As of February 11, 2021
Ernest Nicolas, SVP | Chief Supply Chain Officer
An update on our Global Supply Chain
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. There remain continued supply constraints because of transportation capacity, component shortages, demand fluctuation, difficulties with consistent labor planning, and more. Global transportation is impacted with air capacity down 20% versus last year at this time, lead times on ocean shipments globally continue to extend, and parcel networks remain congested due to the boom of e-commerce.
These challenging market conditions have resulted in inconsistent service levels over the past several months. 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 swift action in response to the changing market dynamics. These actions 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.
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 healthy inventory levels for most product lines, although some catalog items remain below targeted inventory levels. For product lines below target inventory levels, we expect to see improvements throughout the quarter. We procured additional component inventory to mitigate against the reduced availability associated with 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.
• 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.
• 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. 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.
• 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.
How we can 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.
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.