Man, Machines & the Limits of Technology

I am not against machines. I have made my peace with the fact that software applications control most of the things I do, determining and measuring even my productivity at work. In fact, knowing how stormy the weather can be at some of my travel destinations, I am happy to let aircrafts land themselves with minimal assistance from the pilot.

But in electronics manufacturing and especially in the convoluted structure we call the supply chain -- where designs are translated, and components are purchased and put into products to be manufactured and shipped to end-users -- machines and applications have a growing role, and increasingly they are beginning to relegate humans to the background of enterprise activities. Is that healthy for humans and the business organizations they've built?

Of course, you may believe that everything your company does can be handled via phones, email, video conferencing, and, in future, maybe even telepathy. The day may come when we dream up a product and a robot takes over and transforms the concept into winning designs and actual devices. It hasn't occurred, and it will be a long time before that happens. For now, though, the human touch in the supply chain is as critical to success as the admittedly phenomenal applications companies spend millions on to enhance their supply chain efficiencies.

I speak often with industry executives whose operations span the globe, and many of them spend countless hours in the skies each year reaching out to customers, suppliers, analysts, government officials, and other interested parties. I'll like to share why here and also tell a few of their stories.

A Frenchman I know, who works as a senior executive in the sales division of a major US semiconductor company, logs more than 300,000 miles in the air each year. "I go where the customers are, but these are not always sales visits," he says. "I talk about technology roadmaps. The sales may not materialize for another couple of years following these visits, but keeping my contacts fresh is worth several trips."

There are other reasons executives spend more time on the road, meeting new contacts, renewing old business relationships, and sleeping on strange hotel beds. A senior supply chain executive at a major hard disk drive vendor in the United States spends weeks at a time in Asia every three months or so. Each trip typically takes him to four or more countries and involves numerous factory visits, training sessions for local employees, and unannounced fact-finding drop-ins at suppliers. These are in addition to briefings with customers to reassure them about redundancy measures critical to unhindered supply of components.

During a recent visit to a contract manufacturer and design house in Europe, I learned of challenges customers are facing in Asia and other low-cost regions where hiring and retaining technical employees now constitutes one of the more intractable problems facing manufacturers in the region. Many of the companies that transferred or outsourced manufacturing operations to China from Western regions over the last decade are seriously weighing pulling these back because so much time is wasted simply on employee recruitment. A top executive at an electronics company in the midwest of the US spends about three weeks each quarter in China overseeing recruitment and training of employees.

"The cost of manufacturing in China is rising dramatically, and there's been a definite increase in requests for alternatives," Martin Kingdon, director of business development at the Heerbrugg, Switzerland, office of Escatec SDN. BHD, told me in an interview. Escatec, which is headquartered in Malaysia and does a lot of design, prototyping, and some high-end manufacturing in Switzerland, is benefiting from that trend, Kingdon said. Having significant operating presence in both Europe and Asia has helped the company better understand customer needs and match services to their corporate goals.

Many companies have simply yielded such personal contacts to outsourced partners and rely on supply chain management applications to stay in touch with customers and contract manufacturers. The days when the electronics supply chain depended solely or even heavily on people to determine what would satisfy customers is disappearing fast. At many small component suppliers, distributors, and manufacturing companies, the interactions among suppliers, contractors, and customers are shrinking fast, replaced by software applications that now link all segments of a company's supply chain with the outside world.

Increasingly, too, sales, purchasing, procurement, manufacturing, project management, design, coordination, monitoring, measurement, and other activities are performed by computers, leaving limited functions for employees, many of whom sometimes wonder where exactly they fit in now within extended supply chain operations.

This trend accelerated after the horrible 2001 economic downturn as companies tried to reduce the impact of human failings on their operations. Millions were spent on supply chain management applications, and the rapid growth of the cloud has hastened the adoption of machine-to-machine communications in the electronics supply chain. The results so far have been positive in that the industry has a better handle on its boom-and-bust cycles and has improved visibility into demand, supply, and inventory conditions. Recoveries from market downturns have been swifter, and the impact of a demand slowdown less savage.

What has been sacrificed in the meantime is the ability to forge the personal contacts and relationships that serve as the foundations for long-term engagements. A personal experience comes to mind here. I once phoned an executive at a North American company who I had known for years for what I thought would be a quick clarification on some issues about his firm's product. I couldn't even get through to the secretary for the first 10 minutes, during which the communications system bounced me around. I persisted. Finally, I got hold of the receptionist who said she would have to route my call back to the communications maze. I declined and called his cellphone.

"Next time, just call my mobile number," he said. If hadn't known him that well, I would never have merited that privilege.