Since the Industrial Revolution, mankind has been manufacturing items on a massive scale. From the simple ploughshare of the medieval times to the smartphones many of us carry in our pockets today, we have been taking raw materials to process and produce new items. An example is mining lithium to make batteries that can power electric vehicles. The permutations are endless.
Most, if not all, of our items are manufactured from various sources. According to the Organisation for Economic Co-operation and Development (OECD), 70% of international trade today involves global value chains as services, raw materials, parts, and components cross borders — often numerous times. A smartphone assembled in China may include graphic design elements from the US, computer code from France, silicone chips from Singapore, and precious metals from Bolivia.
Even how things are done is changing. The term “manufacturing plant” 20 to 30 years ago was likely to conjure up an image of human operators standing in lines, assembling various parts. But the push toward Industry 4.0 has changed this. Modern factories are becoming increasingly digitalised and leveraging more on robots to take on repetitive, mundane, and dangerous tasks.
Since robots are faster, more efficient and less prone to making mistakes than humans, what then is the role of humans in a manufacturer’s operations? Will there even be a place for humans in manufacturing in the future?
Flex, one of the largest contract manufacturers in the world, may have the answer. The Nasdaq-listed company was known as Flextronics until its name change in July 2015.
The company, whose corporate headquarters is in Singapore, has 160,000 employees in 30 countries, and although it may not be a household name, it makes diverse products — from coffee machines and medical devices to 5G infrastructure and autonomous driving systems for its customers around the world.
Managing it all is Flex CEO Revathi Advaithi, who took the helm in 2019. She explains that the company’s value proposition is providing end-to-end value chain management, saving customers the hassle of dealing with separate entities for each step of the process.
“What we want to be able to do is to own the design and innovation cycle, the manufacturing cycle, and the supply chain services cycle,” she says.
Flex’s solutions and service offerings do not end when the product exits the factory. In addition to providing design, manufacturing and end-to end supply chain solutions, the company also manages returns, repair, recycling and recovery infrastructure to support its customers through the product lifecycle.
Betting on Singapore
While digitalisation is becoming more prominent in the entire value chain, Advaithi believes that the “human element” of manufacturing is still significant.
“How many factories in the world are running without the human touch? It may happen for a few wafer fabs but that is not how the world operates… I’d say very few manufacturing plants across the world operate without human intervention,” she says.
She continues: “Even if you have a highly automated factory, people still have to show up to make sure the equipment is running, to reprogramme [those machines], or for maintenance.”
This know-how is why companies like Flex are keeping their operations in countries like Singapore, which has a higher labour cost compared to some other countries like Vietnam and Malaysia. With more complex machines, more highly skilled workers are needed to run, diagnose and maintain those machines and manufacturing processes.
Flex has two facilities in Singapore located in Changi South and Kallang. These facilities, Advaithi says, manufacture products for the healthcare industry, traditional cloud communication products, and consumer products.
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She highlights that when it comes to medical products, the Singapore team is “unlike any” as they can help a customer design and manufacture medical products, adding that not all of Flex’s facilities can offer such a capability.
This came into prominence during the Covid-19 pandemic. According to a Forbes article in 2020, Flex is one of the top 15 global manufacturers of medical devices, including ventilators used in hospitals for critical Covid-19 patients. Advaithi says the Singapore factory “really helped” in terms of the design of medical products that they helped bring to market.
“We make large complex medical equipment in that factory, which is not easy to make. Anyone who makes such equipment in the world knows that Flex’s Singapore factories are the best in the world. All our customers know that, even customers who don’t use us know that,” she adds.
As such, labour costs are simply one “small variable” in the manufacturing equation. To Advaithi, what’s more important is the capabilities the location can offer.
She also points out that Singapore’s education system and workforce are some factors enabling factories here, including Flex’s, to continue developing complex products. “If you just wanted to mass-produce something that was easy to do, you wouldn’t go to Singapore.
[However, if you’re focusing on] complex products and looking for design ideas and innovation, Singapore’s skilled workforce can deliver those. The kind of brainstorming and troubleshooting that Singapore graduates can do on the design innovation side is bar none
Revathi Advaithi, CEO, Flex
From cost to resiliency
Having spent most of her career in this space, including in leadership positions at Honeywell and Eaton, Advaithi has been privy to the ins and outs of the industry. She believes the future of manufacturing will be a shift away from just costs and profit margins. “For the first time in my life, cost is no longer that metric that I’m being measured by,” she says, quoting what a chief procurement officer told her. Today, the metrics for chief procurement officers and chief operating officers focus on supply chain resiliency instead of procurement prices racing to the bottom.
As such, customers are now looking for a partner who not only understands the market, but is also able to build a flexible, scalable and resilient supply chain for them.
“This means that I [need to be] able to procure products for them faster than anybody else. I [must be] able to help design or redesign when things happen and scale to make products for them anywhere in the world where they want it from.” This, Advaithi says, is what customers expect from Flex.
The conversation around cost has therefore shifted to resiliency, where companies have to make sure they have the product wherever and whenever they need them. “People understand that it’s more important for me to have the product [on hand] than to have a cheap product. There’s no point having a low-cost product when you can’t get it,” says Advaithi.
Despite standing at the helm of one of the world’s largest contract manufacturing firms that is embracing automation and machine learning technologies, Advaithi emphasises that people are the most important asset to the company. This is why her number one concern when the pandemic hit was the safety of Flex’s employees.
As a manufacturing firm, working from home was not an option for Flex’s employees as they “needed to keep the world running”. Therefore, the company had to ensure that workers came to work and felt safe doing so. It did so by developing protocols, including deciding how they commute to and from work, how they work at their workstations, and even how they would go to the cafeteria to eat, so as to minimise the spread of the virus.
The good thing about Flex, Advaithi points out, is its ability to replicate its measures on a massive scale throughout all its facilities. These protocols kept not only operations running, but also its workers safe. “What I’m really proud of is that we’re really focused on our employees, and we make decisions based on what’s the right thing for our colleagues across the world,” she says.