about manufacturing all the time. That’s what we’re about. And boy, that supply chain, I would echo what everybody is saying that supply chain is a constant source of challenge for everybody that we are talking to. And quite frankly, if you had mentioned before the pandemic that the supply chain could be disrupted so badly and seemingly, I mean, to me, so easily, I would’ve laughed about it.
Somebody already mentioned the fragility, but comes across as much more fragile than I would have expected it to be. And then I just want to make one more other comment I have to add though, boy, oh boy, I read and heard about challenge getting the creative juices going. I have really been amazed and awed at the ways companies have thought differently and done things differently, in really unprecedented circumstances to get their jobs done.
Really inspiring stories have come out of it and are still coming out of it. And I think that’s people relying on their workforce- everybody from the executive level down to the shop floor people, to get things done. And I will mention that technology has been a real lifesaver and a whole lot of ways to make that happen. It’s been very interesting and we are going to move into the questions. We have had some submitted already, so we will jump in, but I also want to remind our audience, please take a moment to complete the feedback form that will appear on your screen at the end of the webinar.
We do appreciate your feedback greatly. And with that, let me move to our first question and let’s see.
The question is, how can a small company with fewer than 50 employees with limited technology address the supply chain disruption?
George Lewis
That’s a really good question. Mike, I’d be curious to get your take on that. I know PRG talks to many organizations of that size.
Michael Keer
We do work for a lot of smaller companies. I mean, my recommendation is to understand your supply chain strategy. Obviously, big companies have procurement leverage, right? They have better access to direct leads into companies, that kind of thing. As a smaller company, your best bet is to find strategically designed parts that are easily available, if possible, and have backup designs with other parts that are easily available.
So that really goes down to, I would say, design strategy. The other thing I recommend for smaller companies is, really, if the product is an integrated hardware, software product, be very strategic with how you design the hardware platform, use as much off-the-shelf parts as possible, and as much parts that are available.
And then if it’s possible to have a solid hardware platform, then you can do more with flexibility and changes on the software side. Companies that do that, especially smaller companies, tend to be more flexible and agile instead of companies that throw everything into the hardware bucket and then have to change it every so often.
So that’d be my recommendation.
Jeff Rosen
I can add one more thing if you don’t mind. I would just say this, especially in smaller companies with limited resources, you just have to be very careful and focus on things. I mean, you can’t take on 100 initiatives and 50 different things that young companies want to do. Their eyes are always so big. And my only suggestion is really focus on the things that matter and the things that are going to move the needle and not get distracted. I mean, it seems obvious, but clarity of purpose and of effort is absolutely critical when you don’t have a lot of resources.
Michael Keer
And that would tie into minimum viable, probably didn’t mention that, but I think understanding what is a minimum viable product and making sure you’re not over-designing is also important.
Jeff Rosen
Yep.
Cindy Lalowski
Can I add something here? I think too, that if you’re working with a supplier or a contract manufacturer to bank off of resources as well, that has really helped us a great deal.
George Lewis
Makes sense. Do you have more questions?
Jill Jusko
Yes, we have another supply chain-themed question for you. The question is, has supply chain issues encouraged new sourcing of domestic suppliers, assuming domestic being higher priced, how did you address margin concerns?
George Lewis
That’s an interesting question. Jeff, has Tonal experienced that at all?
Jeff Rosen
Oh yeah, and so first answer is yes. I will say this, it’s not just domestic, it’s obviously within let’s just say the broader continental approach, right? It’s just getting things closer. Some of it’s domestically located, some of it’s close to domestic. The specific answer to your question about how do you address margin concerns is you have to have that total cost view.
Everybody hears this, they get tired of hearing about this, but fundamentally, as an example, is if you have eight or nine or 10 weeks of product on the water, because it’s taking so long to move through the supply chain. While that’s not your PO price, I can tell you that’s expensive money, it’s expensive time, it’s expensive assets. And so the way that we’ve had to look at this is we’ve had to step back from just that pure view of gross margin, purchase price, sale price thing, and really go at where your assets are deployed and really understand that is a true cost.
What’s the cost of your customers on unpredictability that you’re seeing? We’ve all heard, oh, total cost, maybe it’s an overused term, but in this case it’s entirely applicable. You just cannot discard all of those elements of impact that you would see—they’re absolutely appropriate when you look at these types of changes from a closer-to-home strategy of sourcing than a farther away.
George Lewis
Cindy, you look like you have something to add.
Cindy Lalowski
Hey, I just want to say that I’ve heard a lot of horror stories about counterfeit parts out there. So you’ve got to be really careful about where you’re sourcing your components from. And for us, it’s been margin concerns. Yes, but it’s also weighing the balance between can we ship product? And so we’ve paid the higher prices when we’ve had to.
Our supply chain has been very strategic in working to gain product out there so that we can meet our schedules.
Michael Keer
My experience has been it really is a strategic question, as Jeff mentioned, you got to look at the total cost and some parts today still make sense to be built overseas. And I would say the skills are tilting more when you to talk about supply chain risk, the cost of transportation, et cetera. Some of those needles are tilting back to U.S.
The other model I would throw out that I’ve seen in the recent past come up is a little bit of a hybrid model, where people are buying components, more the subassemblies and the components offshore.
And then they’re doing final configuration assembly in the U.S. And that model I think is gaining traction. And if it’s done right, it can be a little bit the best of both worlds, where you’re getting leverage component pricing, but you’re still controlling the final build assembly logistical piece in the U.S.
George Lewis
The next question.
Jill Jusko
We have, our next question is, several cloud solutions were mentioned throughout the discussion. What are the quote, “must-have solutions,” for product companies should adopt to be able to deal with today’s environment, especially with supply chain issues?
George Lewis
That’s an interesting question. It probably has changed over the course of the last couple years here. Cindy, I’m sure you have some thoughts to add here.
Cindy Lalowski
PLM for sure, BOM management, change management, we use Arena at AEye, and then also integration with the SiliconExpert has again, proved invaluable for us with sourcing components.
It’s been a great tool; ERP is another one. And we have our PLM system integrated with our ERP system. And all of these with our PLM system, we’re able to share our bills and materials and our sourcing with our contract manufacturers and our suppliers.
If they see something where there’s a shortage, they can notify us right away and we can work on that.
Jeff Rosen
I’ll jump in on top of that as well. And I know it’ll feel like a plug in this, but it’s not. The reality of it is, I come back to master data control, excuse me, in this environment is absolutely essential.
And it just becomes more evidence. And so, yes, obviously when you talk about PLM solutions, yes, that’s why we’re here and that’s what we’re talking about, but it’s vital and ERP as well. And the reason is, we all talk about it’s been used forever, but when you have a supply chain that used to be this long, that is now this long, that’s the issue. And knowing where all your inventory is at all those points, it seems obvious, but things have stretched out so much in time and location that it’s to understand where your product is at any given time.
And again, to be able to plan, that’s my lens, is you have to know where those things are. And so you have to be using these tools. Otherwise, you’re a mystery, you don’t know where things are.
Michael Keer
And my addition would be, I totally echo the core tools. I’m not going to say that, but I would say something that I have seen a lot of companies sometimes underestimate is, when you’re talking about really going all online, you’ve got data starting at engineering development.
So you’ve got engineering design tools, and then you’ve got the middle-ground tools like PLM, and then you’ve got European. Then you’ve got MES on the manufacturing side. But I think a lot of companies underestimate the value of integrating data and systems. What is the master control of a piece of data, is it controlled in the engineering system? Is it controlled in a PLM? Is it control in ERP and then how do you, how do you electronically manage and control that data from end to end to make sure that you’re optimizing your business. Otherwise, many companies I’ve seen will enter the same data three or four times, they’ll have data entry errors, or they’ll have a real mess. It’s not only the core tools; I would say how all those tools integrate together can be really valuable for companies.
Jill Jusko
We have a related question here and it goes, how important is it to transition from manual to digital processes?
George Lewis
Mike, you were speaking, you want to take that one?
Michael Keer
Very important, I don’t know where to go with that. And what I’ve seen through the pandemic is I don’t really know of any customers or partners that really haven’t made that transition through the pandemic.
But I think it’s absolutely critical for business to let’s say succeed and thrive with the uncertainties and we’ve already talked about a lot of points, Jeff mentioned how you control it. And Cindy mentioned the toolset. I would just say very important. I think companies that don’t embrace those kinds of tools are not going to be able to be successful and companies that embrace them and not only embrace them, but leverage them in the best way that they can, are going to thrive.
Jeff Rosen
Cindy, you want to jump in, I don’t want to jump in on top of you.
Cindy Lalowski
I can take it. I think it’s very important to go to a digital process. If you’re all manual, you tend to lose things, you have data entry errors, and those can be very costly. It’s kind of weighing the cost of doing something manually, as opposed to the digital process, being able to share, and then cloud-based and working remote. I think it’s extremely important.
Jeff Rosen
And so the last piece of that accuracy thing is just time is not your friend in this environment, right? And so there’s the accuracy piece, and the other piece is just the time that it takes, and the latency of information is not your friend when things are moving this quickly. And so you just can’t manage that in a manual fashion. You just can’t keep up with it.
George Lewis
Well, I’d also add that. I think you need to rethink the manual process as you make it digital because some of the old manual processes are obsolete when you have a better tool to do it.
Jill Jusko
Next question. Do you have any thoughts on unique disaster recovery solutions? A fire, a theft, et cetera, would be terrible under normal circumstances. It’s worse now that it takes 52 to 99 weeks to reacquire the lost materials.
George Lewis
That’s a good question. I’m certainly biased working for a cloud native provider, but certainly cloud native solutions generally have backup systems in place to help in a situation like that. But Mike, you have a more neutral perspective, what’s your take on that?
Michael Keer
Well, I think when it comes to software you hit it, but when it comes to hardware, I would say that’s a conundrum. I mean, the challenge is, and maybe break this into two categories. If you’re a large company and you have financial clout, what I’ve seen companies do is they have backup vendors and they duplicate supply and they buy buffer stock, right? I mean, those are all tools that large companies have the pocket book to support. If you’re a small company it’s just not as easy, you don’t have the money. It’s very impractical to have dual supply when you don’t have a lot of volume going, you’re not going to be able to support that.
And you probably don’t have deep pockets to buy a bunch of buffer stocks. I think it goes back to manage what’s going into the product and managing the design and the MVP and making sure you’re minimizing your part count. And the parts that are going into the product are available as much as possible in the open market, because once you get into single source, sole source, you’re competing against Cisco or Apple, against buying parts, it gets very challenging.
Jeff Rosen
A little, not much to add, the answer is like the small company or large company distinction. Mike is spot on. And it would be easy to say if you’re a smaller company here’s all the things you need to do, multiple sourcing, buy buffer stock, but it’s just not a reality.
And then I’d also, I mean, it’s not a happy answer, but I’d also love to be able to say, well, identify what your high-risk parts are, and maybe just focus on those, that’s always a good thing. But what we always know in this environment is it’s the things that you don’t expect that bite. That’s a problem. I’d like to be able to say, well, you’ve identified all the high-risk stuff. Those are the things that could go wrong. Just buy those. But we all know that type of certainty is not the case. It’s a really great question, and it’s not really an easy answer if you have limited resources.
Cindy Lalowski
I don’t really have anything to add.
Jeff Rosen
That’s a tough question.
Michael Keer
Yeah, it’s a conundrum, it’s a conundrum right now.
Jill Jusko
We have a completely different type of question, and I’ll be curious to hear your responses. Are companies considering work reduction to compensate for longer supply chain lead times?
George Lewis
Interesting question, anybody want to jump in on that one?
Jeff Rosen
Work reduction, meaning, I’m actually just trying to make sure I understand the question appropriately?
Jill Jusko
Well, I think they’re talking about reducing the work week since the supply chain lead times are longer.
Michael Keer
I mean, I can give one perspective. I mean, one of my clients just, I won’t say a name, but basically they had intended to start volume production in February and they can’t start volume production until November.
And they’re a relatively early funded company, they don’t have deep pockets. I don’t think they’re going to shorten work week, but they’re reducing headcount, they’re basically positioning the company to survive until they can get parts so they can build and ship.
And I think when you talk about smaller companies that are lean, that’s going to be a common theme, is how do they pay back staff and figure out how to keep the business solvent until they can get parts to build and ship.
Yeah, it’s a tough one.
Cindy Lalowski
I think for AEye, our model’s a little different that we don’t do full-blown production. We buy subassemblies and assemblies from our suppliers. And then for our prototypes, we build those in-house. But when we had like a little bit of a lull, let’s say, because we’re waiting for something to come in, we’ve been able to keep our employees busy if not doing what was planned, actually working on something else. But I can see where that question would come into play here, but we haven’t had to really deal with that.
Jeff Rosen
Just to close up, I think we’re looking at different creativities around scheduling and times, but really unrelated to supply chain, really just more about personal health and well-being. And this is a very tough environment that everybody is under it. I think where we’re looking at, it is more in the context of doing right by our employees, creating flexibility around that, reducing potentials for burnout, and things like that.
I think it’s much more focused on that than it is, I’ll say anything related to the topic we’ve been discussing here about supply chain, supply chain uncertainty.
Jill Jusko
We’re going to go with one final question and it is, I’m an educator and futurist. What are your thoughts and how could your experiences be applied to teaching and learning in public schools, if your world is the new normal, how could we prepare young people to function and thrive in this new reality?
George Lewis
That’s a great question. Jeff, you’ve got some thoughts, I can tell.
Jeff Rosen
I do, I spent a lot of time with folks just through their early years earlier in their professional career. I don’t want to be prescriptive, because there’s no right way or wrong way, and I don’t want it to come across, but it is important to be teaching the notion of the growth mindset earlier on, and to be teaching adaptability. And so really, what does that mean? And everybody sees that in different ways, but it’s showing people complexities and having people work through complex problems together earlier on, not educating in silos.
I’m not an educator, I might get a lot of negative feedback on that, but it really is about introducing some of these concepts much earlier on than you have. And understanding that adaptability and flexibility and ability to work in groups. And just thinking about growth and thinking about change are just incorporated and brought out in curriculums earlier on and just could be through schools. It could be through individual mentoring, talking to people, connecting with people, just breaking down some of those barriers early on.
And it helps because this is where we’re headed, and again, I don’t want to make value judgements on a right way or wrong way, but to answer this specific question, I’m very passionate about that, I think that’s where you have to start.
Michael Keer
I’ll just follow that. My daughter was dating a data scientist from Stanford, and his comment was, are you above the AI line or below the AI line?
I think there is going to be a major shift and there are going to be a lot of jobs, there are going to be automated because of AI, right? I mean, that’s the reality. As an educator, I would say if there’s a way to educate people to be relevant, understanding that AI is going to take over a lot of the basic conundrum, the day-to-day activities. And then as Jeff mentioned, how do you add value in ways that are understanding complexity? This is where maybe an English major 10 years ago, you laugh, now it’s how do you deal with content and make it more relevant, right?
That kind of a background actually may be more relevant as we go forward, because people care about communication content, that kind of thing, but the high-level thought would be though, you do have a lot of stuff that’s going to go away, so how do you focus education and keep people and give people skills that are going to be relevant as we go forward—I’ll leave it at that.
Cindy Lalowski
For us at AEye, every year, even during the pandemic, we’ve employed interns and some of those interns have been remote and it’s worked out really well for them. However, I believe that we should start—and these are interns that are in college—I believe we need to start in high school so that we can prepare students for what the future holds. I don’t think that we’re doing a great job in this country in preparing the kids that are in high school to plan for what they want to do when they do go to college. I think that needs to be addressed, but I really like our internship program at AEye. I think it’s been invaluable. And I must say I haven’t experienced one of the engineering students that we’ve had as an intern, they have had no training at all in documentation. That’s been eye-opening to me.
George Lewis
That one particularly pains me, Cindy, and that cloud-based offering of PLM solutions, I think we can potentially get those in the hands of universities earlier on, not suggesting it should go back to high school or anything like that, but other cloud-based CAD technologies like PTC’s OnShape. That’s a technology that educators can use. And I think it should be put in the hands of users and the youth to play around with these things and even provide feedback on what should the next generation look like. I think that’s an exciting area to think about.
Jill Jusko
That was a great question to wrap up on and an excellent presentation, everybody. I’d like to thank our speakers, George, Cindy, Jeff, and Michael. I would like to thank our sponsor, Arena, a PTC Business. And I would most of all like to thank our audience for your kind attention during this presentation, as well as your great questions. And with that, on behalf of IndustryWeek, have a great productive remainder of your day.