Supply chain shortages encourage automation interoperability

Two-thirds of automation users are more likely to buy from suppliers that support interoperability standards to increase supply chain resiliency. More than one-third re-evaluated suppliers after software supply chain cybersecurity attacks.

These findings are according to the fall 2021 research reports from CFE Media and Technology, “Global Supply Chain Challenges: Manufacturing” and “Global Supply Chain Challenges: Cybersecurity,” prepared by Patrick Lynch, vice president, and Amanda Pelliccione, research director, both with CFE Media and Technology.

Think again about how automation can help resolve supply chain, and cybersecurity concerns for manufacturers.

Methodology for fall 2021 supply chain research

Subscribers were sent an email from Control Engineering or Plant Engineering asking them to participate in the study. The email included a URL linked to the questionnaire. Data collection occurred from Sept. 21, through Sept. 30. For the manufacturing portion, number of respondents were 129 resulting in a margin of error: +/-8.6% at a 95% confidence level. An incentive was offered, a drawing for one $100 Amazon.com eGift Card. The cybersecurity section received 69 responses for a margin of error of +/-11.8% at a 95% confidence level. Fewer than 100 responses is not considered statistically significant data.

Key data points from the research studies follow. Find the full reports with this article online.

Supply chain manufacturing impacts: Longer waits, higher costs

Over the past several months, the inventory-to-sales ratio has fallen for 39% of respondents; 22% said it’s risen.

Basic commodities, cost of shipping goods, electronics or semiconductors, factory automation, industrial networking, manufactured goods and process controls, on average, increased in cost by approximately 11 to 14%.

Average supply chain related delays were running 6.5 weeks, although 7% were seeing 17 weeks or more of delays. Anecdotally, several automation suppliers discussing supply chain challenges at an industry trade show in September noted even longer delays.

In a “check all that apply” question, respondents were asked to select types of products most effected by supply chain delays. Considering margin of error, top 8 (about half down to 30%) were, high to low: Electrical equipment, appliances and components; electronics; computer and electronic products; semiconductors; fabricated metal products; building materials; chemical products; and miscellaneous manufacturing. Eleven other industry groups were on the list.

Manufacturer supply chain disruption effects, optimism

About half of respondents said manufacturers most commonly responded by extending delivery times. Next five replies were a statistical dead heat (38 to 28%): Raised product costs; identified, qualified and signed new suppliers; paid premium to suppliers to ensure additional material are available; broadened supplier base; carried more raw material inventory; and extended production times and incentives. At the bottom, 20% hired new employees or brought on contractors.

About 11 months from September (August 2022) was the average expectation supply chain issues would end, though 22% said 13 to 24 months and 5% more said more than 24 months.

For 61% of respondents, the plant’s supply chain is increasingly fragmented, and just 21% identified the primary cause of the supply chain issues.

Just 12% said their plant had excessive concentration of key inputs in a few firms and locations; 39% didn’t know; 49% said no.

About one-third (31%) is chain supplier management or inventory management strategies as a result of ongoing supply chain shortages. The two most important changes were to identify alternative suppliers (58%) and review inventory policy and planning parameters, including safety stock and vendor-management inventory thresholds.

Reshoring or regionalizing considerations were planned for key aspects of supply chains for 45% of respondents.

Lean inventory strategies have increased vulnerability to supply chain disruption for 61%, hasn’t for 26%, and 13% didn’t know.

Biggest impacts to manufacturers’ plants were internal constraints related to COVID-19 (60%), U.S. labor shortages (50%), internal slowdowns/shutdowns from operations/automation parts shortages (41%) and within the margin of error of that were backups at U.S. port (36%) or Asian ports (35%). Three other options and “none of the above” ranked lower.

Interoperability matters for automation, controls, instrumentation

Two-thirds of respondents (67%) said they were more likely to buy automation, controls and instrumentation and related hardware, software and networks from vendors that demonstrate they support product and software interoperability with open systems and open standards to increase supply chain resiliency; of that, 49% said more likely and 18% more said much more likely.

Similarly, half (51%) said they were less likely to continue to buy automation, controls, and instrumentation from those they find are not easily interchangeable with other vendors products.

Long lead times are causing switches in suppliers for drop-in replacements for automation, controls and instrumentation for 58% of respondents.

These last three points support industry standardization efforts to increase interoperability. Is interoperability only a COVID-19 effect? No.

Prior to COVID-19 related supply chain tightening with automation, controls and instrumentation and related hardware, software and networks, 71% of respondents said supply chain resiliency, interoperability and ease of replacement of products and software with another vendor was important or very important.

Interoperability matters for automation, controls and instrumentation, according to respondents to a CFE Media and Technology supply chain research impacts on manufacturing and cybersecurity, fall 2021. Courtesy: CFE Media and CFE Technology.

Advice from the manufacturing supply chain

Survey respondents were asked to offer advice to peers about the manufacturing supply chain. These include:

• Always use products that are easily interchangeable with competitors
• As an automation supplier business has been very good, labor and turnover has been the biggest challenge.
• Before specifying the product, make sure that the product is available.
• Inventory management would be key. Taking risk to plan optimistically for next 3-6-month timeline (Lean manufacturing may not work till issues with semiconductors and other raw materials get resolved in COVID-era.)
• Need to push for open standards and interoperability.
• Plan for at least 20 weeks for all projects.
• Some manufacturers are having difficulty making the replacement parts needed to keep current equipment functioning
• And simply: “Cybersecurity issues.”

Supply chain cybersecurity: Trust, visibility, re-evaluation, preparedness

In the cybersecurity part of the research, most respondents do trust vendors in their supply chain to identify cybersecurity vulnerabilities and explain which components they use to build their products.

Software bill of materials was identified as a way to help manage supply chain software vulnerabilities, and visibility was the biggest way this happens.

In contrast to visibility, however, 81% of respondents said they didn’t know if supply chain participants had heightened cybersecurity threat profiles.

About one-third re-evaluated their vendors and suppliers after software supply chain cybersecurity attacks like SolarWinds and Kaseya.

As for preparedness, war-gaming major cyberattacks with the executive management team hasn’t happened for 94% of respondents.

Mark T. Hoske is content manager, Control Engineering, CFE Media and Technology, mhoske@cfemedia.com.

KEYWORDS: Manufacturing supply chain, interoperability, cybersecurity

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Original content can be found at Control Engineering.

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