On May 7, Barry Matties and Tom Forsythe, executive vice president at KYZEN, discussed the effects of COVID-19.
During the conversation, Forsythe addressed KYZEN’s strategy to keep the staff and employees healthy as the foremost concern. He also detailed recent changes in interacting with customers and his take on what will be the new long-term changes in how the company does business versus short-term accommodations. Forsythe shared his perspective on how the supply chains may change and evolve, stating, “If I have three different suppliers, that’s great, but if they’re all coming from Milan, I don’t have a diversified supply chain.” He wrapped up the conversation with optimism about the industry and how we will exit from this time.
I-Connect007 continues to deliver original reporting and coverage of the electronics design, electronics manufacturing, and contract manufacturing industries, including up-to-date information from the companies, associations, and supply chains globally. Find the latest news and information at www.iconnect007.com, and on our new topic bulletin board, “Industry Leaders Speak Out: Responses to COVID-19 outbreak,” found here.
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AUDIO TRANSCRIPT
Barry Matties: Today, I’m talking with Tom Forsythe, executive vice president of KYZEN. Tom, welcome, and thanks for taking the time for this interview.
Tom Forsythe: It’s good to be here, Barry.
Matties: Tom, let’s get started with what’s going on in the world and the impact that the COVID-19 outbreak has had on your business.
Forsythe: First and foremost, the outbreak has really affected our people. We’ve been fortunate that no one on our team has gotten sick. We have people in 12 countries these days. Our highest priority was we thought if we could keep everyone healthy and their families healthy, then pretty much everything else would take care of themselves. And that has largely played out. That has probably been the biggest impact. On the customer side, it’s a mixed bag. We do a lot of military and defense in some parts of the world, and they’re cruising along. For some of the other folks, there’s a little softness here and there, but by and large, we’re doing pretty well. We’re feeling pretty good about it, particularly when you read the newspaper.
Matties: What changes are you seeing your customers make?
Forsythe: I think phase one is nobody’s looking for visitors right now. That’s a significant change in behavior that’s wise and now expected here in the pandemic. It’s going to take a little longer for people to decide what’s a long-term win versus what was a short-term accommodation. A lot of people did a lot of things, and there’s a lot of “gee-whiz” stuff going on. But to be honest, there have been loads of news about Zoom meetings and things like that. And by gosh, we’ve been doing that—whether it was WebEx, Adobe, Zoom, or Teams—for as long as they’ve existed. That really wasn’t much of a new idea for us, whereas, for a lot of organizations, it was a “gee-whiz” thing.
It’s going to be very personal on what changes. One of the clear things that people are going to look at from a supply chain perspective is making sure they’re not dependent on one. Most people are very worried about whether they’re dependent on a single supplier for critical ingredients or components or whatever it might be. They’re going to take that long embraced wisdom and expand it a little further up the food chain and say, “I don’t think I want all my suppliers in New Jersey, and I probably don’t want them all in China either.”
We’re going to see the diversification of the supply chains. Imagine if one of your critical suppliers for something was in Milan and Bologna. You’re up a creek. People are going to take a much more critical look at those roots of their supply chains. And that may, in some cases, take work because there are often distributors and steps in the puzzle to get to that. Probably the biggest global takeaway is that, in a way, it reminds me a little bit of the housing crisis of 2008. The theory was that there had never been a nationwide housing bubble in the U.S., and people then took that truth and said, “Therefore, I can diversify a pool of mortgage loans by taking them from all over the U.S.” But what they forgot was that if all of the mortgage loans, regardless of where they were, were junk. Then, that geographic distribution didn’t change the risk factor of that pile of junk.
If I have three different suppliers, that’s great, but if they’re all coming from Milan, and something like this happens, I don’t actually have a diversified supply chain. That’s going to be an “a-ha” for loads of people. We’ve tended to worry about it—the nature of the chemical business—and that’s what most of our raw materials are. It was one that you had to worry about that stuff, but outside of that industry, it’s much less common.
Matties: Right. What do you think the industry needs to learn from this global outbreak?
Forsythe: It’s exactly that—the resilience of the supply chain. It’s both the reliability of the people executing your supply chain and do they do a good job and whatnot.
Matties: Aside from the supply chain, though, I think that’s one aspect of it, but there are some other lessons, such as employees, cross-training, and even some automation. Maybe we need to learn some lessons about that. What do you think the industry needs?
Forsythe: I agree. That’s probably the earliest lessons that will be learned is that inside, under the roof, what systems were robust and worked well work well, and what systems didn’t, such as people dominated systems, etc. For example, we’ve read in the papers about many states in the U.S., and their unemployment systems software is 40 years old. It’s a fair statement that not many people expected us to need the process four or five million claims a week before a month ago. Any of those systems being overwhelmed isn’t really a big shock, but the shock is that the underlying systems are 40 years old and can’t evolve. These systems stressors give us insights into all of our operations and focus on those points that maybe are not flexible or scalable enough. Those will be very personal. Those aren’t the lessons learned you read about in the newspaper a lot; that’s the stuff that winds up happening quietly but delivers great value.
Matties: And to your point, you really have to pay attention and then take action at the appropriate time. Oftentimes, in the middle of a crisis, it’s hard to react, and you just have to work through it. But when the time is right, those are great words of advice there. Thank you.
Forsythe: What’s the old saying? You go to war with the army you have. You can’t change it in the first weeks or months of anything, but long term, when you identify those areas and pinch points, they can certainly be addressed, and I’m sure they will. Manufacturing and just about every operation worldwide will probably be better afterward from the stress.
Matties: I agree. There’s a lot of change on the horizon that has already taken place, in fact. Do you have any closing thoughts or words of advice that you’d like to share with the industry?
Forsythe: I’m not sure that I’m that kind of soothsayer necessarily, but the key in situations like this is it really all comes down to our team. If you have a system issue or supply chain issue, many times, a talented team can come up with a workaround. The value of the team, the respect that the organization has for the team, and the investment that they make in the team pays off in times like this. We certainly believe that today, and I’m sure there are many others in the industry that would agree. We have to protect our talent and make sure that we keep it in the industry so that it can help make us stronger in the future. We’re trying to do that, and I’m sure we’re not alone.
Matties: Great. Tom, thanks again for taking the time out for this interview and sharing your thoughts with the industry. We greatly appreciate it.
Forsythe: My pleasure.
Matties: Once again, you’ve been listening to Tom Forsythe, executive vice president of KYZEN.
