Regionalizing manufacturing will help make supply chain resilient: Siemens USA CEO

Barbara Humpton, Siemens USA CEO, discusses the nation's ongoing supply chain crisis, and how regionalizing manufacturing could ease bottlenecks.

Video transcript

- I'm here with Barbara Humpton, who is the CEO of Siemens USA. Barbara, nice to see you.

BARBARA HUMPTON: Andy, it's great to be back with you.

- Let's jump right in and talk about supply chain, because obviously, there is a tremendous amount of questions about the problems with supply chain and how soon things can get turned around. What's your assessment of what's going on right now?

BARBARA HUMPTON: Yeah we're hearing from our supply chain professionals that we can expect disruptions through '22. It's clear that there have just been massive changes all around the world. But I'll tell you, these folks have been heroes of ours.

They've used all kinds of risk management techniques, as well as diversifying our sources of supply so we could stay up and running, and now using predictive analytics to help us anticipate what we need to do to be ready for what's next.

- What are you guys doing specifically at Siemens, and what do you think about the government's response so far? It's obviously become a national priority.

BARBARA HUMPTON: It is. Well, first of all, you know, this is-- we have been in a couple of decades of globalization. And what we're seeing is a moment that is driving glocalization, the idea that there is innovation going on all around the world. But what we absolutely need is the ability to make products close to the source of demand.

And so this regionalization of manufacturing is actually going to help make our supply chains more resilient. Now, can government help with that? Yeah, we think they can. Governments around the world are actually making investments into getting the industrial base strengthened and more resilient. And Siemens is playing a role with our technology.

- When you talk about that localization, I assume part of that is returning manufacturing to the United States, for instance. Isn't that going to increase costs though?

BARBARA HUMPTON: Well, Andy, not necessarily. We have technologies today that can actually enhance what individual people are capable of producing. And when you start bringing this automation in, and suddenly the cost of labor is not the driving factor for ultimate production, then boy, the sky's the limit with what can be actually produced here.

- And of course, we've seen with these supply chain problems, that focusing solely on cost when it comes to supply chain can lead you down a false path, no?

BARBARA HUMPTON: Well, I mean, here's the dilemma. When we had a supply chain that was tightly tuned to just in time, everywhere, at all times, when there was a rapid change of demand, we saw the effects.

- And one more. Not to belabor this, but the supply chain thing is so fascinating to me. Isn't part of the problem that various parts of the chain can't talk to each other? In other words, you've got the ports, and then the trucks, and then the railroads. Are you guys working on that in any way?

BARBARA HUMPTON: Well, we certainly are. We are engaged in all aspects of the supply chain. We have experts in transportation and mobility. We have experts in the manufacturing processes. Yes, the one really powerful tool that we're seeing being brought to bear is the digital twin.

The idea that you can model and simulate anything from the product that's being made, to the plant that's being made in, to the supply network into which it feeds, and these digital tools are giving us unprecedented insight and then control over the supply chain.

- Speaking of digital tools, automation is a priority of yours and has been. What role are you guys playing with that here in the United States? And what has been going on with COVID to accelerate that transformation?

BARBARA HUMPTON: Well, let me give you some examples of the way automation has transformed the way people are working. During COVID, Medtronic came to Siemens and said, we'd like to make a digital twin of our ventilator, so that others could produce this. They were able to license that plan, and others could produce the ventilator. And that helps scale up production. Fantastic.

Now, what we're doing is working with the FDA to give them the opportunity to use the same digital tools to see medical devices in their early stages of design. They can actually review certain things that they used to have to wait for the actual product to be developed before they could begin understanding and testing. Now they can do that simultaneously as products are developed. It reduces the cycle time and speeds devices to market.

- I remember talking to Geoff Martha of Medtronic about those ventilators. That's fascinating. So when it comes to automation, how does that impact what's going on with the shortage of employees that we're also hearing so much about these days?

BARBARA HUMPTON: People used to talk about human capital. And the fact is, people are not capital. People are people. And right now what we're seeing is that people have the ability to choose what they want to do, where they want to work.

And so I think what we're going to be seeing is a couple of things. One, automation helping to expand the efficiency and productivity so fewer people get more done. By the way, where we've made these changes, we also see an improved safety record. We see higher product quality.

And employees are engaging in ways they really never thought possible. It's exciting to see someone who's a, you know, many decade veteran in a manufacturing environment working side by side with a digital native, learning how to program machines in the manufacturing environment, and actually elevating their role. It's an exciting time to be in manufacturing.

- Speaking of the environment-- we're shifting gears a little bit to--

BARBARA HUMPTON: I like that segue.

- That sort of worked, sort of did. There is the climate summit in Glasgow, and I'm wondering what your take is on that, Barbara, when it comes to public private partnerships in terms of impacting change there.

BARBARA HUMPTON: Yeah, well, first of all, I'm excited I'll be part of a delegation that will be going. I'll be an observer at COP26. And we're all concerned about what's needed now is this next decade of action. What's been clear to all of us, and I think it's been discussed these last few years, is government can't do this alone. The private sector can't do this alone. It will take all of us, thinking systematically.

So Siemens made-- our commitment to be carbon-neutral by 2030, we made that commitment in 2015. We said we'd be halfway there by 2020. Here we are, we've exceeded that goal. And our goal now is to be net zero by 2030. We're working all up and down our supply chain, and we're calling on our colleagues in industry to do the same.

- Maybe you can run into Akiko Fujita there in Glasgow. Coming up. Before we let you go though, Barbara, I want to ask you about returning to work, and what's going on with Siemens, and if you've been traveling around and visiting customers and employees, and how that's all going.

BARBARA HUMPTON: Well, throughout the pandemic, we've kept a philosophy which is, let's not overburden our health care systems. So for people who could work remotely, we encourage them to. People love the flexibility. We kept our offices open so that people had the option to go in.

And I find parents of young children, oh, love going to the office for those moments of silence. But for others who found they were most productive at home, what we're saying is, we want to keep that flexibility in our workforce going forward.