The Resilient Supply Chain Playbook: Combat disruptions through strategic collaboration
Full transcript below:
Jim Brown
Hello, and welcome to this webinar. We’re talking today about building a resilient supply chain. We’re going to introduce ourselves here shortly and then talk about the webinar. I’m just going to go through a few quick housekeeping notes before we get started. Before we dive in, let’s quickly cover just a couple of things to help you get the most out of today’s webinar.
First, if you have any questions during the session, you can submit them through the Q&A box. Just look for the question mark in the speech bubble icon on your screen. We’ll do our best to answer as many as possible during the live Q&A at the end, and actually, George and I are going to try and answer some as we go through the presentation as well. The webinar will run for about 45 minutes, including time for your questions, and we’ll also have a couple of polls during the session to hear your thoughts and get your input, so please take a moment to participate when they pop up. And finally, we encourage you to stay engaged throughout. Your input really helps make these sessions more valuable for everyone and more enjoyable. Hopefully we can all have a little bit of fun, and I know I’m hoping to learn something today.
So with that, let’s go ahead and get started. So as I said, today we’re going to start talking about building a resilient supply chain, a very timely topic for everybody, I think. And I’m going to be presenting. I’m Jim Brown, President of Tech-Clarity. I’ll have a formal introduction in a second, and I’m presenting with George Lewis, who’s a VP of Product Strategy at Arena Solutions PTC, and definitely looking, again, to learn from him.
Just real briefly, Tech-Clarity, we’re an industry analyst firm. We’re independent. Our goal is really to make the business value of technology clear. So we understand what happens in PLM systems and supply chain systems, but where we really focus is how does that help you improve your business, improve your P&L, and to improve your top line, have you hit your metrics?
Again, it’s Jim Brown. I’ve got a background in industry. I started my career during school at General Electric Major Appliances in manufacturing engineering, spent time as a management consultant putting in enterprise applications, and then into the software industry for manufacturing, ERP, and supply chain. And then moved over into PLM and since then have been an industry analyst, founded Tech-Clarity just over 20 years ago. So hopefully some of that background will come through today and be useful to our conversation.
And with that, let me introduce George Lewis and have him share a little bit of his background.
George Lewis
Thanks, Jim. Hi, folks. I’m George Lewis, Vice President of Product Strategy at Arena. I guess a little bit on my background, from an industry standpoint, I worked as a project engineer for BFGoodrich Company coming out of school initially. I spent around five years doing that, helping advise customers on achieving design goals for thermoplastic injection-molded products. So I was in the trenches on the manufacturing line, ramping things up from an operations standpoint. From there, I became enamored with the software industry. We acquired this technology called Pro/Engineer at the time, which is now called Creo, and quickly moved over into that part of the world on the software side of things with doing PDM and PLM deployments for PTC technologies, to sell systems technologies.
Began at Arena in 2005 and spent 15 years leading the solution consulting teams at Arena, and so that’s really where I have a lot of experience in talking to various customers, prospects. Probably thousands of conversations over those 15 years with customers, just understanding what’s going on. Seen some of the evolution in the industry. Certainly back in 2005, Cloud wasn’t that popular and since then, it’s become quite a popular.
I did spend a little bit of time at Oracle and Propel, came back to Arena in 2019, and really I was part of the team that led the charge to bring Arena to PTC. And so that happened in 2021. Since then, I’ve played various roles on just getting Arena connected into PTC’s ecosystem, leveraging PTC as an asset, and then getting out there and talking to folks like you all with Jim here on a call like this today. And so I’m looking forward to the conversation. Jim, back to you.
Jim Brown
Great. Thanks, George. And I understand that we may be having a little bit of an issue with our slides, so George and I are going to keep talking and as we get to some of the detailed slides, we will make sure that we share them with you afterwards if you aren’t seeing them as we go.
First of all, I’m going to be talking from some relevant research today. Again, we’re a research firm at Tech-Clarity, so I’m going to be sharing some of my research on executive strategies for long-term business sustainability, and business sustainability in that case really doesn’t just mean environmental sustainability and governments.
It really means overall, how do you innovate? How do you manage your workforce? We have certain pillars that we talk about, and I think what’s come through very loud and clear is that supply chain is incredibly important there.
And then I’m also going to be sharing some of my colleague Julie Fraser’s research on transformation for supply chain resilience, a great study that she did, so hopefully we’ve got some really good information for you from those. So what I’m sharing now is really from that strategies for business success or long-term business success and profitability. And what we’ve been following, actually for six years, we’ve looked both to the rear and found out what do companies see about risk and disruption in their industry and for their business, and what do they see going forward? And what we’ve seen just consistently is that risk and disruption just continues to grow, whether it’s to do with a man-made event, whether it is to do with the tsunamis or hurricanes or other natural disasters, the pandemic. There’s just been a series of disruptions that have gone on, and what we’ve figured out is the question isn’t about whether there will be risk and disruption. The question is what will it be and how will it impact? And so it’s really caused people to react by being much more agile and innovative, which I think is a positive thing.
But I think it’s just, we’ve just realized that it’s going to be, given the global nature of our supply chains and our markets and our world in general, risk and disruption is going to continue to increase. And in the slide, what you see is that actually 74% in total of companies said that it either significantly increased or somewhat increased over the last five years.
Now, one of the interesting things about that is we ask every year, “What is the largest negative impact on your business over the prior year?” And what we saw is that in 2022, as we published, this is the most recent one we published in 2023, we saw that 46% of companies, so almost half of the companies, reported that supply chain disruption was the most commonly reported negative impact on their business over the prior year. Larger than financial market issues, which were quite a big deal last year, some of the uncertainty. Bigger than workforce issues, political uncertainty, a lot of the other issues that were going on.
The most common was really having to deal with supply chain issues. So I think that makes this just an incredibly important topic, and I probably don’t need to tell anybody that’s joined today why this is important or that it’s important, but I will let you know that the data backs you up.
The other thing that we really focused on, and George, I’ll bring you in on this one too, is the negative business impact of supply chain performance. This is from Julie’s study, and we start to think about what are the things that impact this? And you worry about missed orders, you worry about higher costs and that sort of thing, but the thing that we really started to find out is that there are just these big business impacts of any supply chain glitch that goes on, and part of that’s actually in developing products and bringing them to market.
Two-thirds of the companies said that supply chain performance had a huge impact on lead times and market delays. And clearly when you look at that, that’s going to impact profitability. That’s going to impact their customer reputation, that’s going to impact customer satisfaction. And so those are the kinds of things that companies have to deal with.
And in fact, two-thirds said longer lead times and market delays; over half, at 58%, said that supply chain issues cause that lower customer satisfaction—obviously a relationship between those. So the key takeaway from this is just that the stakes are very high for getting it right in the supply chain and avoiding disruption.
So George, anything you’d like to add to that? I know that you guys pay close attention to this as well.
George Lewis
Yeah. No, I’ve had many conversations over the past few years with customers and prospective customers around just supply chain in general. And while the challenge has oftentimes changed, it could be tariffs or COVID or something along those lines, it’s hard to predict what’s coming next, and the customers that have the most flexible solutions and processes internally I think are the ones that are most adept at adjusting to whatever supply chain disruption comes their way.
And so some of that might be technology, but some of it is also like, “Hey, early in development, let me spend a little bit of time to go a little bit more slowly so that way I’m building in more flexibility into the process, so later when we’re running fast and if I need to make a change to deal with some sort of supply chain issue, I’ve got more levers that I can pull to deal with that issue.”
Jim Brown
Yep. No, absolutely. And I think that being prepared and then being agile and being able to change quickly are probably two of the best things companies can do.
George Lewis
Absolutely.
Jim Brown
So one of the things that we’re going to touch on now is obviously supply chain resilience, but let’s talk about it: why is it so important to the business? And really get a perspective from you first in terms of does your company have a supply chain resilience initiative? So we’re going to leave this poll up here for about 30 seconds.
If you can just give us an idea of do you have a formal initiative? Do you have an organized approach to supply chain resilience or is it just part of everybody’s job on a day-to-day basis?
So let’s go ahead and see what we get out of that. I think given the slide issue, we may have some issue with the poll as well, so we’re not getting a whole lot of information on our poll right now. So I’m just going to go ahead and move us forward behind that because the statistic of 0% and 0% probably is not that interesting. George, you’ve got something to add to that?
George Lewis
I’ve been a part of a number of conversations and round tables with customers and things along those lines, and supply chain in general is something that’s coming up all the time in the conversations that I have. It’s probably top three every single time, maybe next to AI comes up here and there, but supply chain is top of mind for everybody.
Jim Brown
And I was hoping to compare that to what we’ve seen in our research. And as I said, every year we go out and we understand the business factors that drive long-term company success and profitability. So this isn’t even just P&L for the year or profitability for the year, this is how can you stay in business for the long term and be successful? And as you see, the top one in the previous survey was workforce development, followed by brand perception and environmental sustainability.
But you see that actually, 85% of the companies said that it was either critical or important to the long-term success of their company and the success and profitability, and 42% said that it was critical. So I think what we’re seeing here is that resilience or resiliency is starting to be a top-of-mind topic. It’s not something that I had heard that term quite as much before.
We always talk about supply chain disruption, but really trying to do that planning in advance, really trying to build in the ability to flex, the ability to have a plan B, really is something that we are starting to see companies be a lot more purposeful about, whether they call it a design for supply or supply chain resiliency to extend it a little bit just beyond the product development side of things. George, any thoughts on that?
George Lewis
Well, I’ve heard the same sorts of things in the way of what organizations are looking to do. I think many of you on this call may recall at one point in time, Tesla was specifying alternate chip sets in their vehicles to be more flexible later on when they got into production. I’ve heard that in our customer base as well, where they’re literally taking that extra time early on to pick alternate chip sets, which is not a small task because the firmware needs to be updated to be able to support that, but they take that extra time.
Going back to my point earlier, they take that extra time upfront to be flexible later, and that’s becoming a very common theme in customers. The other thing you see a lot of is just simple choices, but making sure your components are multi-sourced early on, and hopefully your technology can help you support that. But as you’re making those choices, technology can potentially inform you to help you build flexibility into your design.
Jim Brown
Yeah, absolutely. And sort of de-risking the supply chain and having a plan B is a big topic. And actually, this is a drill down that we did in our last long-term business success. We looked at supply chain resilience overall, and from a supply chain objectives perspective, what we saw is that over half of the companies, the topmost common answer that we heard was focusing on reducing supply chain risk. And you see that there’s a lot of other things like reducing external supply chain dependency, improving design for supply, improving supply chain security.
It really is, if you look at all of these across, they’re all about supply chain resilience. They’re all about making sure that the supply chain can run as effectively as it can as designed, but then also that it can run when these disruptions that I mentioned that are growing so rapidly and continually, when those disruptions come around, that there is an ability to continue operations and to flex and manage that risk. George, thoughts there?
George Lewis
Yeah. No, absolutely, Jim. Something we hear a lot about, and the challenge is identifying what the risk may become. I know in recent conversations with customers over a dinner last week, the huge topic of conversation was nearshoring and what could be done there. And it’s almost like a hedge, right?
It’s like, “Okay, we’re manufacturing in China or wherever. I need to be able to have options so I can move it if I need to.” Not necessarily everybody in the room was planning to make moves right away, but the idea that I need to be ready to make that decision if something were to happen in that particular region where I’m manufacturing today.
And so those are things that are top of mind for folks that we’re talking to.
Jim Brown
And a lot of people are talking about sort of rightshoring, but also supply chain sovereignty, being able to create resilience for political uncertainty. And understanding that things may happen in the world that are uncontrollable, that are natural, like a volcano. We all remember that one, I’m sure, the impacts on the supply chain at Reykjavik. Not Reykjavik. Anyway, what I mean.
But going beyond that, there are political situations that come up that sovereignty and really being able to understand the political impacts and protections that you may have on your supply chain make a big difference as well.
And as, George, you’re saying, those have to be understood up front. Those have to be investigated and designed in up front because if they’re not, your ability to react is going to be much more limited.
George Lewis
Jim, I think it was just the other day I was reading my Google News feed, and I think there’s another volcano heating up somewhere in the Mediterranean that’s causing angst on what’s going on in that region, so who knows?
But it’s all about flexibility. You have to think about what might occur, but also solutions and processes in place that are ready to deal with the unexpected.
Jim Brown
Exactly. I think everybody wants the crystal ball that’s going to tell us what’s going to happen, but being prepared and being able to shift is also a fantastic way to deal with those things. The crystal ball, mine’s not working, and I understand our slides are having some issues as well, so maybe that’s a related issue.
Let’s look at the benefits of supply chain resilience. And again, this is from Julie Fraser’s study, really asking companies main factors, what really helps to have the supply chain dialed in? And what we saw is that those companies actually have some benefits that you might not expect in terms of planning accuracy, but also being faster to respond to a fluctuation in demand.
So a lot of times we think about resiliency as dealing with a change to supply and having the chip shortage or having a supplier that is suddenly out of business, whether it’s financial or whether it may be due to some sort of natural disaster or man-made disaster, but also resiliency can help with fluctuations in demand. And I think we saw that quite a bit during the pandemic where companies were shifting very, very quickly and dealing with trying to increase their agility and innovation in order to actually respond to an entirely different need or change what they’re bringing to market.
So I think there’s a tremendous number of additional benefits other than just being able to react to this disruption or plan for disruption. George, have you seen any of that in your customers?
George Lewis
I’ve talked to a number of customers that have actually gone so far as to build bespoke solutions for identifying risk inside their organization that mash up information from demand planning tools, PLM, ERP, and then sometimes even outside data sources to supplement that data and then use that to look at, “Okay, where are my high-risk components, or where should I be looking in my overall for risk?” Across multiple product lines, unbeknownst to you, you may have one component that’s used quite frequently but is reliant upon a single source.
It might be easy to find that, find a single source, but to find the one that’s used across 10 different product lines or 30 different product lines, that’s what some customers are trying to do.
Jim Brown
Yeah, absolutely. And if you don’t have your data managed properly and don’t have the right tools to do that, it is next to impossible. And for anybody that uses spreadsheets commonly, which I think we all do in some aspects, bills of material and spreadsheets are the nemesis of trying to make a change like that.
George Lewis
That’s very difficult.
Jim Brown
So let’s talk a little bit about some things that we’ve seen companies do. One of the factors, one of the approaches that Tech-Clarity takes is to identify top performers in a certain business process or business objective and look at how they perform. It’s typically the top 25% of the companies that we survey, and compare them to others, the ones that don’t perform as well.
And so we look at those to understand what are the things that they might be doing differently that might be able to help others? And this one I wanted to bring forward for our conversation today because when you talk about supply chain, supply chain factors that have a positive business impact, what you can do from the supply chain perspective that helps drive long-term profitability, that helps drive the nice profits and the balance sheets that we like?
It was really interesting to see that top performers are almost 50% more likely to have good collaboration, not just within supply chain or with customers, but also internally with manufacturing, with production, with product development, with engineering.
And so it really sort of says to me that the companies that are doing things right look at supply chain resiliency and supply chain overall as a team sport. You’ve got to not just deal with it as a backend issue, you’ve got to deal with it pervasively and really start in engineering, start with that product development side of things so that you’re understanding and designing in resilience from the beginning.
George, thoughts?
George Lewis
Yeah, that is one of the critical things. We’re constantly talking to our customers about what they’re doing, even coaching them to some extent, in that what are we seeing happening across all customers that are quite similar, at least at Arena anyway. And the idea of agility, I’ve also heard it referred to as a shift-left strategy where we attempt to do more work early in development when it’s easy to.
It’s a lot easier to make changes early in development than it is when you get close to production. And so many organizations are just thinking about that and what do I do in those earlier stages? Some are going so far as attempting to do agile software development methodology applied to hardware in those early stages, which is a novel approach. Others are simply just taking the time to really consider their design and get feedback from the supply chain, so DFM feedback from their partners.
I’d say, Jim, the one common thing we’ve heard here lately is that Arena customers, anyway, really see their suppliers more as partners now—as design partners and peers that they need to collaborate with actively early in design. We’re going back 10 or 15 years ago when I would talk to folks, it was more of a throw it over the wall mentality, right? “I’ve completed my design, now let’s go find a contract manufacturer and figure out how to ramp them up.” Now collaboration is happening very early across most of the people that I talk to.
Jim Brown
Yeah. George, we have one question here that I want to just bring into the conversation, and I really appreciate somebody putting this one in. And it says, “For those of us who are just starting to build a supply chain resilience strategy, what key steps would you recommend prioritizing to see quick wins and long-term benefits?” And I think certainly quick wins are important in any new initiative to make sure that you gain the momentum that you want.
I’ll start with that one, and George, I’m sure you’ve got thoughts on that as well. To me, the first step in supply chain resiliency, de-risking, things along those lines is good data. It’s amazing to me how many manufacturers that I talk to on a regular basis don’t really have a consolidated view of their suppliers and their supplier performance, and then the connection from their suppliers back to the components and then the products that consume them.
And so if you’re managing your preferred suppliers, your alternate suppliers, on spreadsheets or on some sort of a shared drive or something like that, it’s not enterprise class. It’s not ready to go out and be queried so you can find the information quickly and share it with others, and I think that’s a big issue. So I think there are lots of things you can do from a business perspective, from a supply chain angle, is probably really not my expertise at the moment.
But to start with, I would say get your data right. Understand who your suppliers are, understand their performance, understand their risk, and then understand how that is going to impact your products or potentially impact your products if, for example, one of your suppliers goes out of business. Sometimes some companies I know are very good at making sure that their suppliers are healthy financially and others are not as focused on that, and sometimes that comes to become an issue.
Is there anything you want to add onto that question? Great question, by the way.
George Lewis
That is a really good question. I agree with your thoughts, Jim. I might be inclined to say, “Hey, reach out and talk to your supplier earlier and that’ll make things better,” but you really need to have your house in order before you can really effectively enable that. There’s lobbing out emails early on. Collaboration’s good, but you really need to have a backbone for communicating and making sure you’re all talking about the same thing at the same time. And so that really comes back to retire the spreadsheets, move to a solution that can better support the collaboration that your enterprise needs, not just internally but also out to your supply chain as well.
Jim Brown
Yeah. I couldn’t agree more, George. And I think when you said collaboration, one of the things that really popped up in my mind and reminded me of it is contextual collaboration, right? There are a lot of good collaboration tools that are out there, but when you really are collaborating to try and improve supply chain resilience, you’re collaborating around a connection of information. It’s the cross-reference between your products, your manufacturing, and your supply base and your supply chain, and trying to pull all of that together I think is one of the key challenges.
And when you’re collaborating on that, you need to collaborate on that contextually. You need to be able to share that information easily. If you’re sending a spreadsheet to somebody and saying, “Hey, can you check out the financial health of these suppliers?” By the time they’ve got that information loaded back into a spreadsheet and sent back to you, the information’s out of date, right? So I think great point that you brought up, George, about the collaboration and the importance of data. I think it’s doing the two together, which is some of the big challenge.
George Lewis
Yeah, no, I couldn’t agree more. Emails get lost, you might not be looking at the current email. I know if I go into my inbox right now, it’s so filled with various collaborations around various subjects, it’s hard to find the information that I’m looking for.
And so having a tool that creates that context I think is very important.
Jim Brown
Good. I’ve got another question I think we’re going to jump on, but I’m going to skip the poll question because it doesn’t seem like people are able to see things very well on the screen.
The timeframes for supply chains to see product changes is another statistic or chart that I brought out of Julie Fraser’s study, and we’ll have to make sure to get everybody a copy of these charts afterward so you can go back and understand what we’re saying, and I believe the replay will have these in it. But one of the things that we saw really differently between top performing companies and others, top performers were really the ones that were hitting their supply chain marks well, was similar to that collaboration, it’s the data visibility across the organization.
And one of the ways Julie asked about that was how quickly can you see between an engineering change? How quickly can your supply team see that? How quickly did your supply chain know that there’s been a change? And again, it’s top performers versus others. And I think the most telling in here is that if you add up the number of top performers or the percentage of top performers that say it takes days, weeks, or a month or more for their supply chains and their supply teams to see a change, you get yourself up to 86%, right?
So if you are working with information that’s that outdated, it’s going to be a big challenge, particularly if you’re in a high-tech industry and you’ve got very fast product releases. But everybody’s moving product releases faster, everybody’s moving changes faster. And the top performers, actually, 44% of them say that they can actually see those changes within hours, and actually, 17% of those say it’s immediate or less than an hour. So being able to not only collaborate but have that data transparency and potentially even a push of something like a design change, which we know throws a monkey wrench in everything, definitely is a key to success.
George Lewis
Yeah, I couldn’t agree more on the industry’s piece. We’re kind of thinking the same way there, Jim, in that for those of you, and I’m looking at the attendee list, some of you are clearly in high-tech electronics, you need the communication to happen in ideally less than an hour, but worst-case scenario, in hours.
But even for those of you that aren’t in high-tech, these are the themes that I’m hearing from everybody. You may have a longer development cycle that’s 12 months or 24 months because you’re doing some large capital equipment. These things still matter because ideally, you want to be getting that feedback from your supply chain as quickly as possible. You don’t want that feedback weeks after you’ve made a design decision to say that “We can’t build it that way. Can you adjust your tolerances so we can go build it?” That doesn’t work for you either, so I think it’s relevant to everybody, really.
Jim Brown
Yeah. And then you get that cascading effect of we changed that tolerance and all of a sudden we’ve got a tolerance stack, that’s going to be an issue or it impacts something else, and something else changes and something else changes and you get the domino effect.
George, I don’t know if you’re seeing any questions you’d like. There’s one that I really want to grab real quickly. It’s, “How do we balance cost reduction with building a more resilient supply chain?” I think that’s such a fantastic question. I’m not sure I have the brilliance to answer it. I have some thoughts. George, do you want to go first, or you want me to get us started?
George Lewis
The one thing I’ve heard that sprang into my mind as you read the question there, Jim, was just that I know a couple of the folks I was talking to last week were willing to sacrifice a little bit of margin to reduce risk, and that was a conscious decision that they were making.
And that’s hard in a capitalist economy, that’s a very tough decision, but that’s one of the things some of these folks are thinking about is maybe my margins aren’t quite as good, but now I have better flexibility because I can go down to Mexico or Tijuana or something like that to get design feedback in real time.
Jim Brown
Yeah. Same thing I was thinking too, George, is that you’re buying down risk, right? It’s insurance. You’re buying down your risk and being able to try to understand what is going to be. You may be trading off a short-term cost for a potential long-term cost that’s much more impactful and would impact the long-term success of your company, brand reputation, customer satisfaction, those things we talked about earlier.
And so I think it really is definitely an important factor to look at. The art of product development is all about optimization and trade-offs, right? And that’s why collaboration is so important. People talk about design for manufacturing and it’s like we want to make sure, as George said, that the tolerances are right so we can make it in the plant that we want to or that we don’t have tolerances that are too tight, and the cost goes ridiculously high. We don’t expect a material that is a conflict mineral-based material. So you start looking at design for cost, designed for manufacturing, designed for supply.
All of those things need to be balanced and optimized, and the hardest part of that is getting everybody on the same page, all having the right data. And from that perspective then you can get into the all right, how do you make those trade-offs? How do you do those what ifs? How do you do the optimizations that need to be made for DFX, design for everything?
And it’s almost comical when we have to say that, but it’s true. You have to design for all of those things upfront, but you have to decide what’s most important to you. And if you’re in an industry where short-term cost is the biggest driver for your profitability, maybe you don’t buy down risk because you can’t afford to do it, but you better be able to shift very quickly when something happens and maybe shift to a different market.
George Lewis
Yeah. No, that’s on point. The other one here, Jim, that I hear all the time from folks that I talk to is how do I get started with dealing with supply chain risk? What do you do?
At Arena, we have customers that are billion-dollar revenue organizations. Arena has always been historically very successful with startups just launching their first product, and the difference in those organizations is maturity, right? What it takes to be successful launching a single product is different than what it takes when you’re trying to manage multiple, that larger organizations have teams for managing and dealing with risk.
The smaller organizations, I would say you need your house to be in order to be able to facilitate collaboration internally and externally. And so to make my point, your house needs to be in order. Don’t do this in Excel. Find a solution that’s going to really support your organization’s ability to grow so when you do take off, you’ve already got that framework in place. It also allows you to democratize some of the decisions early on because you don’t have a team for doing risk management. Well, now if you’re sharing the information with everybody, everybody is a part of that decision-making and having the right tools will help do that.
Jim Brown
So let’s go on. This is the last data chart to share for today, from my end at least, about what are some of the hurdles for supply chain resilience? And this is the top technology hurdles. And one of the things that you see right off of the bat, the topmost common technical challenge companies have for creating a resilient supply chain is integration across multiple software solutions, lacking that integration.
And I think it goes back to that getting your house in order thing, George. If you don’t have integration across systems, you don’t have that data transparency, you don’t have the supply information that may be coming from an ERP system or supply chain planning or supply chain execution system, or even strategic sourcing back into the system where the designs are coming from.
And so, lacking that integration can be a really big deal because when you don’t have that, you don’t have transparency and it also makes it that much harder to collaborate. If you’re talking to a supply chain person and you’re asking them to log back into a separate system so that they can review a design, that’s not maybe going to be as effective as if they just have a link and they can just pull up a view of the design over the web on a cloud service.
I think that lack of integration was really one that struck me, and 50% actually say inconsistent data quality within supply chain function. So I think our premise that it’s all about data and collaboration holds true here and the technology can really help overcome that.
George Lewis
Anecdotally on that one, we are seeing more of the same kind of thing in our conversations with our customers in that, once upon a time, a leading customer of our technology would integrate it with ERP and maybe to mechanical CAD or electrical CAD on the front end. Nowadays, most organizations are coming to us saying, “Hey, I need connections to JIRA. I want connections to MES and supply chain planning solutions.” And by the way, the folks I’m talking about, these are the startups that are just trying to launch products and they’re already thinking about how do I connect these things together?
So I would say the maturity of the customers has come a long way over 10 or 15 years. People are thinking about these things early on, and integration is one of the critical areas to look at.
Jim Brown
And I think expectations have gone up on the ability to integrate, and I don’t know if I say blame the iPhone or thank the iPhone, but it’s just given us all the expectation that of course my email and my calendar and my photos and everything should all interact in some way, and I think a Teams environment does that kind of thing as well.
George, I’m going to move us forward to your slide here. I think you’ve got an example you wanted to talk to with Nutanix.
George Lewis
Yeah. I’m not going to go through the entire slide here, but I just want to point out some of what a typical customer sees as a benefit by using a PLM technology—in this case that is Arena, but you’d see the similar sort of benefit using any PLM technology. I would say though, cloud-native technology really enables better collaboration in general. And so Arena is a cloud-native PLM, for those of you that don’t know.
Nutanix deployed Arena 10 or 15 years ago, 10 years ago, and you can see some of the impacts there on the left. The one I want to point out is the one at the bottom is relevant to today’s conversation. David Sangster says it takes five days to bring on a new supply chain partner. Now, it’s not a contract manufacturer where you’re swapping over full-blown production or anything like that, but the point is they can ramp up a new source very quickly using Arena and other cloud-based technology they have in their organization to enable that flexibility.
And this is part of what I was saying earlier about creating the backbone for success. Well, you need a technology like this to be able to support that. And then if you take a look at his quote here, “We get terrific feedback from the give and take during the review process. Indeed, partners have provided feedback that helped us avoid making unnecessary, confusing, and costly changes.”
I think that quote is spot-on for what many organizations are looking to do early in development to get that feedback, incorporate that feedback before it’s really costly to begin to make change, and so Nutanix is a great example.
There’s other benefits you can see here. You’ll have the slides, you can go review this, but there’s the other associated benefits like ECO cycle times, including suppliers and ECO processes is enabled by cloud-native solutions like Arena. And so, this is just a great story of typical organizations that we talk to on a daily basis.
Jim Brown
It’s interesting. We’ve got some data. Actually, Michelle Boucher from our team has done a lot of data about how often supply chain is working on outdated data, similar to what Julie was doing looking at in the previous slide, talking about understanding how long it takes for a change to get out. And so often, those engineering changes just don’t get out to the right people that need to see them.
So let me jump on to some key takeaways here real quickly, and I don’t want to read each one of these. We’ve gone through this, but I think companies need to expect what we say in our business sustainability, is that disruption is the new normal. We don’t know what it’s going to be, but we know it’s going to be there. Every year something comes up and it’s almost all right, well, what’s going to be the example this year? Is it going to be a repeat of something we saw three or four years ago or is it going to be something new? And you just don’t know, but it’s going to happen and it’s going to create a risk with your supply chain.
And that’s, I think, why supply chain disruption has become such a top risk. And I think it’s that in combination probably with companies that rely more on their supply chain and maybe they don’t call them a supply chain, maybe they call them a value network now because they think about how much innovation they’re getting from the supply chain. And it’s not just I’m getting some fasteners from somebody, we’re now talking about very integrated value networks.
So it is a top risk, and that when things don’t go well, it leads to some significant business benefits. So I think that’s why we see reducing risk supply chain resiliency as being such a top objective. And in here I say collaboration across departments has a significant positive impact. I think I missed data on the key takeaways, George, when I look at this.
Based on our conversation and the questions and some of the things I heard from you, I would probably add data, getting your house in order, onto this as well, but then also the integration. Resilience requires integration, which is the ending point. So to me, key takeaways—data, collaboration, and having the technology to pull all of that together.
George Lewis
I would agree.
Jim Brown
All right. Well, listen, we do have a couple more questions. I know we’re a couple of minutes over time, and thank you all for sticking with us. I know we had some technical issues. Hopefully you’re watching the replay and you’re saying, “I don’t understand what you mean by the technical issues.” So thank you all for joining.
If we didn’t get to your question online, definitely we’ll try and respond to you. Here’s my contact information if anybody is interested in that, following up. Would love to connect, continue the conversation, and I’m sure Arena Solutions will be reaching out to you as well. And thank you for joining us.
Thank you for sticking with this. George, I really enjoyed the presentation with you. I learned. That’s my goal in these things, is to definitely try to get as much learning out as I can, and I thank you for that.
George Lewis
I had a lot of fun, Jim. Hope everybody else did too. It was a very good experience, so thanks for hosting.
Jim Brown
Yeah. Well, and thank you to Arena Solutions and PTC for bringing this all together. Everyone enjoy your days and your evenings. Thanks so much.
George Lewis
Thanks all.