Publisher’s Letter
W
e’ve had stories in Industry Today dating back to 2016 that are either about, or in some way refer to, the term “digital transformation.” In this, our inaugural 2021 issue, we feature a number of articles that help define what exactly digital transformation means for manufacturers. One example is three use cases of digital transformation solutions presented in “Workflow Apps Increase Safety for Frontline Workers.” Author David Brebner describes how touchless workflow applications greatly improve the efficiency and safety of frontline operations. Digital agents provide intuitive, hands-free visual information that, Brebner says, “accelerate the completion of a company’s digital transformation journey by tackling the last-mile problem of enabling frontline workers.” The pandemic has been a significant driver of digital adoption, a wake up call to manufacturers of the need to move faster to achieve greater agility and higher efficiency. This can be achieved through a digital-first business model to keep up with demand and maximize profitability. For more details, see “Enhancing Factories Through Digital-First Manufacturing.” Glenn Leask and Geoff Schreiner write about how digital strategies and platforms are essential to continuous improvement. They outline 10 key assessments to evaluate a company’s readiness to effectively adopt digitalbased production systems in “Continuous improvement: The Lever of Digital operations.” Last but not least, Seth Siegel explains how manufacturers can avoid three common mistakes that lead to derailing digital transformation initiatives. These are: 1) Treating business process automation as an IT project, 2) Failing to create automation centers of excellence and 3) Establishing metrics the c-suite doesn’t care about. The full story is in “Business Process Automation: Make It Mission Critical.” What is mission critical for us here at Industry Today is to provide you with comprehensive coverage about digital transformation as well as other topics of interest to manufacturing and industry. The way we now do this is an example of our own digital transformation, replacing our print with this digital format. And, of course, our daily and weekly coverage at industrytoday.com. We hope you find what you learn from the article in this issue transformative.
www.industrytoday.com spoeton@industrytoday.com
Publisher: Susan G. Poeton Project Managers: Jonathan Listig Production: Melissa S. Burge Art Director: Seema Mazhar Contributing Designers: Jorge Leandro Rodrigues Profile Editor: David Soyka
164 Market Street, Suite 176, Charleston, SC 29401 Ph. 973.218.0310
Industry Today is published quarterly by Positive Publications LLC, 164 Market Street, Suite 176, Charleston, SC 29401. Copyright © Industry Today 2021. All rights reserved. No part of this publication may be reproduced in any form or for any purpose without prior written consent from the publisher and payment of the agreed fee. ISSN # 1521-8058
INDUSTRY TODAY 1
Table of
Contents 10 DIGITAL OPERATIONS
04 ENHANCING FACTORIES
22 BUSINESS PROCESS AUTOMATION
16 WORKFLOW APPS
2 INDUSTRY TODAY
s
VOLUME 24 • ISSUE 1
28 “AMERICA’S SUPPLY CHAINS” EXECUTIVE ORDER
34 “GEORGIA MADE”
40 WORKPLACE SAFETY PROTOCOLS
46 SUPPLY CHAIN STRATEGIES
52 PREVENTING PPE SHORTAGES
58 SUPPLY CHAINS POST PANDEMIC INDUSTRY TODAY 3
DIGITAL-FIRST BUSINESS MODELS
ENHANCING FACT DIGITAL-FIRST MA
In the wake of the pandemic, manufacturers must embrace a digital-first model to keep up with demand and maximize profitability. 4 INDUSTRY TODAY
DIGITAL-FIRST BUSINESS MODELS
TORIES THROUGH ANUFACTURING
T
he pandemic has acted as yet another wake up call for manufacturing, making evident that this industry cannot continue to operate on the systems and methods in place prior to the COVID-19
crisis. Manufacturing must move even further and faster towards the aim of greater agility and higher efficiency. Adoption of a digital-first business model will help manufacturing achieve those aims and will ready the industry for a INDUSTRY TODAY 5
DIGITAL-FIRST BUSINESS MODELS
post-COVID era where customer and stakeholder expectations will continue to become more demanding even in the face of increased socio-economic headwinds. Factories are increasingly connected, as machines talk to one another and collaborate with humans. Automation and autonomy reach new milestones, as robots and machines become more independent, mobile and increasingly take on more humanistic attributes. As manufacturing embraces the digital age, factories are as much the purveyors of material goods as they are producers, consumers, and even sellers of data and information. 6 INDUSTRY TODAY
Emerging technology drives performance and agility within manufacturing operations to better address changes in customer demands. New technologies have changed the face of manufacturing in numerous ways — for example, how blockchain traceability platforms have enabled food safety throughout the supply chain, or how warehouses leverage IoT to track assets throughout facilities to improve response times and optimize labor and capital usage. In this changing landscape, factories that don’t innovate quickly enough – or at all – will be left behind. Manufacturers must now cross a new thresh-
DIGITAL-FIRST BUSINESS MODELS
old as they seek innovative ways to use emerging technologies to make their work flows and supply chains smarter, faster and more efficient. Hundreds if not thousands of digital and technological innovations have been introduced to manufacturing in the last decade alone. But digitization and automation are solutions, not strategies – manufacturers must anchor their embrace of these innovations to audacious and differentiating strategic objectives: near perfect on time delivery, double-digit labor or asset productivity rates, or a zero-defect customer experience. With clarity on the outcomes sought, the right innovation can be selected, integrated, and applied to new ways of working that produce higher margins, better quality, and higher returns on the manufacturing asset. Some ways in which leading companies have navigated the journey from traditional manufacturing to digitally transformed smart factory operations include:
Cloud Computing Environments
Use cloud as the foundational technology to enable scale and adoption of built-in data tools. Manufacturing is highly distributed with plants all over the world, dependent on a constantly changing global supply chain. The combination of these evolving aspects creates the demand for a dynamic environment that enables manufacturers to scale quickly. With cloud as an enabler, manufacturers can achieve the benefits of globally scaled smart factory solutions, in
real-time, all the time. Smart factory tools like PwC’s Factory Intelligence built on Microsoft Azure organize manufacturers’ data from hundreds of source applications and devices, then translate that data into value through advanced analytics, persona-centric visualizations, and automated workflows. Cloud-based digital assets hasten the deployment of smart factory solutions while providing the necessary framework for accelerated scale-to-value as manufacturers adopt new ways of working. Essentially, cloud solutions enable more data, more solutions, better and personalized experience, and more pull for additional innovation from production stakeholders. A real-world example of a company that leveraged PwC’s Factory Intelligence is a $20 billion power tools manufacturer seeking to achieve unit cost advantage or parity with any competitor, anywhere in the world. After analyzing massive amounts of production data in a cloud computing environment, the company detected and isolated the root causes of every INDUSTRY TODAY 7
DIGITAL-FIRST BUSINESS MODELS
last minute of unproductive labor time on their lines. It then translated this analysis into focused, actionable improvements guided by an AI-based recommendation engine that is constantly learning from similar analyses across all of their assembly plants. The competitive-localization strategy is becoming fulfilled, ironically, because the client’s Cloud-based Smart Factory Solution is connected at scale around the world.
Cross-Plant Integration
Focus on horizontal, cross-plant integration to leverage the benefits of the technology. A horizontal, cross-plant integration with easy Pictured: Steve Pillsbury, Digital Operations Leader scalability can make manufacturers indepen- at PwC; dent from their local infrastructure. The cre- below: David Petrucci, Senior Director, ation of a cloud-based platform that connects Manufacturing Strategy Lead at Microsoft. and integrates a smart factory’s plants allows updates and functionalities to be rolled out seamlessly and automatically. As a result, a manufacturer can simultaneously deploy a suite of solutions, not just singular “applications”. For example, one plant can be focused on quality solutions while another in a different hemisphere is focused on safety solutions. Both can benefit from each other’s experiences and solutions, and the net result is a faster, broader set of value across the global network. In another example, a European automotive supplier used a cloud-based platform on both a local and global level to gain full transparency into their real-time data. They implemented an activity feed to send alerts to monitor and steer production processes efficiently. Through this, 8 INDUSTRY TODAY
DIGITAL-FIRST BUSINESS MODELS
they are able to receive spot-on insights and recommendations to solve problems immediately or even before they arise. The result was fully automated production transparency and the ability to better react to production performance. Further impacts include improved planning efficiency and effectiveness, as well as a better understanding of end-to-end performance through globally integrated analytics that cover dozens of factory use-cases.
Optimizing Performance
Embrace AI to improve efficiencies and effectiveness. Businesses turn to AI for adaptability and efficiency. The technology promises augmented capabilities and an upper hand in competitive markets. In the manufacturing space specifically, AI can improve a multitude of aspects, including; operational decision-making, planning efficiencies and effectiveness, maintenance, material flow, and production performance. For example, a manufacturing company had a high potential in improving overall equipment effectiveness with only limited condition monitoring and no predictive maintenance capabilities. Many processes were paper based and required labor intensive work. Factory Intelligence provided the client with an AI-based prescriptive capability to improve asset reliability and optimize the maintenance procedures and spare parts. Machine reliability can be
assessed on an aggregated and plant specific level, with intelligent agents providing real-time support and optimized workflows to address pending risks. The value created can be seen in real-time health monitoring and predictions of machine failures, paperless maintenance and an improved MRO inventory.
Digital Transformation
Digital transformation prioritization is key to get the biggest return from digital investments. To successfully transform factories into smart factories, business and digital expertise need to go hand in hand. Manufacturing leaders must first focus on creating transparency of production performance and traceability of production flows. Leaders must then foster a new way of work by deploying human-centric digital and technical solutions into standard work, rather than outright try to replace human standard work. Smart factories not only operate quickly and reliably, but they also offer a high degree of adaptability for rapid changes in customer markets, products, and the supply chain. This leads to increased business velocity and stronger growth margins, delivered by more engaged employees. Factories are considered smart when they are synchronized to meet the demands of their customers, doing so quickly, reliably and with the optimal amount of capital and labor. INDUSTRY TODAY 9
DIGITAL TRANSFORMATION
A holistic continuous improvement approach is key to optimize digital capability. 10 INDUSTRY TODAY
DIGITAL TRANSFORMATION
CONTINUOUS IMPROVEMENT: THE LEVER OF DIGITAL OPERATIONS
F
or many decades, world-class and high-performing organizations have used Lean methods, underpinned with a philosophy of continuous improvement (CI), to drive efficiencies and sustained ROI.
Digital is changing everything
But traditional corporate production systems do not fully capitalize on the innovation potential, collaboration scope, and end-to-end capabilities of digital technologies and platforms. Studies INDUSTRY TODAY 11
DIGITAL TRANSFORMATION
by global research firm Gartner conclude that digitized operations, as part of a modern manufacturing execution system (MES), can leverage gains of 40%-50% across the value chain. “No manufacturing company can afford to postpone digital transformation,” says Glenn Leask, President and CEO of Competitive Capabilities International (CCi). Indeed, this next generation of digital-based production systems – or Digital Operating Systems (DOS) – has already taken root in 12 INDUSTRY TODAY
many forward-thinking manufacturing enterprises. But if digital systems enable elevated standards of end-to-end value chain agility and capability, the basics remain crucial. Think of it like this: Digital is a window to a world of new potential for manufacturing. But the lever to open the window, and to secure it in the face of headwinds, is the disciplined methods and practices of Lean and continuous improvement. “We call this orchestration,” says Leask. “CI
DIGITAL TRANSFORMATION
“That’s where integrative improvement comes in. Integrative improvement integrates all functions and processes across the value chain to embed operational excellence in the very fibre of the business,” Leask points out.
Integrative improvement transitions and transforms
Integrative improvement is the progression of continuous improvement to move in step with the digital evolution of corporate production systems. It systemizes monitoring and measurement, and serves as a meta-process of all the organization’s operational processes. With a proven recent record of generating productivity gains and savings across the value chain, integrative improvement guides the digital transformation to unlock new levels of performance. And – crucially – it then sustains initiatives, to build on successes and iterate gains.
remains a pillar of even the most advanced systems, because it steers priorities, synchronizes approach throughout the organization, reinforces incremental gains, and sets the targets for renewed improvements and performance objectives.” Essentially, CI programs harmonize smart manufacturing with all parts of the business. World-class manufacturing now means harnessing DOS and making all best practices “speak” to each other.
Prepare to capitalize on digital
The first step, then, is to evaluate your company’s state of digital maturity and readiness for DOS. Geoff Schreiner, Products Director at CCi, provides 10 key assessment areas: 1. Strategy – consider whether digitization is comprehensively planned and included in corporate objectives; 2. Leadership – transformation requires a digital-first vision, compellingly and consistently communicated; 3. Design – in agile, digitized enterprises, INDUSTRY TODAY 13
DIGITAL TRANSFORMATION
ABOUT THE AUTHORS: About Glenn Leask Glenn Leask is a founding partner and CEO of Competitive Capabilities International (CCi), a global management consulting firm that helps leading manufacturing and supply chain organisations achieve world-class performance through best practice and work process improvement. Glenn’s areas of expertise include developing manufacturing and supply chain strategies and implementing World Class Operations, TPM, Six Sigma and Lean. Glenn holds degrees in Mechanical Engineering and Industrial Engineering as well as a Master of Business Administration. GLENN LEASK
About Geoff Schreiner
Geoff Schreiner is Product Director at Competitive Capabilities International (CCi), a global management consulting firm that helps leading manufacturing and supply chain organisations achieve world-class performance through best practice and work process improvement. Geoff’s areas of expertise include operations and supply chain best practices, digital platform development, Industry 4.0 and machine learning, large-scale project implementation, change management, coaching, and learning and development technologies. Geoff holds a master’s degree in Comparative Industrial Relations and CSCP accreditation with APICs
organizational structures shift from siloed to cross-functional; 4. Data – digitally-mature companies use insights from sophisticated data gathering and analysis to drive value creation; 5. Technology – the scale and pace of technology adoption – including plans for artificial intelligence (AI) – is a benchmark indicator of 14 INDUSTRY TODAY
GEOFF SCHREINER
digital maturity; 6. Innovation – gauge the company’s culture around the adoption of digital innovation and innovation tools; 7. Ecosystem – assess the extent of digital alignment with value network partners; 8. Capability – digital forges new skills, but talent will require ongoing training and
DIGITAL TRANSFORMATION
development programs; 9. Process automation – a digitally advanced organization will make extensive use of artificial intelligence applications and robotic process automation; 10. Cybersecurity – digitally-mature organizations will have advanced defence systems in place across the end-to-end supply chain to minimize cybersecurity risks.
A digital road map
Assessing the company’s status on these eight themes will help plot a path towards digital systems maturity. “A holistic plan is vital because it will synchronize the deployment of skills, technologies, new processes plus improvements to existing ones, and updated analytics capabilities towards full-scale DOS,” advises Schreiner. The complexities of transitioning to DOS should not be underestimated. Integrative
improvement is a rigorous methodology to orchestrate digital capability by pacing DOS implementation appropriately, throughout the organization, forging superior end-to-end visibility and performance agility, and instilling the use of data and updated technologies. “CCi provides a digital integrative improvement solution that maximizes delivery across the combination of people, processes and technology. And then it builds on this, to keep driving competitiveness and profitability,” summarizes Schreiner. Contact CCi for further information about how to implement continuous, integrative improvement in your organization. Or download the white paper Digital operating systems: The next generation of production systems to find out more about the drivers of change, and the shape and characteristics of the next generation of production systems. INDUSTRY TODAY 15
WORKFLOW APPLICATIONS
Three essential use cases that benefit from digital transformation solutions built for the frontline worker. 16 INDUSTRY TODAY
WORKFLOW APPLICATIONS
WORKFLOW APPS INCREASE SAFETY FOR FRONTLINE WORKERS
N
ew, breakthrough workflow applications incorporating hands-free control, location technology, and visualization of key data are extending digital transformation to the frontline worker.
By creating AI-enabled digital agents, activities that were previously high-touch experiences can be converted into touchless transactions, enhancing productivity and safety for a business’ employees and guests. With a INDUSTRY TODAY 17
WORKFLOW APPLICATIONS
voice-controlled workflow, digital interaction can occur on kiosks in public spaces, on mobile devices, or AR/VR headsets. Typical examples might include facility or building check-ins, safety work permit processes, and task and safety trainings. By offering a voice-controlled option, interactions can take place at a safe dis18 INDUSTRY TODAY
tance while also improving efficiency by providing added health or security screening options.
Building Reception
COVID-19 has caused many organizations to implement policies for checking the health status of individuals entering a facility as well as
WORKFLOW APPLICATIONS
managing the use of meeting rooms and other shared spaces to ensure that social distancing requirements are maintained. While some of these processes may be discontinued as vaccinations reach the majority of the population later in 2021 and beyond, the value of public health protocols such as screening for infection
has been established and will likely continue in modified form post-pandemic. The SmartAccess kiosk reduces the cost of managing building access while providing systematic tracking of health status or other key security-related metrics. It also helps establish confidence in the safety of the facility for both employees and visitors. The digital avatar and voice interaction is intuitive for both employees and visitors to use and can provide a very personalized, positive experience. Because these solutions can be remotely managed and easily updated, they can be easily adjusted as environmental or public safety regulations change – allowing for a quick conversion to an exclusively digital receptionist/building access control solution when needed. And as COVID restrictions evolve, these solutions allow for additional screening and tracking components if health or security risks become more prevalent. Kiosk check-ins can be made even quicker by using an ID badge, facial recognition, a partner smartphone app or even a pre-shared QR code for visitors. Kiosks can also easily incorporate basic health checks such as temperature and pulse ox – flagging any potential health risks for further screening. Other testing/health status data can be added as needed. The kiosk can also direct employees or visitors to the appropriate location in the facility, with the aid of the partner smartphone app. This can take into account the specific locations the user INDUSTRY TODAY 19
WORKFLOW APPLICATIONS
ABOUT THE AUTHOR: David Brebner is a serial entrepreneur operating in the software development, data visualization and image processing spaces. In addition to founding Umajin, David founded both Fingertapps and Unlimited Realities. David’s companies have developed software for many of the world’s best-known companies like Toyota, Dell, Intel, HP, Lenovo and ASUS. David’s areas of technical proficiency include real-time computer graphics, language design, systems architecture, multi-touch, computer vision, image compression, database design, full-text indexing, software architecture and user interface design. is intended to visit or avoid based on security, work permits are completed and in progress, fire safety, and social distancing requirements. providing insights into the opportunities for broader plant and process improvements.
Safe Work Permit Processes
Many manufacturing and processing facilities use paper-based safe work permit processes to manage the risk of potentially hazardous activity like lock out/tag out or line break permits. This type of process can be implemented on a rugged tablet and eventually to AR headgear. Since workers are often wearing protective gear, voice-controlled processes can be more efficient on either type of device. The tablet-based process also allows for improvements to the information captured including photos with voice dictation and drawings of annotations to reduce data entry overhead. Tablets can be registered to a specific user with biometric identification allowing for sign off and authorization to be efficiently performed on-site with a user, location and timestamp recorded. A dashboard can be provided to show that safe 20 INDUSTRY TODAY
Training
The ability to train employees with more visually stimulating and memorable materials will have a significant impact on retention. Traditional classroom training can have limited effectiveness for many segments of employees. Many classrooms or online trainings can be relatively passive, and there is the risk that employees neither enjoy the experience nor retain much of the content that is presented. While one-onone training or coaching on the line with an experienced technician can be effective, these approaches are also very expensive. The virtual reality methods that have long been used to train airline pilots can readily be incorporated into voice-controlled applications running on kiosks, tablets or AR/VR headsets, providing low cost but effective training for many
WORKFLOW APPLICATIONS
complex technical tasks. The training application is designed around an optimal sequential work process as executed by an experienced technician. CAD files displaying machinery and components can easily be incorporated to provide 3D visualizations of the actual process, annotated with a description of the required materials, safety precautions, and steps used for assembly, disassembly, or service. The trainee can control the steps of the process by voice, allowing the pace to reflect the rate at which the individual can absorb the material. The trainee can also request to repeat a step or back up several process steps if they encounter any material they don’t understand initially. The increasing availability of comfortable, cost effective AR headgear will allow the instruction to be overlayed on the actual equipment and components, and high-fidelity 3D renderings of
the equipment on a tablet, kiosk, or VR headset can also create an effective training environment. These are just three of the most obvious use cases where touchless workflow applications can greatly improve the efficiency and safety of frontline work. Many more will be developed as the technology becomes more ubiquitous. New development platforms are making the development process of these applications increasingly cost effective and making them more widely available across a broader range of endpoint devices. And this surely will become the trend – as digital agents and workflow applications that provide intuitive, hands-free, visual information everywhere will accelerate the completion of a company’s digital transformation journey by tackling the last-mile problem of enabling frontline workers. INDUSTRY TODAY 21
BUSINESS PROCESS AUTOMATION
BUSINESS PROCES MAKE IT MISSION
Avoid three common mistakes that can quickly derail digital transformation beyond the factory floor – or risk falling forever behind. 22 INDUSTRY TODAY
BUSINESS PROCESS AUTOMATION
SS AUTOMATION: CRITICAL
M
ore than 25 years ago, manufacturers first introduced automation to their processes. Productivity and efficiency soared, and many cost areas dramatically decreased. But, for many
manufacturers, digitization stopped there. The COVID-19 pandemic has sparked a renewed focus on digitization across a wide range of businesses. The rate of change has been unprecedented, taking only weeks or INDUSTRY TODAY 23
BUSINESS PROCESS AUTOMATION
months to do what previously was expected to take years. Yet, this digitization movement has bypassed much of the manufacturing industry, which remains at status quo and is now at risk of losing competitive advantage. The last leg of digital transformation in the manufacturing sector is automating time-consuming front- and back-office processes. Without business process automation (BPA), the progress made in automating the factory floor alone will not be able to safeguard companies from falling behind. The good news is that manufacturers can stay competitive – if they get focused now.
es involved in payroll, marketing, advertising, promotion and sales. Consider those processes that are routine and where rules and a certain order of steps must be followed. Those activities are ripe for automation. Another place to look is within FP&A (financial planning and analysis) activities. Automating the analysis of financial and operational data can significantly reduce time and speed decision making. Importantly, one of the key impacts of automating FP&A activities is uncovering areas of lost revenue. Most organizations find that automating FP&A functions quickly pays for itself.
Getting Started
Mistakes to Avoid at all Costs
To begin, look at businesses processes around SG&A (selling, general and administrative expenses). It is estimated that 30 percent of these processes can easily be automated, increasing efficiencies and freeing up staff for more important activities such as problem solving, planning and innovation. Look at process-
While it isn’t difficult to begin automating critical business processes, there are a variety of pitfalls that can severely slow progress. In particular, there are three common mistakes. By avoiding these pitfalls, manufacturers can more easily and efficiently speed digitization. Mistake #1: Treating business process
ABOUT THE AUTHOR: Seth Siegel is the North American leader of Infosys Consulting’s Artificial Intelligence & Automation practice. He is an internationally recognized Management Consultant, has served as the CIO of one of the world’s largest commodity firms and has launched four companies. He has advised dozens of the world’s leading CIOs on innovation and transformation of the IT function and is viewed as a thought leader on what markets want to achieve rapid growth. 24 INDUSTRY TODAY
BUSINESS PROCESS AUTOMATION
automation as an IT project Instead of viewing this as another phase of their overall digital transformation journey, many manufacturers instead view this as another IT project. The impact of automating critical business processes, however, has the potential to be much bigger – even rivaling warehouse automation in terms of improvements to cost structures, efficiencies and accuracy. Mistake #2: Failing to create automation centers of excellence
A serious risk to the success of BPA is when separate business units automate their functions and processes independently instead of working with the entire organization. Establishing an automation center of excellence at the onset of BPA will not only help implement and scale automation but can also aid organization-wide adoption. For this to be effective, the center of excellence should comprise representatives from across the organization. In particular, representatives from the business, IT and operations are INDUSTRY TODAY 25
BUSINESS PROCESS AUTOMATION
mandatory. Other functions can and should also be included to drive true transformation of processes and the way the organization operates going forward. The bottom line is that creating a center of 26 INDUSTRY TODAY
excellence is critical to streamline the automation process, prevent any needless duplication of efforts and build an effective structure for identifying ongoing automation needs and priorities.
BUSINESS PROCESS AUTOMATION
between the IT department and the business valuing different markers of success. In most cases, these disagreements can quickly be overwritten by considering how the organization’s executive leadership will define success. A key metric always important to the c-suite is return on investment. Investing in BPA typically pays for itself fairly quickly in terms of realizing cost reductions and time saved. Other critical metrics include reductions in overall business process costs and improvements in productivity, compliance, accuracy and efficiency. At the start of any BPA initiative, it is crucial to align with executive leaders on objectives and metrics. Digital transformation is a long-term journey. Make sure they are along for the ride.
Time is of the Essence
Mistake #3: Establishing metrics the c-suite doesn’t care about Many organizations have trouble agreeing on common metrics to measure the success of their BPA initiatives. The rub often comes
New risks, uncertainties and challenges will undoubtedly continue to be part of the business recovery landscape. Continuing to drive digital transformation is the best strategy manufacturers have to mitigate risk, prepare for continued change and challenge. The outcomes of successful digital transformation, increased efficiency, productivity and innovation, are critical ingredients for success. However, there is a limited window for being proactive and controlling how functions are automated. The markets will soon decide if manufacturers don’t. Design the next phase of your digital transformation journey now – before it’s too late. INDUSTRY TODAY 27
“AMERICA’S SUPPLY CHAINS” EXECUTIVE ORDER
THE BIDEN ADMIN SUPPLY CHAIN EX The Biden Administration issued an executive order “America’s Supply Chains” to strategize improving the resilience of U.S. supply chains. 28 INDUSTRY TODAY
“AMERICA’S SUPPLY CHAINS” EXECUTIVE ORDER
NISTRATION’S XECUTIVE ORDER
T
o ensure that the United States possesses resilient supply chains that safeguard national security, make certain critical needs can be met during emergencies, and enhance U.S. competitiveness, the
Biden Administration has issued an executive order on “America’s Supply Chains.” The executive order is notable in that it represents the first serious attempt by the U.S. government to develop a comprehensive, government-wide INDUSTRY TODAY 29
“AMERICA’S SUPPLY CHAINS” EXECUTIVE ORDER
policy on supply chains. There are several key themes to highlight from the executive order. First, the strategy is proactive. Statements from White House officials indicate that they are determined to get ahead of supply chain issues and formulate an offensive strategy. The Administration also clearly recognizes
the need to take a sector-specific approach to supply chains, and that there are a number of factors that may differ from one supply chain to the next. The executive order also emphasizes the importance of collaborating with trusted international partners to ensure resiliency, which appears to be an implicit recognition that not
ABOUT THE AUTHOR: Jeff Weiss spent more than 15 years in senior legal, policy, diplomatic, negotiation, and political roles in the US government across three administrations – including at the White House Office of Management and Budget, the Office of the US Trade Representative (USTR), and the Office of the Secretary of Commerce – and now co-chairs Steptoe’s internationally recognized International Trade Policy practice and leads the firm’s Supply Chain team. While serving as deputy policy director for Commerce Secretary Pritzker, he served as the Commerce Department’s lead on port and supply chain policy. 30 INDUSTRY TODAY
“AMERICA’S SUPPLY CHAINS” EXECUTIVE ORDER
every product or component can or should be manufactured domestically. Additionally, the executive order includes a focus on addressing how transportation systems can support competitive supply chains. This is important because, for example, port and maritime issues tend to recur and be highly disruptive to the economy.
Key features of the executive order
The first tier of reviews under the executive order will cover four specific sectors: semiconductor manufacturing, high capacity batteries, critical minerals, and active pharmaceutical ingredients. Six additional sectors will be covered in a second tier of reviews.
The reports on these sectors will include a review of current supply chain conditions and potential risks, and make policy recommendations to increase supply chain resilience through possible legislative, regulatory and policy changes. The executive order also calls for recommendations on how tools such as federal procurement, international trade rules, and education and workforce reforms can be used to strengthen U.S. supply chain competitiveness.
Challenges facing the Administration in shaping a supply chain strategy
Evaluating all of these sectors is a massive undertaking. Assuming that there are numerous
INDUSTRY TODAY 31
“AMERICA’S SUPPLY CHAINS” EXECUTIVE ORDER
legislative recommendations contained in the reports, it may be difficult getting them through Congress, although there will be some areas of bipartisan agreement. And there will be policy priorities relating to supply chain that are sometimes pulling in different directions and will need to be resolved. It’s also important that the Administration ensures that any U.S. supply chain strategy 32 INDUSTRY TODAY
does not alter the fundamental relationship between business and government in the U.S. by engaging in central planning of the economy. Consistent with international trade rules, any approaches should be non-discriminatory and technology neutral in order to promote innovation and interoperability. They should recognize the connection in many sectors between imported inputs on the one hand and export
“AMERICA’S SUPPLY CHAINS” EXECUTIVE ORDER
bility of onshoring in specific circumstances and, where appropriate, whether the U.S. can rely upon trusted partners for potential near-shoring. Criteria for evaluating jurisdictions for potential collaboration would likely include a mix of factors, including the jurisdiction’s legal regime and policies with regard to international trade, climate, the relevant areas of regulation, national security, labor and employment, and human rights, as well as geopolitical considerations. One approach the Administration should explore for potential solutions to supply chain issues where appropriate is reliance on public private partnerships to address supply chain crises. For example, the work being undertaken by ASTM International in the PPE space demonstrates that reliance on international standards can be a tool for driving development of pandemic-related products on expedited timelines without sacrificing technical quality and effectiveness.
How the private sector can particcompetitiveness and U.S. job creation on the ipate in this effort other, including jobs in supply chain transportation and logistics. Additionally, they should recognize the interrelationship among many economic sectors and that measures impacting the costs of one sector could impair the competitiveness of other sectors. Further, the Administration will need to develop criteria for determining the need and feasi-
Given the scope and emphasis of the Administration’s supply chain review, it is imperative that potentially affected stakeholders engage with the Administration as the review unfolds, both through providing formal comment to the agencies when requested as well as by engaging directly with the White House, key agencies, and Congress. INDUSTRY TODAY 33
“GEORGIA MADE”
“GEORGIA M STREN How the state of Georgia has helped manufacturers adapt production to provide PPE. 34 INDUSTRY TODAY
“GEORGIA MADE”
MADE:” A PPE NGTH I n Georgia, we work together to ensure that our diverse array of industries succeeds. From life sciences to advanced manufacturing and logistics, our partnership approach to economic development and culture of innovation have helped the state
consistently set new economic development records throughout the pandemic. Our relationships are at the forefront of everything we do, and by developing and implementing our assets together, we continue to thrive as the No. 1 state for business. INDUSTRY TODAY 35
“GEORGIA MADE”
The importance of these relationships may be best illustrated through the way we pulled together to combat COVID-19 while remaining open for business. Sharing know-how and resources and pivoting operations when necessary, we kept Georgians safely at work across industries – including at on-the-job manufacturing operations – and navigated a path
forward to ensure immediate continuity while developing for long-term growth.
“Georgia Made:” Bonded for Success
Georgia’s established public-private relationships were key to speedy progress in a holistic approach to combating COVID-19
ABOUT THE AUTHORS: Scott McMurray is the Deputy Commissioner, Global Commerce for the Georgia Department of Economic Development, where he has martialed jobs and investment for more than 15 years. McMurray leads Georgia’s team focused on job creation and investment through locating new and expanding businesses, which includes statewide and existing industry project teams, small business, and Georgia’s international representatives in 12 strategic global markets around the world. In FY20, the state set a record for jobs and investment growth and recently earned the No. 1 State for Business designation for the eighth consecutive year. SCOTT MCMURRAY John Morehouse is Director of Manufacturing at the Georgia Center of Innovation at the Georgia Department of Economic Development. Manufacturing employs about 380,000 Georgians and accounts for 11% of the state’s gross state product. With his 24 years of experience in various manufacturing roles, during the COVID-19 pandemic, he shepherded manufacturers in the state, making the right connections to help supply state and local PPE needs and aiding manufacturers with product pivots that protected lives and jobs.
36 INDUSTRY TODAY
JOHN MOREHOUSE
“GEORGIA MADE”
The newly developed “Georgia Made” program, launched just before the global pandemic took hold, turned out to be not only good for business but also wise foresight. This program celebrates Georgia manufacturers and highlights how Georgia’s relationship approach to business benefits our companies. COVID-19 cast a light on the benefits of this approach, especially when staying in close communication with the right resources became particularly critical to saving lives and livelihoods. The Georgia Department of Economic Development’s (GDEcD) tight internal and external coordination provided connections and support for both the business community and the state. This comprehensive method placed Georgia among the first states to identify and publicize manufacturers and suppliers of PPE to fight COVID-19. It also allowed the state and our businesses to remain open throughout the pandemic, and the state economy has emerged in a better position for it. One of the state’s most unique resources for our business community, our Center of Innovation (COI), consists of a team of experts in manufacturing, logistics, IT, aerospace, energy and agriculture technology. This team listens to needs in their industries, asks questions to get tailored information, and then efficiently removes obstacles, making the connections needed for progress and economic growth. The state’s COI team works closely with our 12 project managers who live and work
Pictured: TSG Resolute, a Georgia company best known for making gaskets, thermal insulation and electrical insulators added a new product line.
in every region of the state and act as problem-solvers and connectors in our business communities. Thanks to our relationships within the many arms of our department, including our Small Business and International Trade teams, and thanks to our sister agencies including the Department of Public Health and the Department of Transportation, we were able INDUSTRY TODAY 37
“GEORGIA MADE”
to quickly identify and work with companies who could create, supply, transport, or store much-needed personal protective equipment (PPE) in the state. Several companies looked toward switching to supplying these products to not only help their neighbors but also to ensure a continued stream of revenue. Our department connected these companies with organizations like the Manufacturing Extension Partnership at Georgia Tech and the Global Center of Medical 38 INDUSTRY TODAY
Innovation to help them make this critical shift. During the COVID-19 crisis, world-renowned Georgia Made company Kia Motors Manufacturing Georgia adapted its operations to produce face shields. With GDEcD and Georgia Manufacturing Extension Partnership helping source parts, including from other Georgia companies like TSG Resolute, a business best known for making gaskets, thermal insulation, and electrical insulators, the company produced well over 550,000 shields. TSG
“GEORGIA MADE”
nects hospitals and health care facilities, school systems, businesses, and individuals to local manufacturers and suppliers of critical PPE and health care supplies.
Stimulating PPE Manufacturing
Resolute assembled more than 100,000 of their own shields in 10 days, thanks to additional assistance from nearby University System of Georgia school Georgia Southwestern State University. Now, the face shields are part of the company’s product line. Ultimately, these companies are just a few of the businesses who have been listed on the state’s COVID-19 Supplier List. The public-facing list, assembled by the Center of Innovation, is a statewide database that con-
New incentives established by state government developed to support manufacturing, ensure long-term success Consistently responsive, Georgia has also implemented additional ways to ensure support for future PPE manufacturing and overall support for Georgia businesses through recent legislation to incentivize manufacturers to create more PPE. This legislation also provides relief to existing Georgia companies that lost jobs because of pandemic disruptions. Companies that claimed Georgia Job Tax Credits or Quality Jobs Tax Credits last year may now carry over their 2019 job creation numbers to 2020 and 2021. The Georgia legislature recently passed a PPE-manufacturing tax credit and other new incentives to stimulate job growth and support life sciences manufacturing in the State of Georgia. These types of partnerships – between government, business, our colleges and university system, and our local communities – are examples of what it means to do business in Georgia. It’s never “just business;” it’s personal, and that’s what the Georgia Made manufacturing label is really all about. INDUSTRY TODAY 39
WORKPLACE SAFETY PROTOCOLS
WORKPLAC WHAT EM
Employers need to understand legal rights and obligations regarding vaccination policies when bringing employees back to the workplace. 40 INDUSTRY TODAY
WORKPLACE SAFETY PROTOCOLS
CE REOPENING: MPLOYERS NEED TO KNOW
A
s employers look to reopen their doors following the COVID-19 pandemic, many are faced with a variety of legal questions concerning the issuance of mandatory vaccinations and other workplace safety protocols. To minimize liability and best address these legal challenges, it is critical that
employers are aware of both their rights and obligations under state and federal law before bringing employees back into the workplace.
Requiring COVID-19 Vaccinations and Proof of Vaccinations
In the absence of any state law to the contrary, INDUSTRY TODAY 41
WORKPLACE SAFETY PROTOCOLS
employers are free to mandate vaccinations in the workplace. When making this decision, however, employers must first determine whether a mandated vaccine policy is necessary given the nature of their workplace. For example, certain service industries (i.e. restaurants)
may feel compelled to mandate vaccinations in order to appear safer and therefore more attractive to their public clientele. Conversely, other industries may find that mandating vaccines may have a negative impact on employee morale and therefore decide to simply encour-
ABOUT THE AUTHOR: Lisa Gingeleskie, Esq., is a labor and employment attorney with Lindabury, McCormick, Estabrook & Cooper, P.C. (www.lindabury.com). Based in Westfield, NJ, Lindabury serves clients, including prominent corporations and businesses, throughout the Mid-Atlantic region.
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age their employees to vaccinate. Employers must carefully engage in a cost-benefit analysis tailored to the nature of their specific business when deciding whether to impose a mandatory vaccine policy. If an employer does mandate vaccinations, the Equal Employment Opportunity Commission (“EEOC”) has stated that employers may require proof of vaccination without implicating the Americans With Disabilities Act’s (“ADA”) restrictions on “disability-related inquires.” The EEOC observed that there may be many reasons to explain why an employee has not been vaccinated that may or may not be disability-related. Thus, merely requiring proof of one’s vaccination status
is not likely to elicit information about a disability and should not run afoul of the ADA’s restrictions. However, the EEOC cautioned that follow-up inquires such as asking why the employee did not receive the vaccine “may elicit information about a disability and would be subject to the pertinent ADA standard that [such questions] be ‘job-related and consistent with business necessity.’”
Exceptions to Mandated Vaccinations
If a mandatory vaccination policy is adopted, employers must be prepared to recognize two exceptions to this policy. First, mandated vaccinations may tend to screen out
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WORKPLACE SAFETY PROTOCOLS
disabled individuals who cannot be vaccinated for medical reasons. To survive a disability discrimination claim under the ADA, an employer must show that the excluded individual would pose a “direct threat” to the workplace due to a “significant risk of substantial harm to the health or safety of the individual or others” that cannot be eliminated by reasonable accommodations. EEOC guidance notes that a direct threat includes a determination that an unvaccinated individual would expose others 44 INDUSTRY TODAY
to the virus. If reasonable accommodations to eliminate the risk of COVID-19 exposure including providing additional personal protection equipment or permitting remote working arrangements, cannot be implemented without “undue hardship” to the employer, the unvaccinated employee can be excluded from the workplace. The EEOC guidance cautions that the prevalence of vaccinated employees in the workplace and the amount of contact the unvaccinated individual will have with others
WORKPLACE SAFETY PROTOCOLS
that doing so would pose an undue hardship.
Additional Safety Protocols
including customers whose vaccination status could be unknown, should be considered before the employer concludes that accommodation would result in undue hardship. Secondly, an employee may claim that sincerely held religious beliefs prevent him or her from receiving the vaccination. As with the duty to provide reasonable accommodations for disabilities under the ADA, Title VII requires employers to reasonably accommodate religious beliefs unless the employer determines
Employers should also consider specific mandates in their respective states. For example, Effective May 28, 2021, New Jersey Governor Murphy’ s Executive Order lifted the mask and social distancing requirements for most indoor worksites that are open to the public. Effective June 4, 2021, mask and social distancing requirements in private indoor workplaces were also lifted pursuant for “fully vaccinated” employees as defined by the CDC. However, if the employer is unable to verify an employee’s vaccination status it must require that employee to continue to wear a mask and maintain social distance protocols. These Orders make it clear that businesses have the option to impose stricter requirements for mask-wearing and social distancing, but shall not restrict employees or patrons from wearing masks if they chose to do so. While these Executive Orders are a promising step in the direction of a return to “normal,” it is important to remember that these changes do not fully put employers back to pre-pandemic workplace conditions. Given the complexities of the issues surrounding compliance with ever-changing safety protocols, it is recommended that employers consult with employment counsel to engage in a thorough legal assessment of the workplace prior to reopening one’s doors. INDUSTRY TODAY 45
SUPPLY CHAIN STRATEGIES
HOW COVID-19 MODERNIZED S CHAIN OPERATI Before 2020, “supply chain” wasn’t a common term and “supply chain strategy” wasn’t built into the daily operations of a lot of businesses. 46 INDUSTRY TODAY
SUPPLY CHAIN STRATEGIES
SUPPLY IONS
T
hen 2020 came along and changed everything. It’s called a supply “chain” because every point in the process of supplying goods – from raw materials into packaged goods that
end up in consumers’ hands – is connected and has an impact on the other points. It’s like a lineup of dominos. Remove one and the forward motion of the chain reaction is broken. We saw this play out acutely in 2020 in INDUSTRY TODAY 47
SUPPLY CHAIN STRATEGIES
e-commerce logistics, particularly at the hub of those operations – the warehouse. There were two key dominos that were removed: the labor needed to fill online orders and the ability to anticipate the pace of online orders being placed. Let’s look at the labor piece first. It was complicated. First, as COVID-19 spread rapidly across the U.S., many warehouse personnel were sick and unable to come into work. Second, people were told to stay home and avoid going into other buildings except in emergency situations. It was hard to get enough people in warehouses to keep them running.
The other domino was removed from the demand side of the equation. While e-commerce sales had been steadily increasing over the last decade and putting pressure on fulfillment logistics, there was a realistic forecast in place. Businesses were able to plan for the annual increases in sales. Growth rates had been steadily coming in at 13-14 percent per year, until that doubled to more than a 30 percent increase in 2020. Most retail stores had been closed, forcing people to make all of their purchases online. Even for the stores that were allowed to stay open, they didn’t have enough employees available to come into work to keep
ABOUT THE AUTHOR: Lior Elazary has more than 20 years of experience as an executive in internet networking, robotics, software development and enterprise architecture businesses. He has led and directed diverse teams developing everything from back-office systems to core enterprise technologies. Most recently, he co-founded and later sold EdgeCast, a content delivery platform with customers such as Twitter and YouTube. Before that, he co-founded and later sold HostPro (now Web.com), an internet hosting company. Elazary completed a master’s degree in computer science at the University of Southern California (USC) with a specialty focus on artificial intelligence. He attended a Ph.D. program in robotics at USC, where he met his inVia co-founders. Their work together sparked a passion for the dramatic effect robots can have in driving efficiency and productivity and, most importantly, in helping people live happier and more fulfilling lives. 48 INDUSTRY TODAY
SUPPLY CHAIN STRATEGIES
operations running and consumers were scared to go into those stores for fear of getting sick. So on one end of the chain we had the labor supply removed, and on the other end we lost our ability to predict demand. So, what do you do? You have to ramp the pace of fulfillment to keep up with demand. But you can’t bring more people into the warehouse and in some cases can’t even get your existing workforce back in. Inflation and wages are also
increasing. So, what you have is also going to be more costly to keep. The answer is that you have to create more efficient processes, so you can do more with a smaller available pool of labor. There is a lot of technology available now that will help you bring greater efficiency into your warehouse. But that means there are a lot of choices, and it can be overwhelming to know where to start. Big decisions are often best made INDUSTRY TODAY 49
SUPPLY CHAIN STRATEGIES
by breaking them down into smaller ones. Warehouse optimization can be narrowed down to two major initiatives: digitization and automation. And these steps can be taken one at a time. Digitization will lay the foundation for every other improvement you can make in your operations. Having reliable data, visibility into it, and intelligence that helps you interpret it in order to make smarter decisions is the best investment you can make. It will allow you to understand which tasks create critical paths and which people are best at completing them 50 INDUSTRY TODAY
and then match those up to increase fulfillment speeds. And while it won’t be able to forecast external demand spikes from unforeseen pandemics, it will equip you with the intelligence to know your true internal capabilities and how you can flex those to keep up. Then automation will compound the efficiencies and productivity improvements you’ll make from digitization. Being able to augment a scarce labor pool with always-available, always-on labor points is a game-changer. You can easily see 4-5X increases in fulfillment rates. Fortunately, while automation
SUPPLY CHAIN STRATEGIES
technology has significantly advanced, so have the business models of vendors who sell it. Instead of traditional models where you had to spend millions of dollars to buy enormous pieces of equipment, you can now subscribe to receive services from the equipment without having to own and maintain it. In the industry it’s known as robotics-as-a-service (RaaS), and it’s turned out to be a perfect fit for the uncertainty of a pandemic. Not only does it allow businesses to spread costs over time and avoid big upfront capital outlays, it also makes it easy to take technology adoption one step at a time. With a services subscription, you can add or
remove services from your monthly contract. Start by digitizing with your existing workforce. Add automation as you’re ready. The COVID-19 pandemic was a reminder of just how important supply chain planning is to business operations. When done properly it gives us alternative paths to take when things don’t go as planned. Technology is a critical component of any supply chain strategy. It gives you intelligence about your operations that allows you to see where you can make adjustments and how they affect the rest of the chain. It’s true what they say: Knowledge is Power.
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PREVENTING PPE SHORTAGES
PREVENTING A P BEFORE IT HAPP The COVID-19 pandemic broke the nation’s PPE supply chain. To fix it we have to take proactive measures that prioritize domestic producers. 52 INDUSTRY TODAY
PREVENTING PPE SHORTAGES
PPE SHORTAGE PENS AGAIN
C
rises often reveal the vulnerabilities of our nation’s free-market system. Take the financial crisis of 2008. During this economic tumult, the open market financial system broke under unforeseen stress when
an excessive dependence on mortgage-backed securities and deregulation became catastrophic. As we know, the government stepped in to financially support the banks and, in return, put specific regulations in place to ensure such INDUSTRY TODAY 53
PREVENTING PPE SHORTAGES
a problem never happened again. One could say the government was working to prevent another incident before it occurred. Thus far, it has worked. The personal protective equipment (PPE) shortage that afflicted critical industries across the country in 2020 began with similar origins at the start of the pandemic. PPE supply chains dried up due to an over-reliance on the most affordable overseas products that came to a production halt as the pandemic ravaged the world. Many domestic manufacturers stepped in to support the country in this dire time of need and began producing these critically needed supplies, many building operations from the ground up. As during the financial crisis, the 54 INDUSTRY TODAY
government provided some help to support these domestic manufacturers, with grants and short-term production orders. The main difference between 2008 and 2020, however, is that the government has yet to enact regulations that would incentivize buyers to source these supplies from domestic producers. On his second day in office in January 2021, President Biden signed Executive Order 14001, which directed his administration to report back in six months several steps the government can take to support a domestic supply chain for critical pandemic-related supplies such as PPE, medical supplies and pharmaceuticals. A wide range of domestic manufacturers, healthcare distributors and healthcare providers and stakeholders were invited to give input to the admin-
PREVENTING PPE SHORTAGES
American growth and evolution; it has also created a deadly flaw. Market demand for cheaper PPE has pressured industries to take a tunnel, price-driven view to purchasing these life-saving, protective supplies and source primarily from one market — Asia. Where we found ourselves in 2020 was in a chasm between Asia’s ability (and in some cases, desire) to fill our demand pipeline with sufficient supply of finished product and/or raw materials, and the domestic ability to fill the gap in that pipeline. Even now, there are consistent misses out there between supply chain and need. Before, the US saw widespread shortages of PPE when the spigot of supply from China was turned off. Now, there are organizations and regions with a glut of PPE including N95 masks while others remain starved for these vital materials. And the Free market failures? While it’s true that the open market has driven global shipping crisis of 2021 has exacerbated istration’s task force. While we are awaiting the report, the overseas markets have leveled out, and their products are once again flooding the US, squeezing out domestic supplies with their cheaper and invariably lower-quality goods. As a result, many of the domestic companies that took the risk to step up and provide PPE and supplies during the pandemic have had a more difficult time in the market in 2021 and have pivoted away from PPE, or are shutting down production lines. From a domestic production perspective, we are hardly better off than we were at the beginning of the pandemic. The risks are clear – the US now needs to take proactive measures to prevent another PPE shortage from happening.
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PREVENTING PPE SHORTAGES
the problem.
Supply chain course corrections
As with the financial crisis in 2008, a free-market course correction has demonstrated that it is not the solution to our PPE crisis. Instead, many organizations have simply gone back to sourcing from the cheapest, often foreign, suppliers leaving our critical supply chains strained, out of step, and vulnerable. Price tunneling is not the answer. Only long-term government contracts, investments, and regulations that allow for a US-made pipeline can solve this problem. While we are not suggesting that all PPE needs to be domestic, there needs to be a bal-
ance that allows for a critical-supply domestic industry to stay strong and vibrant to be able to react when the next pandemic does come. This not only includes the production of the finished product, but as importantly the production of the raw materials as well. It does no good if mask and gown factories are idled due to raw materials stuck on the other side of the ocean if Asian suppliers or global transportation cannot get them to domestic plants. To be sure, some have predicted the global trans issues – lack of containers, port clogging, long lead times – will persist for much longer than the pandemic will. American-made manufacturing can respond and scale to answer national PPE needs with
ABOUT THE AUTHOR: James Wyner is the CEO of Shawmut Corporation, leading supplier of engineered high-performance soft materials for the Automotive, Healthcare, Military and Protective Apparel markets. In 2020, in response to the Covid 19 Pandemic, Shawmut began producing N95 masks and medical isolation gowns at its headquarters in West Bridgewater Massachusetts and launched a new Health Safety division to create a secure source of high-quality US made PPE. Prior to Shawmut, James worked for McKinsey & Company, a leading global consulting firm where he focused on both Technology Strategy and Operations work. James holds a BA from Yale University and an MBA from the Harvard Business School. Contact information: Mary Katherine Mulligan | mmulligan@tieronepr.com
56 INDUSTRY TODAY
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an efficiency that is difficult for foreign bodies to match. As a result, US-based PPE, including critical supplies such as N95s, can ship to market faster and provide the same or often better quality at a competitive price. Moreover, complete control of the manufacturing process will ensure lasting quality, safety and eliminate potential price gouging. Domestic production will also allow first responders, medical personnel, and other essential workers to work with local suppliers for rapid prototyping and testing of future PPE products.
Domestic PPE through innovation
Many critics of Buy American and domestic PPE will tell you there is a price for the locally-sourced quality citing the increased price of an American-made N95 mask vs. one from Asia. But there is a solution to this — innovation. By investing in material and process transformation, robotics and other manufacturing advancements, domestic PPE companies can innovate to compete on price effectively. Much like the billions earmarked recently for the semiconductor industry, the government can similarly help the critical safety and medical supply industry as well. The industry needs help to build upon temporary COVID-fueled momentum and quickly establish a long-term framework to foster this innovation. And it can be easier than one might think because a regulatory foundation already exists. It’s called the Berry Amendment, a law
that requires the Department of Defense to purchase American-made equipment.
Regulatory support to embolden a domestic supply chain
The Berry Amendment framework could be extended to critical protective textiles and PPE. As a result, domestic manufacturers would receive the runway, financial support, and commitment required to innovate and compete with foreign suppliers. Long-term contracts from government agencies would give current and future PPE manufacturers the financial commitment needed to innovate and scale their operations to supply for domestic demand from healthcare systems. If the Berry Amendment cannot be applied more widely, then perhaps legislation arising from EO14001 will step in to provide this assistance. With this regulatory structure in place, American manufacturers can inject proven technological manufacturing methodologies like automation and innovation to drive competitive pricing and unmatched quality. These steps would incentivize the US-Made PPE industry and domestic supply chains, create US jobs, and help combat future pandemic outbreaks. With that, the US can actively prevent another potential PPE shortage before it becomes a life-threatening issue. America doesn’t outsource its defense equipment, so why would it outsource the creation of life-saving, critical supplies like PPE? INDUSTRY TODAY 57
SUPPLY CHAINS POST-PANDEMIC
Importers can use valuable lessons learned from COVID to reinforce purchase and supply agreements with foreign manufacturers. 58 INDUSTRY TODAY
SUPPLY CHAINS POST-PANDEMIC
COVID LESSONS LEARNED:
SUPPLY CHAINS POST-PANDEMIC
T
he onset of the global COVID-19 pandemic, at the height of a modern day trade war between the United States and China, created a perfect storm to
cause significant disruption to the global supply chain. At the same time importers were facing a nearly unprecedented labor and goods shortage, along with significant shipping delays, they INDUSTRY TODAY 59
SUPPLY CHAINS POST-PANDEMIC
were also struggling with how to deal with the increased tariffs on goods that touch each sector of the economy, all in an effort to implement the pivot necessary to continue a successful import practice. It actually is quite difficult to overstate the impact of the past two years’ events when it comes to global supply chain issues. Examples of disruptions abound: from decreased availability of labor and resulting unavailability of finished goods for import; foreign manufacturers’ unilateral unfavorable modifications
to existing supply contracts; frequent absence of contractual provisions necessary to address the effect of the pandemic or the issue of how to apportion increased trade duties; and the unavailability of shipping containers resulting in significant shipping delays. Managing both the backlog created by these disruptions and the effect of these challenges requires a comprehensive review of each link in an importer’s supply chain. Understanding that this sounds (and feels) like a daunting task because it is, the silver lining is that there are
ABOUT THE AUTHORS: Co-authors Kristi Zentner, a corporate attorney, and Heather Marx, a commercial litigation attorney, are both members of the Minneapolis office of Cozen O’Connor. In addition to their respective corporate and litigation practices, Kristi and Heather have developed and help to lead the Customs, Import, and Trade Remedies practice at Cozen O’Connor. Ms. Zentner and Ms. Marx focus their collective efforts on all facets of supply chain management, customs, trade and import matters for clients, ranging from drafting and negotiating a wide variety of supply chain agreements, advising as to import practices, guiding customs regulatory processes, through any necessary legal challenges made before the Court of International Trade. Contact: HEATHER MARX
60 INDUSTRY TODAY
hmarx@cozen.com kzentner@cozen.com
KRISTI ZENTNER
SUPPLY CHAINS POST-PANDEMIC
steps that can be taken in order to manage this necessary review process one move at a time. First, examine your contracts. There is an old adage that once we know better, we can do better, and it’s time to implement that approach when it comes to manufacturing, supply and purchase agreements. COVID-19 made businesses aware that most supply contracts lacked a force majeure clause that was either comprehensive or detailed enough to provide guidance as to how to deal with a global pandemic affecting all levels of the supply chain. With the hardwon guidance now in hand as to how businesses are impacted by this type of event, contracts need to be modified and updated. Issues like extended payment timelines, confirmed pric-
ing, priority designation of available goods, and even additional options for cancellation of the agreement should all be examined and implemented through the lens of providing your company the most workable, realistic solution if labor or merchandise shortages (or shipping delays) reappear. Next, take that examination of your contracts through each level of your supply chain. Pro tip: the examination should not stop at a simple review or modification of the force majeure provision of these contracts. Issues like how to apportion tariffs (such as those imposed by the Trump administration on Chinesemanufactured goods) and how to get the certifications and disclosures your company will need INDUSTRY TODAY 61
SUPPLY CHAINS POST-PANDEMIC
in order to deal with increased customs enforcement regarding forced labor should all be dealt with now. It is undeniable that the Biden administration will continue to place renewed emphasis on customs enforcement, and that it is using trade enforcement as a tool to work toward broader social goals like curtailing the use of forced labor in the production of goods. 62 INDUSTRY TODAY
If the vendors with whom you are working at any level in your supply chain balk at a request for transparency or assistance in obtaining or providing all requisite certifications designed to streamline the import process, now is the opportunity to identify – and remedy – that significant weakness in your supply chain. Finally, given the significant uptick in enforce-
SUPPLY CHAINS POST-PANDEMIC
import process by working with CBP to implement supply chain security measures. If an importer is CTPAT-certified while a competitor is not, the certified importer should enjoy a much more efficient process in getting goods into the country during both pandemic and non-emergency situations. With the global pandemic waning, now is the time to revitalize relationships with each link in your supply chain. From manufacturers and resellers to logistics providers and customs brokers, examining ways to address key supply chain performance indicators identified in the last two years will bring a competitive advantage to your company on a going-forward basis.
ment by Customs and Border Protection regarding the import of goods (particularly given the increased funding provided under the Biden administration), there is a definite trend for importers to seek certification under the Customs Trade Partnership Against Terrorist (CTPAT). This voluntary program with CBP allows an importer to obtain a streamlined INDUSTRY TODAY 63
