How one company manages supply chains for every single ‘essential’ industry
If there’s one company that connects the many businesses deemed essential during the coronavirus pandemic, it might be Flex. “Name an end market—we probably are in it,” says Revathi Advaithi, CEO of the $26 billion Global Fortune 500 company. “I can’t think of something that’s essential that we’re not involved in.”
The manufacturing and supply chain logistics company makes everything from health care equipment to products that support the global energy supply to infrastructure needed to keep the world’s communications systems functioning. Flex is one of the world’s top 15 manufacturers of medical devices, and this year it alone will produce more ventilators than the total 35,000 made by all global manufacturers in 2019.
As part of a series of conversations with female executives about how the coronavirus has affected their businesses, Fortune spoke with Advaithi, first over email and then by phone. She’s easier to pin down these days, now that she’s no longer spending 60% of her time traveling the globe visiting Flex’s factories everywhere from Southeast Asia to Europe.
The CEO spoke about changes to Flex’s worldwide operations and how to keep global supply chains running—avoiding the kind of breakdown we saw in the production of products like toilet paper. Advaithi’s two conversations with Fortune have been edited and condensed below.
Fortune: What’s your No. 1 concern related to the coronavirus and your business?
Revathi Advaithi: Of course, my No. 1 concern is the health and safety of our employees. It has to be. Flex has 160,000 employees, mostly factory workers, and locations in over 30 countries; in many of these areas there are outbreaks. It is a challenge because many people really do want to keep working, and many of our factories make essential products, but we have to provide a safe place for employees. We have put considerable resources into protocols to protect our employees including providing personal protective equipment, temperature screening, and physical distancing. To date, we have done over 7 million temperature screenings.
How has the coronavirus impacted your business in the short term?
Early on, we experienced disruptions to our China operations. Fortunately, we were well prepared, but we also learned quickly, and developed a robust playbook to manage the situation and replicated our plan around the world as the virus spread. We participate in diverse end markets from medical, automotive, consumer, tech, and industrial. As you would expect most markets are expected to be down except for medical and critical infrastructure in technology.
COVID-19 is driving significant demand increases in critical care products, such as oxygenators, patient monitors, testing equipment, and ICU-related necessities, all of which we manufacture and quickly responded by increasing production to help our customers meet demand. We are also in the process of manufacturing five different ventilator programs. Typically, medical programs take nine to 18 months to ramp. We ramped and started shipping ventilators in five weeks.
What does it take to manage supply chains of this level of complexity through this period?
It’s dependent on factories running in every part of the world. It’s dependent on planes flying. Obviously there’s been a tremendous amount of disruption over the past few months, but it was more significant in January and February. Most other markets, besides health care, are recovered and back on track. In health care, demand has been up for anything associated with critical patient care: not just ventilators, but beds, infusion systems. These supply chains are four or five levels deep, so you’re chasing hundreds of thousands of suppliers to make these end products. It’s a pretty complex animal.
How do you expect the crisis to impact your business in the long term?
We continue to see more discussions on regionalization of supply chains, which had started during the trade war. While this is easier in some markets, it is more complex in others. Supply chain resiliency is another major concern for many companies. Many are understanding that this is not easy to navigate, and we are helping our customers rethink their supply chain strategy.
What management lessons or principles are you drawing on as you face this unprecedented crisis? What, if any, road map are you following?
Having spent my whole career on the manufacturing floor, you always put people’s safety first, no exceptions. All decisions consider safety first.
It is easy for teams to get overwhelmed when faced with the level of challenges at a time like this, so I am a huge fan of simplicity and disciplined execution. You take the extra step to break down the problem or challenge into their simplest forms and take them on one at a time. I apply these principles to my decision-making, and we instill it in our culture. I am also very organized on getting the teams focused around the issues. My road map on leadership has always been about being empathetic but making decisions quickly. I continue to use that to guide me on an everyday basis.
What data are you monitoring to gauge the crisis short term? Long term?
We have been using credible sources like the CDC and the WHO, like most companies. We have epidemiologists under contract to help us scenario-plan and be as prepared as we can related to the virus. We have an internal data analytics system that compiles data from 88 different sources to give us visibility across a number of vectors.
Flex is in a unique position to see trends early because of where we sit in the value chain as well as the diverse markets we serve. We are manufacturing everything from a small consumer device to cloud infrastructure, from drug delivery systems to autonomous vehicle electronic modules. We operate directly and indirectly in almost every country in the world, so we see early data at the grass-roots level, through our contacts with thousands of purchasing managers and leaders. We combine that with the connectivity we have with a broad array of CEOs, banks, and government officials. We are using all this intelligence to help shape our customer and supplier behaviors in terms of demand so we can operate as a more efficient supply chain. We are also using scenario-planning for different demand situations, enabling us to respond to decreases or increases more quickly. All of this work is helping shape the future of manufacturing.
What’s the biggest way your professional life has changed amid this crisis?
Not being able to travel has been a huge adjustment. Before the pandemic, I was traveling about 60% of the time; now of course it’s down to zero. Think of a country, I probably have been there in the past year. Anywhere in Southeast Asia, India, China, all parts of Europe. I couldn’t even name the top five. I miss meeting with employees and customers at our sites around the world.
What’s the biggest way your personal life has changed amid this crisis?
I head to my office at 6 a.m. and am in my office until 6 p.m. most days. But I’m also spending more time with my family, which has been wonderful. With two teenage kids—my son, who is home from college, and my daughter who is in high school—at home, like most families we are learning how to best make it work.
The first few weeks there were a lot of interruptions—“Mom, what’s for lunch?” We had to set some rules: There are sandwiches for lunch, everyone make their own stuff. Like clockwork, one of my kids will walk in at 5 or 5:30 and ask what’s for dinner; they did that during an all-employee meeting.
What—if any—good do you think will come from this crisis?
I think we will see faster innovation and reduced time to market in some health care sectors. We have shown the world how fast we can ramp manufacturing when every minute counts. My hope is we apply that learning to rethink how we can accelerate innovation and production. My hope is that we continue the collaboration and strong relationships we have built through this crisis and stay more connected. As nation-states, hopefully we are learning to be better prepared for the next time we face a crisis like this.