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As they weather the fallout from shifting government trade policies and other sources of disruption to global commerce, importers and exporters are seeking ways to make their supply chains more resilient.
It’s a matter of turning adversity into positive results. That’s the goal of AkzoNobel, a maker of professional coatings for aerospace, automotive, metal manufacturing and other industries.
Karen-Marie Katholm, chief integrated supply chain officer, heads up a 14,000-person operation that’s busy digitizing and transforming the company’s supply chain.
“The investments we’re making will help us make our supply chain in North America more reliable and accommodate future growth,” Katholm says.
One outgrowth of that effort is a push to get closer to the ultimate customer. Fraying supply lines, caused by geopolitical tensions and the failure of key links in the extended supply chain, are fueling the company’s strategy of creating “a very wide footprint of plants across many countries,” Katholm says.
“We are a global player, but we need to have a regional presence with shorter lead times,” in part to offset challenges in obtaining raw materials, says Nate Norris, director of AkzoNobel’s integrated supply chain for North America.
Currently, the company maintains 140 manufacturing sites serving four business units. The one that supports powder coatings is especially intent on maintaining a presence across regions.
Last year, the division launched a program to automate key industrial processes. The initiative is “very much market-backed” and geared to the unique requirements of the industries that AkzoNobel serves, Katholm says, adding that the U.S. and Mexico are especially ripe areas for sales growth at the moment.
Nearshoring as a concept isn’t new to the company. Most of those production sites around the world are dozens of years old. Nevertheless, the company is boosting investments in North America in response to sourcing shifts among its customer base.
“Many companies learned from a supply chain perspective some very hard and important lessons during COVID — how difficult it can be to manage when things get very volatile and dynamic,” Katholm says. That’s why a number of raw materials suppliers are beginning to return, at least in part, to their European origins.
The desire for proximity to the supply base also exists in the U.S., but certain assets that once supported raw material production there no longer exist, and to replace them would require heavy investment, she says.
“Most of our customers want us to be agile,” Norris says. “You almost have to produce and buy what you need in this region.”
In the wake of COVID-19, he adds, “we’ve all changed our mindset on business continuity planning.” Given the importance of striking a delicate balance between supply and demand, and meeting increasing demands for on-time delivery, “we just can’t deal with hiccups in our supply chain anymore.”
Technology plays a key role in AkzoNobel’s push to increase supply-chain resilience and agility. The company recently invested in a pilot project in Europe, supporting its coil and packaging business, to develop a type of coating that prevents the product from touching the inside of the can.
Also part of the recent industrial transformation is a focus on industrial process flow, involving more intensive quality inspection and drawing on multiple data points.
That effort requires deployment of a “digital playbook,” especially when it comes to supply chain planning and the adoption of artificial intelligence. Digital-twin technology allows for creation of a virtual map of operations, upon which AkzoNobel can impose various scenarios before adopting the one that leads to the greatest efficiencies.
Sustainability is yet another major driver of change within the organization. AkzoNobel is helping to initiate a move away from traditional solvents in favor of more environmentally friendly powder coatings — an area that Katholm says is currently experiencing “fantastic growth trajectory.” The company recently announced an investment in that process of more than $30 million, to build capacity and upgrade the network in the U.S. “The sustainability agenda is driving lots of pull from our customers and to our suppliers,” she says.
Product innovation is centered in four large research and development centers in the U.S. “We’ve invested heavily in those facilities, and we’re trying to get in front of it,” Norris says, noting that the effort includes formation of a 10-year technology roadmap that will be executed in multiple phases.
Like most global businesses, AkzoNobel has been in a “catchup mode” as it seeks to meet current demand while positioning itself to serve future markets. Complications arise both from new technology requirements and a tight labor market, the latter of which is causing the company to focus strongly on talent development. A global engineering training program hires graduates fresh out of school, and places them in two-year rotation programs during which participants acquire multiple skills.
All of this must be accomplished against a backdrop of ever-shifting government policies, regulations and product specifications. “The automotive, aerospace and military industries all deal with very highly regulated standards,” Norris says. “They really force you to be at the top of your game.”
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