MFG Utah | Fall Season Reflection 2021

MFGUTAH ISSUE 4 | SUPPLY CHAIN ISSUE | OCT 2021

Fall Season Reflection OFFICIAL PUBLICATION OF THE

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UTAH MANUFACTURERS ASSOCIATION 2021 BOARD OF DIRECTORS UMA CHAIRMAN

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Jim Divver

ZionsASSOCIATION Bank UTAH MANUFACTURERS Brent Reddekopp Powerblanket Alex Dobsky 2021 BOARD OF DIRECTORS

1ST VICE CHAIR UMA CHAIRMAN Clint Morris Lifetime Products Brent Reddekopp Powerblanket

2ND VICE CHAIR 1ST VICE CHAIR Natalie Kaddas Kaddas Enterprises Clint Morris Lifetime Products

SECRETARY/ 2ND VICE CHAIR TREASURER Natalie Kaddas Johnny Ferry Kaddas Enterprises Honeyville, Inc.

SECRETARY/PAST IMMEDIATE TREASURER CHAIR Johnny Ferry Doug Dahl Honeyville, The BoeingInc. Company

IMMEDIATE PAST UMA PRESIDENT CHAIR Todd R. Bingham

Utah Association DougManufacturers Dahl The Boeing Company

DIRECTORS: UMA Travis PRESIDENT Aardema

Swire Coca-Cola, Todd R. BinghamUSA Utah Manufacturers Association Steve Allred Liberty Safe

DIRECTORS:

Bryan Anderson Travis Aardema Rocky Mountain Power Swire Coca-Cola, USA Erin SteveBarry Allred Merit Medical Liberty Safe Brett BryanBarton Anderson Fresenius Medical Care Rocky Mountain Power Blair Blackwell Erin Barry Chevron Merit Medical Brett Burningham Barton Hydro Engineering Fresenius Medical Care Mark Coy Blair Blackwell Setpoint Chevron LLC Doug Dilley Brett Burningham Parker Hannifin Hydro Engineering Corporation Mark Coy Setpoint LLC Doug Dilley Parker Hannifin Corporation

Mity, Inc.

Michael Gleason Jim Divver Hexcel Zions Bank Karen Griffin Jas. Easton, Inc. AlexD. Dobsky Mity, Inc. Todd Groll Orbit Michael Gleason Hexcel Mike KarenHenry Griffin Northrop Grumman Jas. D. Easton, Inc. Kirk ToddHolden Groll Autoliv Orbit Bill Johnson Mike Henry Barnes Bullets Northrop Grumman Jace Johnson Kirk Holden Key Bank Autoliv Chris Locke Bill Johnson Nucor BarnesSteel Bullets Jeff JaceLowe Johnson Inovar Key Bank Shawn Newell Chris Locke Industrial Supply Nucor Steel Frank Peczuh Jr. Jeff Lowe Peczuh Inovar Printing Eric Pope Shawn Newell U.S. Synthetic Industrial Supply Brad FrankShafer Peczuh Jr. Marathon Petroleum Company Peczuh Printing Merrill Stoddard Eric Pope L3Harris Technologies U.S. Synthetic Richard Stonely Brad Shafer BD Medical Marathon Petroleum Company Mark MerrillWalker Stoddard EnergySolutions L3Harris Technologies Andrew Walls Richard Stonely Edwards Lifesciences BD Medical Matt Mark Wardle Walker JD Machine EnergySolutions Steve Young Andrew Walls Holland Hart Edwards&Lifesciences Matt Wardle JD Machine Steve Young Holland & Hart

16 20 Table16 of Contents 20 Table of Contents: 5

Municipal Elections Matter

6 Table of Contents: Todd Bingham, President, UMA

President’s Message — Reflect and Look Forward

UMA Virtual Conference 7 President’s Message — February 2021

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11 10 8

Utah Manufacturer’s Association

Todd Bingham, UMA President/CEO Reflect and Look Forward Appointed February 2021 to NAM Board Excel at Manufacturing with Utah-MEP 2021 UMA Chairman the Board Todd Bingham, UMAof President/CEO Utah MEP Brent Reddekopp, President of Powerblanket Appointed to NAM Board

SBA’s Paycheck Protection UMAInvestigationChairman of the Board 12 Incident Program Can Help Preserve 10 15 2021 Workers Compensation Fund Brent Reddekopp, President of Powerblanket

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Manufacturing Payrolls October 2021 By Cece Mitchell SBA’s Paycheck Protection Program Can Help Preserve Manufacturing Payrolls Non-COVID Workplace on the Rise Overcome Hiccups and SaveFatalities Time Through StressBy Cece Mitchell

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Using Market Demand to Manage Piggyback™ Fulfillment

by SnugZ USA Production Non-COVIDLevels Workplace Fatalities on the Rise Dr. Tulinda Larsen

Reshoring to Utah: Challenges and Using Market Demand to Manage 21 10 Ways to Make Continuous 16 Opportunities Levels 20 Production

Improvement STICK! Dr. Tulinda Larsen Lead David Beckerman, Analyst UAMMI Cedro Toro

10 Ways to Make Continuous 20 Improvement STICK!Chain Shake-Ups Adapting to Supply 24 Service Directory 25UMA Cedro Toro Win Jeanfreau, iMpact Utah

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Municipal Elections Matter

By Todd Bingham, President, Utah Manufacturer’s Association

Municipal and elected positions do matter. This past week many municipalities across the state had elections for mayors, city Council’s and other positions at the local level. The public often pays significant attention to national elections including for president, U.S Senate and U.S. Congressional races. However, municipal elections often get overlooked and voting participation is generally significantly lower than the other elections mentioned above.

It’s an interesting paradigm however. it is stated that “the public is best served by the government closest to the people.” So if that’s the case, how come participation at lower levels for elections is so low?

Wouldn’t it be who’ve most of us to participate more at a local level to determine who our city councilman, and mayor, and/or county commissioners etc. might be? The answer to that is yes. However these races and elections generally don’t get a lot of attention because they’re not funded to the same level as even state House and Senate races and specifically not to national level of races. That certainly doesn’t mean they are less important, however that they simply don’t get the publicity. When was the last time you saw an add on television for a City Council race? Never.

One can certainly argue that these elected positions are thankless and certainly don’t receive the respect perhaps they deserve. Dealing with difficult issues 5

within your own community such as dog parks, trail systems, requests for stop lights, speed bumps and other important issues for local communities are important and are the issues closest to us all. Electing individuals who understand these issues and are a part of our cities and towns is critical to the success of these communities. Development of our towns and cities, smart growth and strategies for recruiting businesses and tax base are major roles of these elected officials. The right individuals in these positions understand the importance of business and industry in our local communities as a supporting tax base, job creation entities, and amazing community and neighborhood partners.

I once served on a planning commission in a local community. After a period of time, I began to notice that consistently other members of the planning commission were generally speaking overstepping their bounds and trying to limit and restrict the types of businesses that come into such communities. The planning commission’s job is to simply decide if the companies have a plied appropriately and fit within the zones and requirements for the cities to open their business. It’s not their job to determine whether the entrepreneur thinks a new bookstore or a barbershop will succeed in such an area. That’s for private business to decide. This brings me to my point that city council’s are the entities that make these decisions. Having the right people elected into

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these positions is critical for business and industry to continue to grow and drive the economy while maintaining a great relationship with such communities.

I certainly understand that elections are generally not an exciting thing. And in today’s world there are certainly many people who do not enjoy the political environment at any level. However, I would encourage you as an employer within a manufacturing company or other business to become involved in your local government. Helping identify and find candidates for such races is one way in which manufacturing companies can help with this. Company and management support of employees running for election in these communities is another way of supporting and fostering a spirit of community with manufacturing companies and local government.

The next time you see an agenda for a city council meeting or something similar, I encourage you to participate as an individual as well as a representative of your manufacturing company should the meeting or issue be pertinent. You might just gain a new respect for those who volunteer, serve, and dedicate their time to your local communities. I have several friends who serve as City Council representatives across the state in a variety of communities. Thank you to them for their dedicated service, efforts and sometimes taking of abuse to serve those around them in their neighborhoods.

Municipal elections do matter.

UMAWEB.ORG

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2021 UMA Virtual Manufacturers Conference Click the speakers below to watch their session presentation or scan the QR code to visit the virtual conference page!

KEYNOTE SPEAKER Martin Frey

Utah Workforce Panel

Mainsail Capital, Summit Journeys

Chanel Flores, UAMMI

The Adventure Driven Mindset Whether selling products, changing manufacturing processes to save costs, or supporting customers, having an adventure mindset is crucial to enabling your personal and business success.

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Rob Llanes

Diana Guetschow

Sales and Business Development, Ottobock Bionic Exoskeletons

Director, Workforce Training & Education, SLCC

Exoskeletons in the Workplace

Emotional Intelligence for Business Professionals

Leah Lobato

James Peterson, Jason Glade

Director, Governor’s Committee on Employment of People with Disabilities

President, World Class Transformation Incorporated and Taffy Town

Utilizing Individuals with Disabilities as a Workforce Advantage

Transform to Improve On Time Delivery at Taffy Town

Cameron Searle

Brian Walker

Vice President – Operations, Dynapac Rotating Co.

Process Engineer/CNC Programmer, Liberty Safe

Lean Six Sigma Green Belt Project – Improving Machine Shop Setup Time

Reducing Delivery Time to Warranty Customers

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Richard Stonely

Wyatt Hart

Engineering Manager, BD Medical

Continuous Improvement Coordinator, Casper’s Ice Cream

Knitting together lean manufacturing, six sigma, and continuous improvement projects for the sustainability of manufacturing in a competitive marketplace

Building a Team of Leaders from the Frontlines

Blake Christensen

David Burton and BJ Minson

CEO Valley View Granite

BJ – CEO, Founder David – Director of Marketing, General Counsel

Factory Tour - Implementing the EOS

How to leverage online marketing to rapidly grow your business

Win Jeanfreau

Jim Porter, Spencer Douglas

Executive Director, Impact Utah

Company: World Trade Center

The Essential Foundation for Effective Marketing and Sales

Go International!

Todd Valentine

Craig Nelson

Sr. Vice President, Beehive Insurance Agency

Senior Vice President Client Service Executive, Lockton

How the soup is made – Health Insurance options for 2022

The Property/Casualty Insurance Market Storm: Why is this happening and how do you navigate through it?

Katie Whited

Devon Hyatt

Senior Safety & Risk Consultant, WCF Insurance

Director of Business Development, ARCO Design/Build Salt Lake City

Investigating Amputations: Lessons Learned

Manufacturer’s Guide to Construction, Expanding, or Improving Your Buildings

Toby Eborn

Spencer Hohman

SVP, Business Development Firetoss

Safety and Risk Consultant, WCF Insurance

Large Scale Effects from Google’s algorithm update. – How you can take advantage of those opportunities

Improving Near Miss, Hazard, and Incident Reporting.

Utah MEP- Panel Discussion Manufacturers Extension Partnership

UMAWEB.ORG

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Custom Fit - It’s for your company!

The Custom Fit Program Provides: • Utah companies with flexible, customized training for their employees, tailored to meet specific employer needs.

• Discounted training costs by 20-50%.

• Training opportunities for large and small companies across all industries including, but not limited to, manufacturing, mining, construction, service, processing, technology and healthcare.

• Support of economic and workforce development, and facilitates the retention and creation of new jobs in the state.

Contact your Custom Fit representative today to receive help with your training needs.

Ogden-Weber Technical College Kristina Tolson (801) 612-4178 custom.fit@otech.edu

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Wasatch

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Juab

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Tim Chamberlain (435) 283-7372 tim.chamberlain@snow.edu

Carbon

Snow College Richfield

Sanpete Millard

Emery

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Sevier

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Claudia Ross (435) 893-2206 claudia.ross@snow.edu

Southwest Technical College

Wayne

Nicole Mayerhofer (435) 865-3926 customfit@stech.edu

Garfield San Juan

Washington

Snow College Ephraim

Kane

Bridgerland Technical College Sterling Petersen (435) 750-3147 spetersen@btech.edu

Davis Technical College Pamela Fobert (801) 593-2318 custom.fit@davistech.edu

Tooele Technical College Donna Hesleph (435) 248-1895 dhesleph@tooeletech.edu

Uintah Basin Technical College Lezlee Whiting (435) 725-7109 lezlee@ubtech.edu

Utah State University Eastern Moab Meghan McFall (435) 678-8102 meghan.mcfall@usu.edu

Dixie Technical College

Utah State University Eastern Price

Marie Bowcutt (435) 668-4358 mbowcutt@dixietech.edu

Tyler Agner (435) 613-5460 tyler.agner@usu.edu

Mountainland Technical College

Utah State University Blanding

Kelly Stone (801) 753-4264 kstone@mtec.edu

Meghan McFall (435) 678-8102 meghan.mcfall@usu.edu

Excel at Manufacturing with the Utah-MEP Utah-MEP.org | info@Utah-MEP.org | (801) 587-0713

A coalition of organizations that provide services to improve Utah Manufacturing have formed the Utah Manufacturing Extension Partnership (Utah-MEP) Alliance with the stated purpose to provide all Utah manufactures a single, expert resource to help them improve their bottom lines. In a recent release, UtahMEP said it will deliver service and outreach to the manufacturing industry in the form of industry- specific training, mentoring and coaching. The alliance hope to be a trusted business advisor to its clients.

“The manufacturing industry is critical to Utah’s economy.

Utah-MEP is a vital economic development organization, chartered specifically to help Utah manufacturers,” the Utah-MEP statement said.

The alliance pools the expertise of the University of Utah Manufacturing Extension Partnership (UUMEP), Utah State University’s Manufacturing Extension Service and its Manufacturing and Outdoor Products Support Hub, iMpact Utah, Utah Manufacturers 11

Association, World Trade Center Utah and the Utah Advanced Materials and Manufacturing Initiative. The team provides access to manufacturing specialists, application engineers and research professionals from organizations and universities throughout the state.

Utah-MEP delivers industry-centric resources such as process improvement and operational efficiencies, supply chain optimization, revenue growth, leadership development, quality systems and certifications.

Available programs through UTAH-MEP include cyber security, organizational excellence, continuous improvement, sustainable practices, technology acceleration, international business development, workforce development, supplier development and top-line and bottom-line growth resources, among others. As part of the national Hollings Manufacturing Extension Partnership, Utah-MEP leverages

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federal and state resources to support manufacturers even further.

During the COVID-19 pandemic the Utah-MEP reached out to every manufacture in Utah via phone and offered a set of free services to help address their needs. Many manufacturers are seeking out methods to streamline and improve their processes as they face increasing demands post COVID, UtahMEP said.

Utah-MEP serves all 29 Utah counties, ensuring manufacturers throughout the state of Utah are supported. Many of their programs can be accessed online and at 29 locations statewide.

More information about Utah-MEP is available at Utah-MEP.org, 801-587-0713, or by email at info@Utah-MEP.org.

“Manufacturing is a vital part of the state’s economy,” said Stephen Reed, director of USU’s Utah Manufacturing Extension Service. “It is essential that manufacturers have access to every tool they need to succeed, grow and thrive. Utah Industry Resource Alliance was founded to provide a unified resource for these tools.”

UMAWEB.ORG

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MFGUTAH

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FUNDS AWARDED

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Projected STUDENT ENROLLMENTS

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Application submissions to date

1200+

Workforce programs • composites technology

• HVAC Energy Optimization

• injection molding Technology

• computer-aided design (cad)

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energy

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29%

healthcare

information technology

advanced manufacturing

technical training

transportation

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OV E R $ 8 5 M I L L I O N I N C A P I TA L RETURNED TO OUR CLIENTS H E L P I N G U TA H ’ S B E S T- I N - C L A S S M A N U FAC T U R E R S R E A L I Z E T H E I R F U L L VA L U E T H R O U G H TA X C R E D I T S T R AT E G I E S AND INCENTIVES Contact us for a complimentary analysis Ben Lonsdale blonsdale@tannerco.com 801.990.5957

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Incident Investigation Workers Compensation Fund Workplace accidents happen. Incident investigations prevent future and similar accidents from happening.

The goal is not to seek or point blame, but to collect information that can be analyzed in identifying the underlying root causes or fundamental reasons for an incident.

An incident is an event that happens because of a departure from normal operating conditions. Incidents (also called, near misses, close calls, near hits, etc.) may cause property damage or result in injuries. Incidents are disruptive, unplanned, unwanted, and controllable. Whenever there is a significant departure from normal operating conditions, perform an investigation.

You should perform incident investigations to: • Prevent incidents from happening again • Save lives • Save money • Identify hazards • Improve and expose system inefficiencies • Reduce future injuries and workers’ compensation costs • Determine contributing causes • Establish effective corrective actions WHEN TO INVESTIGATE In an ideal situation, you should investigate every incident, including close calls. In practice, you’ll have to choose what should be investigated. Use the following criteria to determine if an incident should be investigated: • Injury severity • Property damage • Significant disruption • The worst plausible outcome if the incident occurs again • If someone could have been injured or killed 15

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Once you determine that an incident should be investigated, perform the investigation as soon as possible. The longer you wait, the more evidence you will lose. If an incident results in a significant injury or fatality, you will need to notify OSHA, who may ask you to secure the scene. You can investigate the scene (provided you do not disrupt it) even if OSHA requires the scene be held.

HOW TO INVESTIGATE There are several best practices to use when investigating incidents. Best practices are the most effective techniques available, and you can add your own as you discover what’s best for your company and your situation. Use the best practices below: • Develop a plan and some procedures about how

CONNECTING AND STRENGTHENING UTAH'S MAKERS

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Assign responsibilities.

Address first aid and/or emergency care.

Include methods to develop and evaluate 428 E WINCHESTER STREET, #135 an PHONE 801-363-3885 investigation kit, including tools, forms, PPE, etc.

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Interview witnesses.

Gather information and facts using video, photos, notes, etc.

Determine root causes.

File a workers’ compensation claim.

Implement controls.

Write a report.

For more information on incident investigation and safety topics, visit wcf.com. If you’re interested in getting a 5% discount on your workers’ compensation insurance as a member of the Utah Manufacturers Association, talk to your agent about the benefits of WCF Insurance.

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Overcome Hiccups and Save Time Through Stress-Free, Reliable, Experienced Fulfillment Services Piggyback™ Fulfillment by SnugZ USA Hi there! Nice to meet you. We’re Piggyback™ Fulfilment by SnugZ USA, a new business services powerhouse for Utah manufacturers. Locally owned and operated with main warehouses in West Jordan, Utah, Piggyback offers Utah small businesses everything they need to expand their business affordably—without hiring a costly in-house fulfillment team.

Piggyback can help manufacturers overcome common growth hiccups (and get back valuable time) through stress-free, reliable, experienced fulfillment services. An expansion of respected Utah promotional merchandise manufacturers, SnugZ USA, Piggyback’s leadership has 30+ years of manufacturing experience. We’re offering up the business services we know Utah biz owners need most—all under one roof.

Efficient, Experienced Kitting and Product Assembly Piggyback’s Utah-based facility offers fast, reliable kitting and product assembly done right the first time, every time. Simply deliver materials or kit components to Piggyback and specify how you want your kit or product assembled. We’ll do the rest!

Piggyback can also assemble products, including assembly of zipper pulls on bags, clipping two items securely together, folding and sorting apparel, inserting apparel into poly-bags, and anything else your small business needs to get your products in the hands of customers, faster. Again, these services can be combined with warehousing, drop-shipping, and other popular small business needs to make your manufacturing biz run smoothly.

Drop-Shipping for Easy, Stress-Free Distribution Need drop-shipping you can trust to get your products there on time, without damage? Piggyback ships to domestic and international locations at affordable prices to make your life just a little bit 17

easier. The Piggyback team can individually ship one or more pieces, product sets, or packed boxes to as many locations as needed. Whether it’s sent to 3 or 3,000 addresses, it’ll get there on time and intact.

Short and Long-Term Warehouse Storage If you’ve got space-hogging inventory clogging up your warehouse, distribution center, or corporate space, you know the value of expanded storage for inventory. If you’re considering the hassle of moving your manufacturing operation to a larger facility, don’t! Piggyback’s warehousing is a pay-as-you-go, monthly storage solution for up to a year. Plus, warehousing can easily be combined with other Piggyback Fulfillment services to streamline your storage, assembly, and shipping process.

Custom Printing, Engraving, and Other Decoration You provide your raw materials and Piggyback will produce beautiful, professional full-color labels or reproduce your designs using pad printing, screen printing, dye-sublimation, laser engraving, and debossing methods. The possibilities are limited only by your imagination.

Full-Service Third-Party Fills and Lab Formulations One of the services we’re most excited about at Piggyback is 3rd-party fills and formulations. Have your own formulation and need a qualified lab and FDA registered facility to make it, fill your containers, and add product and ingredient labels for retail? Done.

This is a true game-changer for Utah small business owners making beard wax, room sprays, lotions, topicals, and many other self-care products. And Piggyback can help with warehousing, kitting, and distributing your products, too.

Want to grow your business with reliable, friendly, local business services? Try Piggyback Fulfillment by SnugZ USA! Contact us today for a free online quote at piggybackutah.com or call 877-275-8014 to chat with our team.

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Reshoring to Utah: Challenges and Opportunities

By David Beckerman, Lead Analyst, UAMMI

Reshoring has been a hot topic of late. The global COVID-19 pandemic exposed the weaknesses in global supply chains, but even before the pandemic a rise in tariffs in America on Chinese goods and increased tensions between the two countries had caused firms to reexamine the benefits and challenges of manufacturing and sourcing in China. Companies looking to reshore would like assistance with both the evaluation of opportunities and the reshoring process, but often find few such resources. To that end, the Utah Defense Manufacturing Community (UDMC), through the Utah Advanced Materials and Manufacturing Initiative (UAMMI), set out to identify and assess reshoring efforts. The goal of the research is to support Utah’s policymakers in developing a statewide reshoring program.

UDMC divided its work into four projects: 1. A benchmarking analysis that compared Utah’s reshoring efforts with those of other states and local communities around the country; 2. The second project was an economic benefit analysis that sought to compare the costs of manufacturing or sourcing in Utah with the costs of doing so overseas, particularly in China;

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3. Identification of Utah companies looking to reshore; 4. Attracting non-Utah companies that seek to reshore to the U.S. UDMC has completed the first two of these projects and gained interesting insight on Utah’s competitiveness as a reshoring destination.

The benchmarking analysis showed that Utah, although in line with its peers, could do more to proactively encourage reshoring to the state. Many people are surprised to discover that neither the Federal government nor any of the states provide financial assistance to companies that are looking to reshore.

Federal support is limited to consulting and analytical support tools through the U.S. Department of Commerce. Few local entities – states, manufacturing communities states or other local organizations – have developed specific reshoring incentives. They instead treat reshoring like any inquiry for new site location or expansion. Thus, the available incentives (support for job training, new employment credits, site selection, etc.) are not specifically targeted to reshoring companies. A Google search for “Reshoring Utah” will direct you to a site run by the Reshoring Institute (an excellent organization), but not to any state or local programs.

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The same is true for most states. One exception is Kansas which has a dedicated web page through its Department of Commerce. It provides case studies and highlights companies that are reshoring, but Kansas does not provide any economic incentives specifically tied to reshoring. This highlights an opportunity for Utah – UDMC has recommended that Utah develop a reshoring website and review existing economic development programs to identify strengths and weaknesses with regard to reshoring.

The second project, the economic benefit analysis, sought to identify the actual costs of manufacturing in China versus Utah based on data from Utah companies. A lack of consistent and non-proprietary data prevented a line-by-line analysis, but the researchers did confirm that basic parts, such as bushings, can cost as much as 80% less in China than in the U.S. Utah firms noted, however, the higher costs of shipping especially in the wake of the pandemic, with container costs up five times their pre-COVID levels. Lengthy delays in the supply chain have added to costs. As a result, firms want to take a look at the total costs of offshoring.

falls to between 10 and 15%. If the U.S. manufacturer can lower its costs or raise prices, it could overcome the Chinese advantage.

Weber State University (WSU) is in the initial stages of developing an International Supply Chain Risk Assessment Model that would allow Utah companies to weigh the risk of various potential events (such as war or a pandemic) and the associated effect on revenue streams if they take corrective action or not.

Users can incorporate the assessment into the TCO Estimator for enhanced analysis.

UDMC has recommended that Utah promote use of the TCO Estimator, assist WSU in the development of its tool, and identify measures to help mitigate remaining cost gaps for Utah manufacturers.

UDMC expects to make additional recommendations following the third and fourth projects of this initiative, identifying both Utah and non-Utah companies that are looking to reshore to the Beehive State.

The study found several tools that help in this effort such as the True Cost of Ownership (TCO) Estimator developed by the Reshoring Initiative. It allows lineby-line comparisons and evaluation of what-if scenarios. The Reshoring Initiative has determined that, on average, Chinese manufacturing prices are 30% lower than U.S. prices. But when accounting for hidden costs, such as intellectual property and supply chain risks, the actual cost advantage

Click The QR Code Links to Reshoring Reports

Source: The Reshoring Initiative

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Adapting to Supply Chain Shake-Ups With expert insight from Win Jeanfreau, Executive Director of iMpact Utah.

From bottlenecked ports in Los Angeles to labor shortages across almost every industry, the ripple effects of COVID-19’s impact on supply chains are evident and real. And unfortunately, there is no guaranteed return to business as usual anytime soon. So how can manufacturers adapt and stay competitive?

Win Jeanfeau, Executive Director of iMpact Utah, offers key insights and takeaways for manufacturers looking to stabilize their supply chains and avoid disruptions in the future.

It has been said ad nauseam that the pandemic has brought about unprecedented times. But Win Jeanfeau, a successful entrepreneur who is no stranger to optimizing supply chains, points out that there is some precedent we can learn from—specifically, the 2011 Tohoku earthquake and resulting tsunami in Japan.

Much like the pandemic, the 2011 tsunami in Japan was an unforeseen disaster that not only killed thousands of people but devastated manufacturing supply chains too. Toyota, who had pioneered the just-in-time inventory (JIT) process, lost a vital chip maker in their supply chain. As a result, Toyota recognized the fragility of their JIT model. As a result, they reevaluated their supply chain philosophy, informed by this disruption. As a result of their evaluation, strategic reserves for certain elements of 25

their supply chain were identified and upper limits increased. One of the items identified as critical and difficult to replace were chips for the computers in their automobiles. Toyota created a surplus of computer chips so they would be ready to respond should they lose such a vital component of their supply chain again.

Making JIT inventory more robust.

Toyota’s preparation following the tsunami has now paid off. While most car manufacturers have had to slow or halt production due to the computer chip shortage brought on by the pandemic, Toyota has thrived. “They’re the only car manufacturer that’s been able to make cars in the last year because they had all the parts and pieces in strategic reserve,” Win says. “Nobody else did.”

While disasters like tsunamis or pandemics have revealed the fragility of bare-knuckled JIT inventory, that does not mean JIT should be completely abandoned. Instead, Win refers to pre-tsunami JIT as being version 1.0 of a lean manufacturing approach.

Now, Toyota has shown us version 2.0 of JIT—one that is more robust by implementing strategic reserves and empowering manufacturers like Toyota to weather the storm.

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Strategic JIT reserves are comprised of the key elements in your supply chain that are more difficult to replace in the event of a catastrophic event. Ask yourself: in the design of your product, what are those things that are challenges in your manufacturing now? Look for more than one way of designing that item. Identify if there is a substitute for that item that is more readily available without causing a declination in the quality of your product. And this leads to Win’s next bit of advice—consider sourcing that item locally.

But the challenge for manufacturers isn’t so much about how to return to normal, but rather, how to innovate and adapt. Win recommends looking towards advanced manufacturing approaches that can address supply and labor shortages. He names automation, “cobotics”, new synthetic materials, and 3D printing as the promising avenues for growth in manufacturing.

Implementing domestic vertical integration.

Another strategy for dealing with supply chain disruption is to implement, where possible, domestic vertical integration. In domestic vertical supply

Things may seem daunting now, but remember that making decisions under stress perpetuates bad decisions. “This is a great time to go to that chi place where, rather than responding to a pandemic, you begin to think of a world beyond the pandemic,” Win advises. “The more of us that start planning for that, the more likely that future will manifest itself.”

chains, manufacturers own it all, or at least the parts that matter most. Smaller manufacturers who can’t do that have begun to look for suppliers closer to home.

Visit impactutah.org to learn how Win Jeanfreau’s team can help your company survive, grow, and thrive.

Domestic vertical integration has typically not been part of the initial calculations for manufacturers who are more inclined to pursue the shiny appeal of lowcost, overseas suppliers. But when measured by the risks to your supply chain, the true cost of relying on the panacea of Chinese suppliers is proving to be untenable. Win suggests that some manufacturers are now “realizing that a 20% increase in cost to buy domestically is probably cheaper than the time that it takes and the interruptions that can occur because I’m buying these things from China, or from Europe, or from Asia somewhere.”

In short, domestic vertical integration is about bringing your supply chain closer to home, and under more of your control, wherever you can.

Thinking ahead.

If there is any silver lining to these supply chain disruptions, it is that manufacturers are learning how to make their supply chains more robust and less likely to falter in the face of catastrophe.

Implementing strategic JIT reserves and domestic vertical supply chains will inevitably lead to increased costs, and by some reports, we’re at least 3 quarters away from any kind of return to normalcy.

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Lockton Companies grows Salt Lake City operation Offering deep risk management expertise to Utah manufacturers SINCE EXPANDING INTO UTAH IN OCTOBER OF 2019, LOCKTON, THE WORLDS LARGEST PRIVATELY HELD GLOBAL INSURANCE BROKER, HAS STEADILY GROWN ITS SALT LAKE CITY-BASED OPERATION. LOCKTON’S INCREASED PRESENCE IN THE AREA HELPS MANUFACTURING COMPANIES IN ALL SECTORS ADDRESS RISKS RELATED TO THEIR BUSINESS. FROM PROPERTY/CASUALTY TO EXECUTIVE- AND HUMAN-BASED CAPITAL RISKS, LOCKTON PROVIDES CLIENTS THE TOOLS AND RESOURCES NEEDED TO MAKE THE MOST INFORMED DECISIONS. Anthony Jensen, a 13-year insurance industry expert, leads the Salt Lake City office. Specializing in MFG, Jensen develops unique risk management strategies for all types of manufacturing clients, from food and beverage to aviation/aerospace to outdoor sports and recreation.

Jeff Bryant joined the team in March of 2020.

Bryant has more than 30 years of industry experience developing comprehensive risk management programs to protect his clients’ balance sheets. He specializes in real estate, manufacturing, tech, healthcare, education, and construction.

“This team is proud to help our clients ensure risk resilience by understanding their business and industry issues.

We provide the tools and guidance our clients need to avoid disruption and capital losses,” says Jensen.

“At Lockton, we work hard to become an extension of our clients’ risk management teams and protect their businesses and employees as if they were our own.”

With Lockton, you get something you may not be used to with insurance — creative thinking and an unmatched commitment to client success. Lockton’s team brings global resources and capabilities to Utah’s strong manufacturing community. The best and brightest are drawn to Lockton because they want to make a difference. They’re voracious doers who know how to help clients respond quickly to changing markets and offer the deep industry expertise needed to navigate these complex times.

Lockton Salt Lake City 111 E. Sego Lily Dr Suite 190, Sandy, Utah 84070 anthony.jensen@lockton.com | 801.601.5366 jeff.bryant@lockton.com | 801.601.5447

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