Rockwell Automation is committed to the health and safety of our employees, customers, suppliers and communities as we continue to do all we can to maintain a high level of service to our customers. We support you in maintaining your business continuity as you also focus on keeping your teams and loved ones healthy and safe during this dynamic and stressful time.
Our global supply chain plays a critical role in serving our channel partners and customers. We, along with many industries and customers, feel the broad-based challenges in our supply chain due to the pandemic. As I previously shared, ongoing supply constraints due to components shortages, demand fluctuation, and more continue to impact our business.
Unfortunately, we continue to see challenges in the electronic components market, constraints due to inclement weather, and natural disasters in specific locations that have caused further disruption to our supply base. These disruptions have been partially offset with improved stability in our workforce and increased transit time stability in our transportation network.
Recent market challenges continue to cause uncertainty in our supply chain, but we remain committed to doing everything we can to support our customers. These challenging conditions will continue to cause inconsistent service levels in select product lines as we work through our recovery actions. We recognize the importance of continuing to deliver best in class service across our global network. Together, we will continue to navigate this tough situation with a focus on safety while taking care of each other, our customers, and our communities.
Our team continues to monitor the end-to-end extended supply chain so we can take action in response to the changing market dynamics. The actions I highlighted in my last update include building additional inventory, hiring incremental labor, securing additional freight capacity, and a robust expediting process for critical orders. We also continue to evaluate business continuity plans throughout the network. Previously highlighted actions remain in place and we will continue to adjust accordingly to the dynamic market conditions.
Actions we are taking
We continue to monitor the dynamic situation, have accelerated our efforts in the past weeks, and we are committed to these actions for as long as they are needed:
- Increasing global capacity to build additional inventory where appropriate: As we work to expand capacity, we anticipate some continued inconsistency in product lead times. A higher than anticipated increase in orders late in 2020 led to a lower than planned service level for some of our products. Presently, we have several catalog items that remain below targeted inventory levels. We expect to see improvement in the coming months. We continue to focus on procuring additional component inventory to mitigate against the reduced availability in the market as well as the sudden increase in orders. We also continue to make the necessary investments in manufacturing to increase capacity.
- Managing product lead times: Lead times have been extended on select product lines to drive improved accuracy in the promise dates provided to our customers. We continue to monitor our inventory levels and will adjust lead times as product availability changes. We will do everything we can to reduce lead times as we stabilize supply in our constrained products.
- Scaling resources in our manufacturing facilities: The pandemic has had varying impacts across our global manufacturing locations. We are monitoring the situation closely and ramping up additional resources and operations without compromising the safety of our employees.
- Finding agility in our supply base: We remain in frequent contact with our largest suppliers. We’re constantly assessing our supply base to ensure we are prepared to respond to critical areas of operations, inventory build-up, surgical expedites, and business continuity planning. We are also investing in incremental capital capacity where appropriate. Our executive leadership team remains in close contact to those component suppliers most critical to our supply chain availability.
- Adapting logistics to secure additional freight capacity and manage expedites: Freight continues to move both regionally and globally across our network. Transit times and capacity continue to vary with the effects of COVID-19, but are beginning to stabilize. With the reduction in commercial airline flights and cargo space, we have secured additional flight capacity, added additional operational controls, and have contingency plans for high volume lanes. We have also shifted to expedited modes of delivery to improve our promise dates, including shifting from ocean to air.
- Distribution and fulfillment surge capacity: We continue to develop surge capacity within our global distribution network including leveraging a legacy distribution center in North America to accelerate throughput. Also, we are direct shipping orders from our manufacturing locations where possible to improve speed to our customers.
- Increasing customer support resources: We are increasing our teams for Customer Care global prioritization and order support. We are also leveraging our global shared service organization to increase bandwidth for more complex interactions. We also have a cross-functional team with sales, operations, business and regional leaders focused on dedicating resources for resolution.
How can we work together
We ask and encourage you to work with us to assist in managing the current situation and help all of us better serve our customers.
- Communicate large order requirements in advance: As a result of the increased orders amid the ongoing pandemic it is more difficult for our manufacturing operations and suppliers to react to increases in demand. Large order notifications will improve our ability to proactively address your demand requirements. Our authorized distributor network can help provide value to our customers using preferred products wherever possible, in many cases improving lead time.
- If you have critical needs: Continue to work with your authorized distributor partner, your Rockwell Automation sales team, and your local Customer Care team on critical needs – we remain committed to doing our very best to provide outstanding support for critical needs.
- Our authorized distributors continue to leverage our Customer Care expedite process for critical orders: If there is an item that is past due, we have robust processes in place to monitor and manage these orders.
- Social distancing best practices: We are encouraging employees to practice social distancing. This means, wherever possible, remaining out of large group settings, avoiding mass gatherings and maintaining distance with others, recommended at four to six feet, (or 1.2 to 1.8 meters) apart.
- Visitors to Rockwell Automation facilities: We are limiting visitors to Rockwell Automation facilities to business essential need only, and are encouraging people to conduct meetings and discussions virtually. For business essential visits, visitor screening guidelines will be applied to prohibit visitors who are ill or have traveled to restricted locations within a certain time period.
- Domestic meetings/events/training: We have cancelled events that involve large groups of people, and will evaluate future events individually, considering timing, size, attendance and location.
- Employees are working from home: Employees in office locations in geographies where there are a large number of reported cases have been directed to work from home or continue to work from home, wherever possible. This helps reduce the spread of the virus. We have directed any employee feeling ill or with any flu-like symptoms to stay home and seek medical attention immediately.
- Enhanced cleaning in our facilities and major locations: Our Environmental Health and Safety Team continues to work with our cleaning vendors and food service providers to ensure safety and good cleaning practices are part of our standard operating procedures.
- Increased employee communication on good safety practices: These include staying home when sick, respiratory etiquette, and hand hygiene best practices, avoiding touching the face, shaking hands or hugging. Our global security team is available 24/7 with emergency numbers published and communicated to all employees.
Thank you for your continued partnership and collaboration. We remain fully committed to investing in a resilient supply chain and delivering operational excellence despite the adversity we all continue to face
Senior Vice President and Chief Supply Chain Officer