Greg Smith is Medtronic’s EVP of global operations and supply chain. [Photo courtesy of Medtronic]
The heat is on for Medtronic’s global operations and supply chain leader as he forges new links with suppliers the company relies on for innovation, quality and reliability.
For much of his 36-year career in operations, Greg Smith has had to explain to family and friends what the supply chain is and what his job is all about.
“I don’t have to do that anymore,” he said.
It’s no wonder why. Examples of supply chain SNAFUs have intruded on nearly all aspects of our everyday lives since the start of the COVID-19 pandemic, from shortages of masks, test components and toilet paper in the early days to persistent bottlenecks in semiconductors, resins and the many medical and consumer products that use them.
Smith is EVP of global operations and supply chain at Medtronic (NYSE:MDT) as the biggest medical device company in the world focuses on supply chain shortages, delays and modernization efforts.
He joined Fridley, Minnesota-based Medtronic in April 2021 after serving as EVP of U.S. supply chain at Walmart and SVP of global operations at Goodyear Tire & Rubber Co. His more than three decades of experience also included time at ConAgra Foods, United Signature Foods, VDK Frozen Foods and Quaker Oats.
But the last three to four months have been the most difficult yet for supply chains, with issues compounding and culminating “just about everything that could possibly happen,” Smith said this week in an interview with DeviceTalks Editorial Director Tom Salemi.
First came the pandemic and its lockdowns in China, labor issues in the U.S. and abroad, and global logistics problems for freight by ship, truck and rail. Then add the February 2021 cold snap that took the Texas power grid down and halted operations at semiconductor factories and petrochemical plants for weeks. Cyber attacks are increasingly threatening supply chains across industries. And most recently, Russia’s invasion of Ukraine destabilized global energy markets and disrupted the supply of goods and flow of materials.
“There are some positive things on the horizon, but there are also some uncertainties that we will have to live through and we’ll see what happens,” Smith said.
“We are seeing recovery in certain areas,” he said. “There are items on the forefront such as material availability that we’re starting to see actually improve. We don’t have a clear line of sight to all the material improvements like semiconductors, but we’re seeing improvement there. And we’re seeing things stabilize a little bit in the labor ranks, starting to see more and more employment within our shops, as well as within our suppliers.”
Smith is working with a more complicated supply chain than at Walmart or Goodyear, with so many parts and components coming from a wide variety of suppliers to make just a single medical device.
“The distribution of our supply chain, the number of components that go into our items, the number of secondary, tier two, tier three, tier four suppliers that we have that service tier one, it’s not as transparent of a supply chain in some areas,” Smith said. “And I think what we need to strive to do is to continue to get deeper and deeper into understanding and having that concentrated supply base that’s very strategic, that has a good handle on the connectivity of all the components and the parts that come through their supply chain, because ultimately their supply chain is our supply chain. We’ve got to make sure that we’re successful all the way through.”
Getting closer with suppliers
Facing pressure in late May from analysts after supply chain issues got out of control, Medtronic CEO Geoff Martha assured them that Smith is driving ongoing improvement. Smith said those efforts have included getting closer and more hands-on with suppliers.
“We’re partnering with a number of our key suppliers to make sure that we have visibility into capacity, labor, all the restrictions that may be problematic and could impact our ability to be able to get the product,” Smith said. “[And] we are taking special steps as well with our planning processes to make sure that we are locking in supply for longer periods of time and getting more transparency.”
Medtronic is investing in advanced planning solutions and digitization efforts that will allow for better transparency and collaboration with suppliers and distributors down to last-mile delivery, he said.
The company is also “incredibly focused” on effectiveness at its own manufacturing facilities, Smith said, to reduce volatility due to labor, material supplies and other factors. “We’re really trying to stabilize and standardize and be in a position that when we do get the materials, we can convert and we can actually reduce the cycle time to get products into the distribution channel.”
Medtronic is reexamining relationships with some suppliers, Smith said, to make sure they’re a good fit.
“We’re really questioning some of our more extended supply base to make sure that — as we go through and we really streamline our supply chain and we drive the improvements that we’re seeking to improve — that we are partnering with the right suppliers and that they are actually an extended version of our supply chain,” he said. “That’s making us better.”
Innovating with strategic suppliers
At the same time, Smith said Medtronic is doubling down on its base of strategic suppliers, emphasizing that this critical group of partners will only become more important in the future.
“They are committed to the space and they’re somebody who’s going to be around for a long time dedicated to the products,” Smith said. “They have the highest quality standards that you could ask for to make sure that we have the right product, right place, right time, right condition. … They’ve got to be important to us. We’ve got to be important to their book of business in that we can grow together, that we can have the right quality, we can have the right service, we can have the right cost structure where we drive continuous improvement on both ends. And we’re tapping in and they’re bringing to us innovation that we can leverage to help grow our business and find new solutions.”
Smith said his team gets involved in the earliest stages of new product development to understand needs, consider technical solutions, pick the right suppliers and even start weighing the optimal product design for reliable, efficient manufacturing.
“We try to make sure that as we bring that product to market, we do it in a way that we can best optimize the processes, the reliability and the utilization within manufacturing,” Smith said. “Design for manufacturing is a growing component [at the forefront of] our development process to make sure that we’re making good decisions for how we produce it for years to come.”
Hear the entire interview with Smith when it airs by subscribing to the MedtronicTalks Podcast on any podcast player, or find it at DeviceTalks.com later this month.