NTAI06 On December 12, 2023, Flextronics CEO Revathi Advaithi, who also serves as a member of the U.S. government’s Supply chain Policy Advisory Committee, was interviewed by The Wall Street Journal’s Emily Glazer at the Wall Street Journal CEO Council Summit, Advaithi talks about how developments in technology will affect the way everyday products are made, how she deals with uncertainty, and looks to the future of the workplace and manufacturing.
Emily Glaze: First, let’s talk about the job market. In the context of the current global economic slowdown, do you think we still need more AI experts or more labor on the factory floor?
Revathi Advaithi: Of course. Any skill that has to do with supply chain resilience, software skills that have to do with how to do production planning, or how to retool software systems to be more efficient, is hot and scarce in the market. When we hire employees, we ask questions such as: Can you operate SMT surface-mount technology machines? Can you operate large manufacturing equipment? Can staff be deployed reasonably? I think high-skilled workers are still hard to find. They are still a scarce resource in the talent market. Most people prefer to work for trendy software companies rather than manufacturing. So we’re still going to be hiring around those areas, and I think the pace of hiring will accelerate. But on a day-to-day basis, our progress is much slower.
Emily Glaze: You mention a lot of trendy brands, and I hear Flextronics is behind many ofNTAI06 them. I imagine that many of us have probably used products made by Flextronics in the past 24 hours, from hair dryers to coffee makers. Can you tell us a little bit about the different work Flextronics does and its contributions?
Revathi Advaithi: When my kids ask, “Mom, why don’t you guys make these cool, fun products that we use every day?” I always say, “What we do is not a brand. But if we didn’t make them, you wouldn’t have them.” But in reality, we do almost everything from vacuum cleaners to hair dryers to flat irons. We used to be a big player in mobile because the end product market is too competitive and we are no longer in it. We have a strong presence in cloud communications and enterprise technology. Industrial and power is one of our largest end markets. Therefore, whether it is embedded computing power supplies, device power supplies, or basic infrastructure, industrial, residential or commercial sectors, they are our main customers. In addition, electric vehicles are also one of our important platforms. So we’re not just dealing with small products, we’re dealing with huge devices and integrating them globally.
Emily Glaze: You do cover a lot of industries. You also mentioned electric vehicles, so let’s talk about the economic development in this area. We’ve covered the slowdown in demand for electric vehicles, how might that affect your business?
Revathi Advaithi: Of course, if the electric vehicle market slows down, we will definitely be affected. But I thinNTAI06 k our growth has been overshadowed by our market share gains because of the consolidation that has taken place in our electric vehicle supply chain. So I’m not too worried about the auto industry. I think the automotive industry needs to pay more attention to whether the production capacity can be adapted. Is there enough room for growth? We also have a large electric vehicle market in China, and although the growth has been a bit slow, we have still made some progress recently. The potential for electric vehicles in the future is huge, and our electric vehicle business has a wide presence in North America, Europe and China. So I’m not worried about a slowdown in the auto industry because I think we’re going to have a lot of capacity growth. But sometimes, some markets move more slowly than others.
Emily Glaze: Let’s talk about artificial intelligence next. You’re a member of the supply chain subcommittee, and a lot of work goes into figuring out how to prevent some supply chain challenges. Can you tell us a little bit about the work you’ve been doing on that subcommittee and whether AI can play a key role in solving global supply chain problems?
Revathi Advaithi: That’s a big question. I would say that our focus is first and foremost on the availability of people. For these huge plants that are being built all over the United States, we need talent to run those plants. How, then, should we focus on policies that accommodate an expanding workforce and help manufacturing become a true contributor to the U.S. economy? This is probably a niche area of work.
Emily Glaze: Do you think we’re at that stage yet, or are these factories under construction or in the pipeline that might create vacancies?
Revathi Advaithi: I don’t think we’re there yet. Every day we read articles about how difficult it is to staff certain factories. For manufacturing, at least, training skills sounds easy. But that’s not the case. We have to reach out to many rural communities and help build community colleges to create a pipeline of talent that really works. This will require a long-term effort. To keep these factories going, you have to have a pretty strong immigration policy. We can suggest a lot, but politicians will do what they have to do. Some suggestions are feasible, others are not considered. But that’s just one theme of the work. The second theme of my work that I want to talk about is around resilience. Think about medical devices, think about how much work there is to do in terms of transparency in the supply chain to make sure we’re really thinking about building long-term resilience. For example, can we get different parts of government and the private sector to work together to create a more transparent supply chain for medical devices? And build a strong supply chain around it. Moreover, we should finally understand what planning looks like in a world of AI and supply chains. But I would say that for the Supply Chain subcommittee, these are the two big themes of the work that we are doing and help us make recommendations.
Emily Glaze: For how AI will improve the supply chain, you talked about both short – and long-term considerations, how will it improve Flextronics’ efficiency and productivity? And how can data be used to ease some of the obstacles in global supply chains? In the longer term, what is your vision for the future? If you can fix the supply chain and use AI proficiently and properly, what does the future look like?
Revathi Advaithi: I’m going to talk about it in two parts. Part of it is based on the situation on the production floor. The other part is from the perspective of macro planning. For the past 30 years, I have been working in factories all over the world. I’m looking forward to the next 20 years. The reason is that if you consider the productivity of the factory, it hasn’t improved significantly. Just like in the early 2000s, in the late 1990s, when labor arbitrage took off, you saw a lot of emerging economies benefit. And AI can be an equalizer in a way. I’m not talking about large manufacturing plants that are fully automated or large plants that we operate. But if you think about AI in small, mid-sized manufacturing, if implementation costs are low, then hardware machines may play an equalizing role in increasing productivity. They might have 25, 30 different discrete software systems, not talking to each other, trying to run production schedules in the factory. In order to make up for the low utilization of equipment, you can only add more equipment, capital will no longer be cheap, so what do you do? So I feel that AI can help by considering a combination of: How is your working capital deployed? Can equipment utilization be improved? Putting all of this together, I think AI can help increase the productivity of factories. So I’m very much looking forward to this because it will give small and medium-sized manufacturing an advantage.
