Business Operations

Business Operations

World’s Largest Floating Wind Farm Could Become Reality

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Energy company Equinor, in partnership with ConocoPhillips, Shell and Total, is looking into the possibility of building the world’s largest floating offshore wind farm, according to POLITICO Pro’s CLIMATEWIRE (subscription).

What’s going on: Equinor said that “Trollvind,” which would be constructed off the coast of Bergen, Norway, “would have an installed capacity of about 1 gigawatt and would produce 4.3 terawatt-hours annually.”

  • “The companies are aiming to make the installation economically feasible by buying as much energy as it produces and are targeting a final investment decision next year to bring the installation online in 2027.”

Why it’s important: The announcement comes as many energy companies look increasingly to offshore wind, which is set “to develop rapidly through the end of the decade.”

  • Floating offshore installations such as the planned Trollvind allow for energy harvesting in deep waters where installing fixed-foundation turbines is not feasible, opening up many more areas of the water to wind capture.
  • “The Global Wind Energy Council (GWEC) forecasts that floating offshore wind capacity will reach 16.5 GW by 2030, according to a recent report published by GWEC and sponsored by Shell.”

A call to U.S. action? “This continued advancement begins unlocking the technology and supply chain to build the new industry,” Business Network for Offshore Wind Director of Coalitions and Strategic Partnerships Sam Salustro told the publication.

  • “[T]here is still a need for coordination between the states and federal government to ensure we have the infrastructure to support floating [wind] and can support our suppliers.”
  • The West Coast leads the U.S. in floating wind-farm development.

The NAM’s take: “This announcement is part of a much larger trend we are seeing in the U.S. and around the globe,” said NAM Director of Energy and Resources Policy Chris Morris. “The NAM has been a leader in ensuring all states that want to pursue offshore wind options can. Earlier this year, we urged policy makers to repeal the 10-year moratorium on offshore wind leasing off the coasts of North Carolina, South Carolina, Georgia and Florida. We will continue to push for policies that provide diverse, secure energy options for manufacturers.”

Business Operations

Rockwell CEO Blake Moret Talks Supply Chains

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Blake Moret thinks a lot about supply chains. The chairman and CEO of Rockwell Automation—the world’s largest company devoted exclusively to industrial automation and digital transformation—Moret is helping other manufacturers navigate the disruptions of the pandemic and the painful shortage of semiconductors.

On his way back from sharing his experiences and best practices at the World Economic Forum in Davos, Moret spoke with the NAM about the current state of the industry, his predictions for the future and what manufacturers should do to prepare.

What’s happening: Moret sees a few “overarching trends” in manufacturing:

  • First is the historically high levels of demand, which had been pent up during the pandemic and is also caused by businesses trying to expand their market share.
  • Second, there is also a historic shortage of components, especially the very disruptive shortage of semiconductor chips.
  • Last, of course, labor and material inflation is putting additional pressure on manufacturers’ operations.

The chip shortage: The shortage of semiconductors poses the biggest near-term problem for Rockwell and the industry, Moret notes. But the demand for chips isn’t just as simple as supply chain snarls and post-pandemic rebound; it is also caused by manufacturers working to make their products “smarter than ever before”—an industry trend that isn’t likely to change anytime in the future.

  • Rockwell’s solution, says Moret, is to reduce pressure on its customers by “strengthening long-term relationships and tightly aligning technology roadmaps with existing suppliers and deploying our engineering resources to find alternatives for the most severely constrained types of chips.”

When can manufacturers expect relief from this chip crunch?

  • Chip manufacturers are adding “incremental capacity,” says Moret, but “it will take a while for supply and demand to balance out.”
  • “Over the next year, the situation will improve,” he adds, though manufacturers may still be dealing with constraints.

Redundancy: To cope with supply chain disruptions, Rockwell has also been adding redundant capacity into its worldwide network.

  • The company is increasing the number of products that can be made in more than one facility around the world.
  • “Just-in-time principles are very efficient when every link in the supply chain is doing what is expected. But with disruptions like the pandemic and chip shortages, that sort of efficiency is not totally possible,” Moret says.
  • “Elements of redundancy that in the past were not able to attract funding will get funded now.”

The U.S. market is a top priority, Moret adds, and Rockwell has extensive operations here.

  • “Even in a high labor-cost market, the high-trained [U.S.] workforce, coupled with advanced technology, can make products that can successfully compete anywhere on earth,” he says.

After the pandemic: Now that COVID-19 restrictions are all but over, what’s in store for Rockwell?

  • Moret says that his company found that many of its jobs could be done from home. Its team buckled down during the pandemic, contributing to the production of essential products, such as packaged food and vaccines.
  • Now, as workplaces have returned to “normal,” Rockwell continues to embrace a flexible work culture. Moret says its next challenge is ensuring that a workforce with such flexibility stays engaged and able to form productive collaborations.

“Workforce is very near and dear to my heart,” explains Moret. A former chair of The Manufacturing Institute’s Board of Trustees (and a current member of the NAM Executive Committee), Moret is a big proponent of developing flexible, targeted training programs.

  • One such program at Rockwell, the Academy of Advanced Manufacturing, trains veterans for roles in manufacturing plants (much like the MI’s Heroes MAKE America program).
  • It provides “outcome-based training,” Moret says, offering a “quicker and more hard-hitting program” that is 12 weeks long and does not necessarily require two- or four-year degrees.

What should manufacturers do? Moret has some advice for other manufacturers seeking to build more resiliency into their operations.

  • He recommends developing a “product resiliency index,” which accounts for factors that affect production—the value of the product, its manufacturing complexity, how distributed the manufacturing needs to be, how many vendors are needed and more. Manufacturers should consider this right from the start of developing a product, Moret says.
  • It’s also important to talk to key suppliers “to understand what their roadmaps are.” You need to know when you are relying on suppliers for products that aren’t “strategic” for them, he explains—as that could pose a problem for you down the line.
  • Moret also recommends conducting this audit on both new and old products. “We’ve had to go back [to established products] to assess them with this resiliency index to make sure we’re not vulnerable.”

The last word: Collaboration with partners on supply chain issues and workforce development is key. “No one company can do it all. Being able to assemble the right team is maybe the most important starting point to emerging stronger than ever.”

For policy recommendations that address the supply chain and other challenges, and which can enhance U.S. manufacturing competitiveness, visit https://www.nam.org/competing-to-win/.

Business Operations

Ransomware Attacks Increasingly Targeting Manufacturers

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Think your business is safe from hackers? You could be wrong, according to the Manufacturing Leadership Council—the division of the NAM focused on digital transformation in manufacturing.

With the incidence of ransomware attacks against manufacturers on the rise, all businesses should be on guard against cyber extortion, advises Peter Vescuso, vice president of marketing at industrial cybersecurity provider Dragos and a member of the Manufacturing Leadership Council.

How it works: Ransomware schemes often target manufacturers by disabling their operations technology and blackmailing victims into paying to restore the functionality of their systems. Manufacturers that cannot afford to have production halted by hacks often have no choice but to pay the hackers’ ransom.

What we’re seeing: Industrial ransomware attacks increased significantly in 2021, with criminal groups specifically identifying manufacturers as vulnerable and profitable targets.

  • Last year, manufacturing accounted for 65% of industrial ransomware incidents, according to Dragos.
  • The top three manufacturing subsectors targeted by ransomware attacks were metal components (17%), automotive (8%) and plastics/technology (6%).
  • Manufacturers as a group were targeted six times as often as the second leading industrial sector, food and beverage.

Why it matters: Many manufacturers remain unprepared for ransomware attacks.

  • About 90% of manufacturers have limited visibility into their OT systems, according to Dragos.
  • 90% of manufacturers are also ill prepared with poor network perimeters, 80% have external connectivity exposure in their OT systems and 60% use shared credentials that make it easier for ransomware groups to infiltrate systems.

Who’s behind it: In 2021, ransomware groups Conti and Lockbit 2.0 caused 51% of all ransomware attacks, and 70% of their attacks targeted manufacturers.

  • These groups successfully developed malicious business models and used underground marketplaces to outsource operations to partners who then carried out the attacks.
  • Ransomware groups also fund research and development to stay ahead of the curve on security and infiltrate systems.

What’s next: “Ransomware trends are likely to continue shifting as groups reform and reprioritize and as law enforcement pursues them and takes them offline,” says Vescuso.

  • “As this evolution continues to evolve, Dragos analysts believe with a high degree of certainty that ransomware will continue to disrupt all industrial operations and OT environments through 2022, in manufacturing and beyond.”

Protect yourself: To protect against ransomware attacks, manufacturers must take the necessary steps to modernize and secure their IT and OT systems. Check out NAM Cyber Cover for information and risk management solutions.

Business Operations

How Manufacturers Can Amp Up Their Cyber Protections

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Manufacturers are used to compliance requirements. These requirements are a part of daily life; from safety to quality, manufacturers must constantly track and adhere to rules that ensure their products and processes meet certain standards.

For manufacturers that work with the Department of Defense, that includes meeting Defense Federal Acquisition Regulation Supplement cybersecurity requirements, including the highly anticipated “cybersecurity maturity model certification.”

The basics: CMMC is the U.S. Defense Department’s proposed method for checking that their suppliers have strong enough cybersecurity protections to safeguard the Department’s information. Whether it’s a prime, subcontractor or sub-tier supplier, every company doing business with the Defense Department will need to comply with CMMC to receive a contract.

The big picture: All manufacturers should secure their businesses against cyberattacks, whether or not they are obligated to under DFARS or other requirements. According to the National Institute of Standards and Technology Manufacturing Extension Partnership Cybersecurity Services Lead Celia Paulsen, one of the most important—and most often neglected—steps manufacturers can take is simply to understand the structure and information flow within their own companies.

  • “A lot of companies don’t know how information flows in their companies and how their companies work,” said Paulsen. “Once you have that information, you’ll be able to scope out the rest of the compliance efforts.”
  • “In some cases, you might find that all of your controlled information can be limited to one computer. If so, great! Keep it separate and you won’t need to worry as much about the rest of the business,” she added.
  • “In other cases, you might find that there’s no easy way to cordon off CUI, and it might be cheaper to secure the whole business. That’s something you wouldn’t have known otherwise.”

All aspects of the business, from physical structures to software, should be considered when thinking about security. According to Paulsen, looking at your business from the outside-in can turn up problems that are easily fixed.

  • “Think of it as if you were looking to protect your house,” said Paulsen. “Begin by looking at the business physically – are there locks on the doors and windows? Do you have backup power?”
  • “Then look inside the house: Where are your jewels (i.e. computers) located? Are they protected from curious eyes? Are your home, guest and business networks separated?”
  • “Last, go to the software and data level. Do you have backups? What do you have in your computers that keeps sensitive information secure?”

Sensitive information doesn’t just flow through an individual manufacturer; it often travels up and down the supply chain, reaching other businesses that may not be taking the proper precautions.

  • It’s imperative for manufacturers to discuss these issues with their connecting businesses, Paulsen notes They should determine what requirements apply, whether access to sensitive information is needed for either business, and if so, how it can be protected.
  • “When you’re integrating IOT devices onto the shop floor or implementing AI or going to the cloud—anytime you’re purchasing something that is smart, or that has a chip—you need to consider the security of it,” said Paulsen.
  • “A lot of breaches happen because of supply chain attacks where the products aren’t developed with security in mind. That is key to a long-term strategy: making sure that whatever you buy, they’re considering security.

Learn More: NIST provides additional resources, including the Small Business Cybersecurity Corner, and the Manufacturing Extension Partnership.

NAM resources: Are you prepared in the event of a ransomware attack? Built specifically for manufacturers, NAM Cyber Cover was designed to provide risk mitigation and protection. Find out more at www.namcybercover.com.

Business Operations

Meet the Manufacturing Leadership Council

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How is digitization changing manufacturing? What can manufacturers do to stay competitive in a fast-shifting world? What does the future look like—and how can leaders prepare for success?

Those are the kinds of questions being asked and answered by the NAM’s Manufacturing Leadership Council—a member-driven global business leadership network focused on the intersection of manufacturing and technology. We spoke with David R. Brousell, MLC co-founder, vice president and executive director, who gave us more insight into what the MLC is, how it works and why it matters today more than ever.

An early start: The idea for the MLC was born nearly two decades ago, when manufacturers began turning to consumer technologies to strengthen their businesses.

  • The convergence of these technologies with traditional operational technologies on factory floors sparked an idea. Brousell, who was running a publication called “Managing Automation,” recognized the trend—which he called “Progressive Manufacturing”—and founded an annual conference for manufacturers to discuss new approaches and best practices for the future.
  • By 2008, that conference had given rise to a council designed to offer useful programming for manufacturers on the future of digitization. Ten years later, the council became a part of the NAM.
  • “We realized that digitization was not a tactical or small change—it was a fundamental change in the industry,” said Brousell. “It was clear that manufacturers needed an informational resource or organization to bring them together to deal with what we now call Manufacturing 4.0 in a systematic way.”

A systematic approach: Today, the MLC represents what Brousell calls “the digital transformation arm of the NAM,” helping manufacturers meet future needs and address ongoing trends—through changes in technology, organization and leadership.

  • “The transition to the digital model of manufacturing is only one part technical,” said Brousell. “The harder part is changing the organizational structure to be more collaborative and decentralized and making the leadership approach digital-first. We’re probably the only organization that has looked at it this way, in a systematic way, beyond technology alone.”

A critical focus: Every year, the MLC lays out a member-approved set of critical issues involved in the transition to Manufacturing 4.0 and offers resources and programming from thought leadership to plant tours to the Rethink Summit.

  • This year’s critical issues include topics like factories of the future; transformative technologies, including AI and machine learning; augmented reality and virtual reality; Manufacturing 4.0 cultures; and cybersecurity.

A broad view: Digitization isn’t just an issue for individual manufacturers. Because manufacturing is so vital to economic and societal growth, it’s also important to the future of the United States and the world.

  • “Manufacturing is one of the fundamental drivers of social and economic prosperity,” said Brousell. “Its growth will lead to a better life for people. No other industry can say that. And I believe that the countries whose companies are most successful in making the transition to the digital model are going to be the powers of this century. There’s a lot riding on this.”

Sign up: Come learn from leading manufacturers at the Rethink Summit, June 27–29, in Marco Island, Florida. It’s the premier event for senior operational executives and their teams as they continue to navigate disruption.

Business Operations

Why You Should Attend the IRI Annual Conference

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“I’ve attended the IRI Annual Conference many times,” says Dr. Martha Gardner, “and I have taken many things that I’ve learned back to my company.” Gardner is the executive quality leader for process improvement at GE Aviation. She plans to attend this year’s IRI Annual Conference in person.

What it is: The IRI Annual Conference is where innovation leaders of all industries come together to share key emerging trends, technologies, critical skills and best practices. This year’s agenda includes four tracks:

  • Strategic leadership practices for next-generation innovation managers
  • The future of work
  • Operationalizing sustainability strategies
  • Digitalization of business and industry

Relevant content: “One reason to go is certainly the content,” Gardner says. “I leave with best practices, information on building future-ready leaders and more. The content is really relevant for the things I’m thinking about right now.”

  • If possible, Gardner attends with multiple team members: “You can cover concurrent sessions. This year, there’s a breakout session on domestic supply chain resilience, which I will definitely attend. But there are other breakouts at the same time that will have useful nuggets for my company.”

Valuable networking: Connecting with peers is also a big reason Gardner attends. “I’m looking forward to the extra networking we get from being there in person,” she explains. “I’ve missed this during the virtual events of the past few years. There are people like me who have gone for several years, and there are always new people. I always get different points of view.”

Fresh perspective: Gardner believes the IRI Annual Conference is well worth her time away from the office: “It gives me perspective to think about the future and what I would like to drive differently in my organization. I use some of the takeaways to develop new strategies.”

How to participate: The 2022 IRI Annual Conference takes place June 7–9 in New Orleans. Innovation leaders from across companies and industries are welcome to attend. You do not need to be a member of the IRI to participate. Click here to view the agenda and to register.

Business Operations

How Manufacturers Compete in the Labor Market

Manufacturing companies are increasing wages to stay competitive in attracting and retaining workers, according to a new study conducted by The Manufacturing Institute and Colonial Life.

Tight labor market: Of the survey respondents, 93% had unfilled positions in their companies that they were struggling to find qualified applicants for.

  • Nearly 90% said they have increased compensation and incentives to pursue and retain employees.
  • Seventy-three percent of respondents felt that increasing compensation helped their company stay competitive.

The big picture: Average hourly earnings for production and nonsupervisory workers in manufacturing climbed to $24.78 in March, up 5.5% from one year ago.

  • Despite significant wage increases, the labor force participation rate was below pre-pandemic levels at just 62.2% in April.

Other benefits: Hourly wages and salaries were most important for attracting and retaining workers, but other benefits were also effective.

  • Manufacturing companies have also attracted employees with health, dental and vision insurance, bonuses and/or additional income opportunities, paid vacation and sick time, contributions to a 401(k) or retirement plan and flexible work hours.

What the MI is saying: “We continue to see record growth in wages, and many of the companies we spoke with are offering even more generous benefits packages to try and differentiate themselves from other sectors struggling to find talent in a tight labor market,” said MI President Carolyn Lee.

  • “We’re averaging more than 800,000 open jobs in manufacturing a month, and the MI is focused on equipping manufacturers with tools and strategies to overcome this challenge so we can reach our full potential.”

Learn more: Looking for retention strategies you can use right away? The MI will be hosting a retention workshop on June 7–8. Find out more and register here.

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Manufacturing Supply Disruptions Could Last into 2023

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Supply chain disruption could continue for more than another year, according to the newest Resilient M4.0 Supply Chain survey conducted by the NAM’s Manufacturing Leadership Council. The MLC is the digital transformation arm of the NAM.

What’s the holdup? A combination of factors is causing fundamental shifts in supply chain approaches across the industry. These include pandemic lockdowns, blocked shipping lanes, container scarcity, material and component shortages, extreme weather events, rising prices and military conflict.

What manufacturers are doing about it: Supply chain organizations are reassessing traditional supply chain strategies, reducing network complexity and integrating key functions.

  • They are also redesigning processes and harnessing the power of digital tools to transform their supply chain ecosystems.

Universal disruption: Even supply chain structures with some local or regional networks have been affected by recent events, according to the MLC’s survey.

  • Ninety percent of respondents reported suffering either significant (52.5%) or partial (39%) disruption in the past two years. Just 0.5% said they had seen no disruption

Improving resilience: While many manufacturers have taken action to reduce supply vulnerabilities, 73% of companies said their current supply chains are not fully protected, and 12% said they believe their supply chains lack resilience.

Integrated supply chains: While today just 19% of companies said their supply chain structures are fully integrated, this proportion is set to more than double (to 47%) within the next two years.

  • The number of companies that remain dependent on siloed operations is set to fall from 14% to 4% over the same period.

Digital opportunities: The race to fully digitize more supply chain operations is picking up speed.

  • In nearly every supply chain function, companies said they are planning significant increases in digital adoption in the next two years to streamline their supply chain organizations.

Obstacles to progress: Many obstacles to future supply chain development involve issues with industry partners. Among the challenges cited by manufacturers in the survey were the following:

  • Differences in digital maturity among partners (54%)
  • A lack of common data platforms (53%)
  • Problems transforming traditional supply chain processes (29%)
  • Upgrading legacy equipment (26%)
  • A lack of skilled employees (22%)

Review the data: Click here to review the data in detail and read manufacturer responses to survey questions.

Business Operations

Plant Tour Provides Firsthand Look at Digital Transformation

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On a recent tour of Intertape Polymer Group’s Tremonton, Utah, plant, manufacturers saw disruptive technology in action. From employing 3D printing to slashing parts-making time to programming floor equipment to identify and fix problems quickly, the Manufacturing 4.0 processes and technologies were on full display. The NAM’s Manufacturing Leadership Council hosted the tour and brought 70 MLC members to the paper- and film-based packaging maker.

Growth: IPG, a Montreal-based manufacturer whose products include the cling film StretchFlex, has seen its revenue double in the past six years, from $750 million to $1.5 billion.

  • The company now has approximately 4,000 employees across 34 locations, including 22 manufacturing facilities in North America.

What they saw: In addition to 3D printing and problem-solving floor equipment, tour participants got to see how IPG:

  • Manages parts more effectively with an automated storage system; and
  • Uses “hackathons” and employs a data-driven, digital-first mindset to find solutions to challenges.

Digital journey: In a briefing before the tour, IPG Vice President of Business Transformation Jai Sundararaman described why and how IPG undertook its digital transformation journey.

  • First, the manufacturer conducted an in-depth investigation. This included studying 20 different technologies, attending more than 10 industry conferences, hosting technology summits with vendors and engaging in more than 25 networking sessions with fellow members of the MLC.

Phased transformation: IPG’s phased approach to digital transformation focused on delivering business value. The company undertook the following schedule:

  • Phase 1: Align strategy and execution and “homogenize” operating culture. Upskill and retain talent with digital and process knowledge.
  • Phase 2: Drive revenue and margin growth by applying digital technologies at scale in other functions, such as customer engagement.
  • Phase 3: Leverage digital technologies for business model innovation.

M4.0 discussion: At the end of the IPG plant event, participants joined a panel discussion on data standards and analysis. Panelists discussed how to measure the return manufacturers get from implementing M4.0 technologies and how to get buy-in from employees and leadership.

Upcoming plant tour: Join the MLC’s next plant tour right from your desk on July 27. Participants will take a virtual look inside Accuray’s Global Manufacturing Center in Madison, Wisconsin. This virtual plant tour will highlight the challenges of a low-volume, high-complexity manufacturing and supply chain model. Register today to reserve your place.

Business Operations

Lilly Accelerates Innovation Under Mike Mason

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What is Lilly Diabetes President Mike Mason’s goal for people living with diabetes? The simple answer is to improve and simplify diabetes management so people can focus on living the life they want.

Forward-looking: Today, more than 537 million people across the world are living with diabetes. That’s why Mason and his Lilly Diabetes team are continuing to develop more innovative insulin and non-insulin medicines to help transform diabetes care.

Lilly has played an important role in improving diabetes care for close to a century, starting with manufacturing and bringing to market the first commercial insulin, lletin, in 1923. Since then, there has been incredible innovation in insulin, shifting from animal-based insulin to recombinant DNA human insulin to today’s more modern analog insulins.

  • “Thanks to a century’s worth of scientific advancements and discoveries, I am proud that we can meet the diverse needs of people with diabetes in ways we only dreamed were possible,” Mason said.

More to be done: Still, only about half of people with diabetes are achieving their blood sugar goals—leaving them at higher risk for long-term cardiovascular disease and other diabetes-related complications.

  • For Lilly, that means keeping a “relentless focus” on the improvement of diabetes treatments and solutions, Mason said.
  • “Importantly, delivering breakthrough treatments is just the start of what we do. Lilly is deeply committed to doing what we can to ensure everyone who needs our products can access them,” he added.
  • Lilly offers a variety of affordability solutions through patient support programs and copay assistance across the major products of its portfolio. People with diabetes can contact the Lilly Diabetes Solution Center to learn about affordability solutions that best match their needs.

What’s coming: Lilly’s vision for the future is to maintain a relentless focus on raising the innovation bar for diabetes treatment, as well as in other serious metabolic conditions, including obesity, NASH and heart failure, to name a few.

  • “Our diabetes pipeline includes a once-weekly injection, currently under review by the FDA that represents a new class of medicines to treat type 2 diabetes,” Mason said. “In clinical trials, this therapy significantly lowered glucose levels and body weight—and even helped many participants reach a non-diabetes glucose range.”
  • “Our hope is to revolutionize how metabolic conditions are understood and treated, hopefully changing the way people manage conditions like type 2 diabetes and others,” he added.

Manufacturing support: Diabetes innovation is ultimately made possible by the people who work tirelessly to make life-saving medicines.

  • “I’ve witnessed our team start with an extraordinary idea and determine the science to make it possible, and it’s our manufacturing team that brings these products to fruition,” Mason said. “Our talented and dedicated manufacturing teammates make delivering life-saving medications to people with diabetes possible.”
  • Even at the height of the COVID-19 pandemic, Lilly employees in essential manufacturing and research jobs came to work each day “to make vital medicines for the world.”

 The last word: Lilly is “in an exciting period of growth,” Mason said, noting a recent announcement from the company that it planned to invest $1 billion in a North Carolina site to create an injectables-manufacturing facility.

The investment “underscores our commitment to delivering innovative medicines to patients around the world,” Mason said. “And it taps some of the brightest minds from the local labor force to bring it to life.”

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