Interview: Flex’s Tom Linton and the digital supply chain
As Chief Procurement and Supply Chain Officer at California’s Flex, Tom Linton helps run a workforce of 200,000 that designs, engineers and delivers logistical and manufacturing solutions for customers in 30 countries.
A 30-year industry veteran, Linton is evangelical about digital’s ability to transform his craft and those keen to learn from his wisdom should read The LIVING Supply Chain: The Evolving Imperative of Operating in Real Time, which he co-authored with academic Dr Robert Handfield (published in August 2017).
“Digital tools allow us to operate the supply chain in real-time,” the ebullient Linton tells Supply Chain Digital. “Before the availability of these tools, it was like driving on a motorway in your car and trying to monitor and increase your speed using yesterday’s speedometer information. It’s almost a cliché to say that the pace of change is accelerating, but it’s true. Digital allows supply chains to keep up and often drive that speed.”
Historically, the biggest problem with supply chains was one of visibility – you can't fix what you can’t see – but that need no longer be the case, with digital allowing managers to understand inventory flow in real time and act immediately to alleviate any obstacles. “Timely information is presented to people who need it so they can make real-time decisions. When they do that, they increase the velocity of a supply chain,” says Linton.
“Faster inventory turnaround means more, free cashflow. The velocity of a supply chain is directly linked to the health of the balance sheet of a company, so a faster supply chain is a better supply chain.”
Flex’s CEO Mike McNamara has challenged its staff to remove five days a year from its supply chain. As a public company, it reports days of inventory or days of supply, which is a balance sheet measurement showing the cashflow of a company. “When you move goods you free cashflow, and you get your money back from your customers when you sell it. This is a simple concept and it's got a very significant ROI because of the cash benefit,” says Linton. That is not the only improvement – a faster supply chain will also bolster operating margins and increase customer satisfaction.
“Customers like to receive things faster, and you can produce more revenue over the same period of time,” Linton claims. “The combination of visibility and velocity of the supply chain and its direct impact on the bottom line is understandably getting a lot of attention.
“Supply chain managers who don't focus on the speed or the acceleration, may not be leveraging digital enough meaning they might not be as successful as those who do.”
Linton’s book summarises his philosophy as L.I.V.I.N.G. –
L Do you have real-time live information?
I Is it intelligent? - Are you able to connect the essential points in your network through cloud, mobile and other ways to provide the analytics you need?
V Are you moving your assets faster and with velocity?
I Is your data interactive? – i.e. can it be accessed by common mobile technology?
N Is your information networked? – so you can pull it together to get one view?
G Is your network good?
These capabilities are all evident at Flex’s Pulse centres, which compile data from over 50 different information feeds into a graphic format so that staff can visualise and understand what's happening in the supply chain more easily.
The centres feature a huge wall of interactive screens, which allow staff to engage with the information much as one would on an iPad. They can drill down into the data underneath each feed for a more detailed picture of events and then correlate data to comprehend what’s happening, or likely to happen. The system immediately alerts staff to anything going wrong.
“Much like a nurse’s station at a hospital, a nurse may be responsible for a dozen patients, but they don’t go to the room of the sick patient until an alarm goes off,” says Linton. “Then attention is given to the patient. There can be a million things happening in a supply chain, but you only want to be alerted to things that need your attention.”
Flex has built several Pulse centres worldwide; in Europe and the Middle East these are in Czech Republic, Poland, Austria and Israel. In addition, more than 6,000 staff have Pulse software on their phones so they can react immediately.
A key tool Pulse uses is Source, which identifies the physical location of a customer’s suppliers. It then monitors Twitter feeds, fire departments, police scanners and anything relevant on the internet relating to these locations, thereby ensuring Flex will know immediately if something occurs that could disrupt supplies.
Flex has also partnered with Elementum to create new digital tools that use technology such as GPS tracking to provide real-time information on the location of goods. Historically, visibility in transportation networks was provided through tracking numbers that trace shipments through a barcode – the product was scanned when it leaves a warehouse or lands in another warehouse. But this method only records points in the supply chain, rather than tracking something along the entire route.
The Elementum software tracks the movement of goods on ships, trains, planes and trucks so customers know precisely where things are and when they're going to arrive; this level of transparency will be disruptive to current business models.
“You might be informed you're going to get your box in two days, but what if you found out your box is sitting one block away in a warehouse and it’s not being delivered to you because they centralised the shipments and only deliver them once every two days?” says Linton. “That visibility changes the way you think about how fast you want something. If you know that it’s a block away, you want it today.”
Transparency can also alter working relationships within companies. “Transparency is a one-way bridge, you can't go back. You can't say, ‘I want to be less transparent,’” Linton continues. “When information is no longer controlled and metered out piecemeal, we democratise it and make it easily accessible in a digestible and understandable way. Then, the company can move faster, rather than relying on this process of getting information, retrieving information, reporting information; instead we see it all in real time. ‘Live, fast, and intelligent’ is what we have to focus on.”