I interviewed Michael Hetzel who discussed 'Not Just Logistics Anymore'.
Well, sure. First of all, thank you, Dustin. It's a pleasure to be here with you. I'm looking forward to our chat today. I've had 18 years in manufacturing, nine and a half years of those as CEO of an injection molding company and metal stamping company doing precision work. During the '90s, we were exporting, kind of a fish going upstream compared to all the exporting that was happening.
The last 13 and a half years, I spent with a third-party quality firm managing the North and Latin America division. Third-party quality, or 3PQ, of course, is basically helping people get what they pay for, primarily in long-distance supply chains. And during that time, we took the company from 10 to 38 countries of presence. During that course, I had the visibility of a thousand supply chains, and I can't tell you what any individual company was doing, but I certainly have a lot of information on watching the evolution of these supply chains.
These days, I'm consulting with companies in various areas and at the same time, if someone has a bigger project or a company, I'd be delighted to look at that.
What do you mean by "not just logistics anymore"?
Well, that's a nice big question that we can cover. What I'm saying is that there are major changes occurring. It's not just routing and logistics. We have changes being facilitated by technology, not being defined by it, although in some cases, people are mistakenly letting the technology define in changes. But it's being facilitated by technology. Recently this year, we have changes being driven by politics. And with the new administration in the US and the potential for impediments to imports, this adds a strong additional force to an impulse that's been there for some time, and I'll get to that in just a minute.
But along with the technology, it's more of a facilitator. We have IIOT, industrial internet of things.We have data overload because the analytics can't keep up with the generation of data. We have a nascent program of robotic process automation or RPA, which is not just for credit card payments anymore. But of course, things have to be defined in order for RPA to be developed for the analytics. Things have to be defined because right now, we're just collecting data because it can be, more so than because it should be.
Now nothing I've said or am going to say is absolute. There is no always. There is no never. Certainly, there are enlightened companies and company leaders that are following some of the channels that we'll be talking about here in this rather brief overview. But by and large, we're just seeing the emergence of quite a bit of this. That's why we're still seeing in the literature people talking about the technology of supply chain, and they're talking about routing in logistics. And certainly, the technology is very enabling in that regard.
Now something that I've been speaking about in my lecture practice and articles I've published over the last 17 years is that ultimately, the most logical basis for manufacturing is to produce in proximity to market. Nothing gets more valuable riding on a boat. Let's put it that way. With the agility of proximity to market in the face of shorter product life cycles, mass customization, the cost of warehousing, the diminished advantages of heretofore low-cost areas are all contributing to what I believe will ultimately be — and I don't have an exact timeline. If I had that crystal ball, then that would be a great thing. But it's moving in that direction, has been for some time.
So what does proximity to market give us? Agility.What's an example of it? Well, if you need a 100-line manufacturing facility, and half of those products, say, go to Asia and half of those products go to the Americas, ultimately it's going to be a 50-line factory in Asia and a 50-line factory in the Americas. And I think that clarifies the type of structure we're talking about. The initialization of factories, for instance, with today's automation, there's a much shorter learning curve and much easier in the sense that the same program on the robotics will work in China or Indonesia or in the United States or Mexico. Same thing with Europe and so forth.
This is where we should be taking our new look. We shouldn't just be improving what we've done for years and decades. It's time for disruptive change. At the risk of maybe upsetting a couple of people or maybe just one, the world's not flat. It never has been, except for the transfer of data. It still takes time for that boat to get across the ocean. It still takes extra warehouse space for the additional inventory and all these other issues associated with long-distance supply chains. So that may be a great title for a book, and it sold a lot of them, but the world will never be like that except in the technology world where it absolutely is.
Years ago, we were designing molds in three countries around the world so that we were passing off the designs on a 24-hour basis. Instead of trying to have an engineer work the 3 AM shift in Chicago, we'd have somebody in Asia and someone in Europe.
So those kinds of things do flatten the process, but we're dealing with the physical products. That's where I'm coming from on this discussion.
Now market opportunities, you may find if you examine this, rarely are market opportunities overlaid in the design of supply chain architecture. So we have these supply chains stretched out in different areas, often chasing lower costs, chasing materials, or chasing the input suppliers so that we don't end up with remote islands of production. But at the same time, we may have two or three options, and without the market overlay, we might miss that one of those positioning options, puts us in a perfect spot to not only produce for our supply link but to produce for others, consequently creating a new market advantage for the company.
I'm not giving that much time in words but that's one of the biggest tenets here that we're dealing with. You overlay those. You might see a whole different picture for your supply chain architecture. You may not. It depends on the product. It depends on the processes. It depends on many regional issues and so forth.
I coined a term back in '06. It was published in Mexico Now, and it's called "Strategic Overshoot."And strategic overshoot — forget the military version — in supply chain is extending the supply chain far longer and distant than it needs to be without fully rationalizing the position. I really said that in response to that period where China manufacturing for the West became in many ways a fad. And you may recall people reading in the trades, "We went to China, and didn't save money." I consulted with some of those of companies and stopped them from going because it was an assumption that was not valid. It's still, to some extent, present.
These are some key challenges in that area, avoiding strategic overshoot, creating market opportunities through the supply chain architecture, pulling the supply chain in closer for agility, using IIOT and RPA for data analysis with trigger points built in so that rather than being overwhelmed by the data, we filter the data to these key metrics and parameters.
The last area that I'll point out is on the culture side of this. Humans can't simply be the backups for the machines. And unfortunately, that's exactly what's happening in highly automated plants. And that's what's changing the attitudes of some of the workforce — remember, there are no absolutes — but some of the workforce in that they're perceiving themselves as less important. They're being allowed to perceive themselves that way because functionally, that's all they really are doing — walking around, squirt some oil here, this thing broke down, put in a new module, that sort of thing.
We have to create new value drivers to optimize the human condition in these factories. I've been optimizing the human condition for decades in my career. It's the human condition and how it's configured and what it seems like. That's what's changed. Obviously, the results are going to come from the performance. Frankly, we give too many ocean cruises to our television sets and not enough ocean cruises to our employees. That may sound flippant, but give it some thought, and you'll find that that really has a tremendous effect on workforce loyalty, workforce attrition, workforce progress, and dealing with the cross-generational issues, particularly when we look at our latest group, the Millennials. That could be another discussion in itself. I've worked with quite a few over these years of my career.
So in overview, this is why it's not just logistics anymore because we shouldn't optimize what is obsolete. We shouldn't apply a layer of technology over something that we need to evolve. This is actually one of the most fun times I've had in decades, is working with this sort of change rather than just brushing the rust off of old methods or creating new methods. We're actually changing the foundation. And it's a very exciting and historic time for manufacturing. And I sincerely hope that this short presentation has proven to be useful to your readers.
Yes, thank you, Michael. These are very important points. And I'd love to speak with you in the future where possibly we could go into more depth in some of these areas.
That would be my pleasure. I'd be delighted.
About Michael Hetzel
CEO, President, COO - International Trade Specialist Mfg or Services