This article is the first installment of the 2021 Automation supply chain update.
View the rest of the series here.
As difficult as present strains on the supply chain are, many of the conditions for them and the volatile fluctuations they produce started before the pandemic. In fact, Will Aja, customer operations VP at Panacea Technologies Inc., a CSIA-member system integrator in Montgomeryville, Pa., reports these latest strains on global supply chains started several years before COVID-19 arrived when the U.S. increased tariffs.
"Many products including brand-name automation hardware from China, Vietnam and Singapore started going to third countries for trivial 'assembly' procedures to avoid the tariffs," says Aja. "This created a whole new world of shipping aggregation, and we started seeing lead times for sensors and other parts increase from the usual two weeks to 12, 24 and 40 weeks. So, we had to inform our clients ahead of time that we can do some engineering and order instruments and parts now, but the rest of some projects will have to wait to be finished. This really flipped the automation business on its head. Where distributors used to order from suppliers and other distributors, we're all scrambling far more now, and it can be a real nightmare. The stress is like the panic during the old gas shortages, but it also causes everyone to overestimate what they need and order spares, which strains the supply chain even more."
Likewise, when the pandemic eased earlier this year and supply chain models began to catch up, Aja explains this situation caused unbridled demand from projects that were delayed, which in turn caused massive backups in supplies that had to wait, too. "If a distributor wasn't available, then we and other system integrators had to plug into new distribution systems," says Aja. "However, we also saw added staff turnover during COVID-19 due to early retirements or other job changes, so this was another issue to add to the supply chain models."
Designing around the chain
“Even though it makes projects harder and more costly, we now begin with hardware designs and selecting components as soon as possible because they require the longest lead times," explains Aja. "Previously, hardware lead times weren't as critical, and ordering was folded into the usual coding, project management and service tasks that drove the completion of projects. Now, we have to ask clients to be more flexible and fluid, and consider using acceptable alternative components that may be able to go into their projects. We also put in temporary solutions until the right equipment arrives.”
For example, Panacea integrates devices and systems for targeted gene therapy medicines that rely on refrigerator/freezer incubators for which reliable and accurate data is hyper-critical. “The usual choice is adding external probes to monitor processes and variables. These include special parts for external sensors that are wired to transmitters and environmental management systems (EMS),” says Aja. “Usually, we implement these on our own and collect data from the equipment. However, lead times for sensors, probes and transmitters are now so long that we can’t start with an end-state, secondary monitor. Instead, we have to bring onboard data in first and add the hardware later—so we’re basically integrating these projects twice.”
Aja adds that Panacea is even designing systems that can be integrated twice, such as adding secondary sensors and monitoring when they become available, and delivering solutions that can function with both. “This can minimize some supply chain issues by adding services. However, it’s still a lot of stress on us and our clients when we have to tell them there’s a 40-week lead time and there’s not much we can do about it,” says Aja. “It’s like building a wood floor, and having to add carpet temporarily because the wood sealant isn't available. This requires a lot of educating, front loading services, and convincing people. Eventually, some stress on the supply chain model goes away, but we're still keeping our good relations with our distributors because we'll still have to ride out other rough months in the future."
