By Shannon Davis, Web Editor

“There’s never been a better time to connect” was the theme of John Kern’s keynote address at SEMICON West 2016 Tuesday morning, though it was clear from his speech that connecting – or digitizing – supply chains is not just a good idea, but imperative in the current ever-changing climate of the electronics supply chain.

John Kern, Senior Vice President of Supply Chains, Cisco Systems, speaking at SEMICON West 2016 on Tuesday morning. (Source: SEMI)

“If you’re not investing in digitization today, it’s going to be very, very difficult for you to remain relevant over the next decade,” Kern urged his audience.

Kern, who is Senior Vice President of Supply Chains at Cisco Systems, came equipped with several compelling case studies from his team’s own experiments, to make the case for why connecting the supply chain is so vital to innovation and profitability.

The first case study that Kern presented showed Cisco’s results from monitoring energy and energy costs in a factory setting. His team deployed a network of thousands of sensors that monitored energy readings of every piece of equipment in one of Cisco’s Malaysian factories, so teams could gather data and analytics on each piece’s performance. This initiative allowed the factory team to make changes in equipment to optimize performance, which resulted in a 12% energy reduction and a 1 million USD cost savings, which amounted to a full return on investment achieved in less than 10 months.

Kern also envisions a path to tens of millions of dollars in capital savings each year with adaptive testing, an initiative that’s currently saving Cisco test engineers man hours and allowing them to return to high value work. Kern said that Cisco was able to leverage analytics capabilities of a software they owned called Auto Test, along with Cisco’s own 10-15 years of test information, to build a test system that is now capable of machine-to-machine learning.

“The tests are becoming adaptive; they’re changing themselves,” said Kern, “and they’re notifying the engineers when they’re making a change.”

In addition to the cost and time savings, Kern believes this also allows for engineers to develop higher quality products.

And these products are also reaching the market faster, thanks to a Cloud-based supplier collaboration platform Cisco is using, that is allowing all of their suppliers to see real-time changes in demand and real-time changes in supply response, eliminating the bull-whip effect in the supply chain.

“We’ve also seen substantial improvement in product lead time,” Kern said. “We’re able to solve issues [with our suppliers] in a much faster way.”

Ultimately, this is where Kern says Cisco and its supply chain is headed: to what he calls supply chain orchestration.

“We’re trying to move this from a big IT project to having literally hundreds of people in our supply chain that are equipped to change the nature of their work every day,” he said. “If they understand the technology, they’re empowered to change the nature of their work.”

“This is the path for breakthrough productivity,” he concluded. “If you’re not investing heavily in these concepts today, it will be hard for you to stay relevant in the next decade.”