Advanced robotics is creating both a supply chain challenge and a major manufacturing opportunity. In this Supply Chain Byte, Lisa Anderson discusses the FCC’s recent action requiring advanced robotics used or introduced in the U.S. to meet U.S.-made requirements. That generally means the robotics system must be manufactured in the United States, with more than 65% of the component cost coming from domestic components.
For manufacturers using advanced robotics, this means it is time to look closely at the end-to-end supply chain. Review the bill of materials, component parts, domestic content, tier 2, 3, 4, and 5 suppliers and overall supply chain resilience. At the same time, this creates a significant opportunity for U.S. manufacturers. Companies may not need to build robots themselves. They may be able to supply the manufacturers producing advanced robotics in the U.S. or supply the supplier networks that support them.
Overall, it has become apparent that manufacturers and supply chain organizations will not be successful if they don’t pursue advanced robotics and/or related technologies to support at least key areas of their business. It is impossible to compete and scale rapidly with increasing demands in several industries such as aerospace and defense, pharmaceuticals, data warehouses, medical devices, and supporting electronics industries. However, due to the risks associated with national security, the U.S. has put advanced robotics on the FCC list. Thus, companies will not be able to source advanced robotics produced in countries outside of the United States. To qualify as U.S. produced, generally it requires 65% of the bill of material cost to be produced in the U.S.
What are the impacts of the new robotics categorization?
Proactive companies will plan ahead. If interested in purchasing robotics, start looking for sources of robotics produced in the U.S. and start building a relationship with those companies. Find out if your suppliers rely on foreign-produced components in their robotics. It will be essential to deep dive into your end-to-end supply chain and related suppliers and bills of materials. Since it is likely to become a crowded field rapidly, you’ll have to do something to stand out from the crowd. Look for win-win opportunities so that you can gain access and secure scarce supply. Similarly, if you must compete with the robotics extended supply chain for your components, you must jump on the topic – secure additional supply, source additional suppliers, and roll out a SIOP (Sales Inventory Operations Planning) process to stay ahead of changing customer requirements and proactively align supply. To learn the best practices of SIOP, download our complimentary eBook, SIOP: Creating Predictable Revenue and EBITDA Growth.
On the other end of the spectrum, if you either participate in or have the opportunity to engage in the robotics end-to-end supply chain, get ready to take advantage of significant revenue growth opportunities. Do not wait for the potential volume to show up. Start building capabilities and capacity and prepare to scale. Our best clients build agility into their processes so that they are ready to take advantage of opportunities but don’t waste resources in the interim. They also consider modular manufacturing as part of a hyperscale strategy and leverage AI and advances technologies to accelerate success.