With $1.4 billion in annual supply chain spending potentially up for grabs in Wisconsin, many manufacturers have eagerly awaited additional information on how to do business with Foxconn Technology Group when the company ramps up production in Mount Pleasant.
The first in a series of supply chain readiness invents coordinated by the Wisconsin Economic Development Corp., Foxconn and other industry partners, provided some details, but it also made clear becoming a supplier will not follow a clearly defined path the way construction sourcing has.
“What we’re doing has never been done anywhere before like what we’re doing at the speed, the size, the scope, the scale, the investment, the sheer number of people that we’re going to be hiring, all of those things, it makes it something that’s never happened, so we don’t have a model that we can follow,” said Bill Mitchell, Foxconn vice president of business operations – Americas, during the event Wednesday at Waukesha County Technical College.
He said the supply chain process will not have the kind of clear timelines and processes that the construction process has followed. While he said the company is committed to be as transparent as possible, Todd McLees, a consultant working with Foxconn, acknowledged there likely won’t be as many announcements about vendors as there have been with construction.
“In supply chain, there’s very few plastic injection molders that want their current customers to know that they’re pursuing business, let alone taking it on,” McLees said.
Foxconn plans to build a $10 billion LCD panel manufacturing campus in Mount Pleasant and has suggested it will bring other business units to the region as the project continues. At the moment, the company is already assembling televisions – one to two per minute depending on the use of automation – at a leased facility in Mount Pleasant.
Mitchell, who is also chief executive officer of Aguila, a Foxconn distribution company, is part of the team working on the assembly operations. He said part of the goal is to lay the groundwork for other parts of Foxconn’s business.
“We’re trying to figure out what is the very best and chart the course so that as new pieces of our organization come they’re not having to remake the wheel. They’re not having to start from scratch,” he said.
The assembly work primarily includes putting together finished components to make televisions and displays. That puts the current emphasis for suppliers on finding plastic injection molders, metal stampers and automation systems integrators.
Foxconn and general contractor M+WǀGilbane have established clear targets for hiring Wisconsin workers and using Wisconsin companies in construction. The company estimated about one-third of its manufacturing supply chain purchases would be made in the state, although Mitchell did not point to any specific targets on Wednesday.
“We have a strong desire to localize everything we can,” Mitchell said, before adding, “We’re a business, we’re in business to make money and so we’re going to do everything we can that makes business sense as a company. Is that a fair statement? That’s the same thing you’d do with your company.”
He sketched a vision for Foxconn’s manufacturing and distribution that relies on automation and interconnected systems to be able to make design changes quickly, minimize the need for warehousing and provide customized products at a massive scale.
“One of the things that’s going to be important to us is that we have suppliers who can keep pace with where we’re headed and what we’re trying to do,” Mitchell said.
He acknowledged he does not know exactly what operations will look like in a few years and the company may end up deploying technology that does not exist yet.
“I would be preparing and ready because every major manufacturer is going to want the same thing,” he said.
Mitchell said Foxconn had a team in Wisconsin last year working on developing a supply chain, but realized it needed a more efficient and effective process to deal with the scale and complexity of the project. The company eventually began working with Todd McLees, founder and managing partner of Milwaukee-based management consulting firm Pendio Group.
McLees said the goal became to invert the sales cycle and proactively gather the names of companies to allow Foxconn to approve and then designate a preference for potential vendors.
“If you leave everybody to the traditional way of selling and buying, crazy things happen like people showing up in Racine at 6 a.m. with a robot at the door,” McLees said.
What McLees and Foxconn developed is a vendor readiness program intended for use by the company’s current businesses in the state, future businesses that come to the region and other OEMs in Wisconsin as well.
The system creates a scorecard for potential vendors based on a variety of factors. A company’s core capabilities around manufacturing, quality control, including ISO 9001 and TS 16949 certifications, engineering, safety programs and continuous improvement are all assigned points and given a 40 percent weight in the final score.
Another 40 percent of the score comes from customer-derived data, including 20 percent for a company’s net promoter score and another 20 percent for net quality score.
The final 20 percent comes from an evaluation of a company’s infrastructure and innovation. McLees said the category includes things like advanced manufacturing practices, plans for emerging technologies, business continuity plans, growth and talent acquisition strategies and willingness to engage in partnerships.
He said now is a good time for companies to do a baseline analysis of where their strengths and weaknesses are and develop plans to move forward.
“We’ve seen highly automated, unbelievable businesses, they’re still not ready for the volume,” McLees said. “There’s business decisions to be made in the next couple years to ramp up for the scale.”
The starting point for a company to get involved in the Foxconn supplier process is the Wisconsin Supply Chain Marketplace, an online tool state officials have pointed to over the last year as a place to register their interest in working with Foxconn.
But Mitchell also encouraged potential suppliers to reach out to McLees or Jela Trask, WEDC’s key business liaison, about opportunities.
“If I were you, you never wait on anything,” he said.
Mitchell said companies should start the process because even if they do not meet Foxconn’s immediate needs, they might be a fit for LCD screen fabrication or other business units in the future.
“This is just a good exercise for every company to go through,” he said.
