Forbes

Jabil Circuit’s $18B Digital Transformation Inside And Outside The Company

By Peter High

December 22, 2016

Jabil Circuit is a $18 billion revenue provider of electronic manufacturing services. For much of the company’s 50 year history, it has been a traditional manufacturing organization, but over the last three to four years, the company has pivoted to become a digital company to a greater extent. This has manifested itself through the development of a digital product and service platforms. The transformation began in with the acquisition of Nypro, a provider of manufactured precision plastic products for customers in the Healthcare, Packaging and Consumer Electronics industries. That acquisition included a design team called Radius. Radius interfaces with customers at the earliest stage of product creation, often when customer have thoughts rather than working prototypes. As Radius collaborated creatively with a range of companies early in the development of new, innovative ideas, Jabil leveraged these processes to rethink its own product and service offering. I recently spoke with Jabil’s Chief Operating Officer, Bill Muir, and its Chief Information Officer, Gary Cantrell, about this transformation inside of Jabil Circuit and with its customers.

Peter High: “Digital” is a term that is used broadly today. What is your definition?

Bill Muir: We talk about the use of algorithms, analytics, and data that provide insights and help us deliver value in three ways. How does it help the customer experience? How does it help us operationally? How does it create new business models, new engagement models that drive a creative margin and value for us as a company, our shareholders, and our customers who are coming along with us on the journey? When we talk about the application of digital, that is how we refer to it.

High: Talk about the transformation that you have led over the past three or four years.

Muir: Our evolution starts with a couple different things that we did internally. First, we focused on improvements and operational performance. One of the things that Gary [Cantrell] and his team did from an IT perspective, working with a couple of our plants and the shop floor, was drive predictive analytics from a manufacturing perspective: trying to understand how we can take data at latter stages in the process and alter how we set up certain parameters for our manufacturing process in a real-time fashion. The depth of this transformation has been acknowledged by leaders of other companies including [Microsoft CEO] Satya Nadella, who noted us as a digital leader.

We have done some other things on the manufacturing side that I think are pertinent to the continual digital evolution of our firm. Much of this revolves around 3D printing, big data, and analytics. We can offer better insights and analysis to our customers, allowing decision making as early as possible to remove latency and waste from our supply chain. There is also the work that we do to map what we believe is one of the most sophisticated and complex supply chains that exist. We take that complexity and make it as simple as possible through the use of data, algorithms, and approaches we have developed internally.

High: Please describe your digital platforms.

Muir: We have built out three digital platforms that have been stress tested across 250 of the best brands and some of the toughest customers in the business. We have done this in support, historically, of our existing businesses. We have built out a supply chain algorithm and tool set. We have built out our approach to automation, 3D printing, and machine-to-machine communication. We have also launched a digital prototyping lab in conjunction with the upfront design discovery work we do via Radius. We honed these capabilities over the years in the service of our existing customer base – the $18 billion dollars of business that we do today as a company across several different marketplaces.

In September, we went public with launching each one of those as an independent digital service platform offered for our customers. One of the key differences there (aside from the fact that it is a business model that is largely virtual in nature) is that it is happening outside the context of traditional manufacturing relationships for us. It is taking deep, broad capabilities and expertise we have built through our company and turning that horizontal capability into a vertical P&L in business form.

High: How do you quantify the value you are creating?

Muir: We quantify how we take either cost or time, or both, out of products and engagements with our customers so that we are bringing products to life as quickly as possible, reducing cycles of iteration, and getting from that initial idea or concept to something to scale as quickly as possible. One of the things we think is unique about our firm and, again, is built on this digital platform we are enabling across the enterprise, is our ability to work at the incredibly early stage with a customer when they have an idea or concept and build out that concept through an infrastructure of creative engineering resources. We have complemented that with the digital prototype lab that I referred to earlier that allows us to take that concept and build early stage mockup products – something that used to take anywhere from ten to fourteen to sixteen weeks or so we are now consistently doing in five or six weeks – so that as quickly as possible engineers are getting feedback on the viability of their products.

Our vision and what we are trying to do, we believe we are existing in a timeframe of massive disruption. The lifespan of customers and companies is getting shorter and shorter all the time and the disintermediation of supply chains and value chains is happening in a manner unlike anything we have seen in the fifty years that we have been in existence as a company. We are trying to keep our customers at the front-end of that through the work we are doing in all the areas that I mentioned earlier and the type of innovation that we are providing. We are a big believer that in this environment the innovation is important, but one thing that is critically important is the speed at which you deliver it. We talk about innovation at the speed of digital, but that innovation is only meaningful if it allows customers to move at the speed they need to in order to remain relevant in their industries. When we map out this entire economic landscape in the areas where we play as a company today, and the potential that exists there for our customers, we see that as an opportunity in excess of $5 trillion that is open to a company like ourselves and, by extension, open to each one of the customers that we are fortunate enough to serve.

High: You talk of five decades in business and that means you are not a digital native organization, yet you are delivering this to organizations that are digital immigrants rather than digital natives (though you may have those clients as well). To what extent is this a reflection of your company’s own journey?

Muir: We would be kidding you to say that we are digital natives. Like you said, we are a fifty-year old firm and it takes some time to change some DNA for us to continue to innovate at this pace, but we have done some of this structurally and symbolically for our company to message the type of organization we want to be.

One of the things we did as an organization going on about two years or so is launch a blue-sky innovation center for our company. I have been fortunate enough to be here for over two decades now and, at times, our company has been good about having a customer come tell us, “I want you to build 10,000 of these and I want you to build them exactly like this, and I want you to deliver them to location XYZ by X date.” What we have been trying to do over the last couple years is change that conversation to be one where customers come to us at the early stage of a concept or idea for their product. They have ideas; they also have a whole lot of problems. They want an outcome to be X. They are less certain as to how they get from where they are today to that desired outcome. In many cases we are finding that these are companies that do not have a great deal of hardware expertise. They are coming to a company like us to help map them through that journey. We are providing insight on the hardware side because we have done that for fifty years. But the work that I alluded to on supply chain, 3D printing, our work with companies like SAP and Microsoft, that has been about us mapping our own digital journey to partner with the right kind of companies that provide thought leadership in this regard, keep us at the forefront, and make sure we are bringing that innovation in a manner that is maybe one or two steps removed from our traditional core value proposition. It is not light years removed from what we do day in and day out, but it augments what we have done. As we progress in our digital journey, each one of our interactions with our customers becomes more relevant in that regard.

High: Digital is one of these interesting topics that cuts across the entire enterprise. The traditional siloed divisions or business units of an organization – Marketing, Finance, Human Resources, IT, etc. – need to now play together in a way that is different from traditional business done one, two, or three decades ago. What sort of organizational changes has your company undertaken to bring together the right sorts of people for multiple parts of the company? What insights or recommendations do you have for others who are following behind you in this journey but wish to catch up quickly?

Muir: We try to embed as much functional, tactical, day-to-day decision making responsibility and structure into each one of those business units. We are focused on keeping our core and central organization reasonably lean. As COO, I run a group that is a capabilities team which provides thought leadership in a number of the different areas I have referenced so far: supply chain, marketing and sales enablement, IT, and advanced manufacturing from both a product and a process standpoint. The conversations we have across my staff are always about how do we show up as a horizontal organization and not as a vertical organization. How do we take every engagement – whether it is the customer journey to our company or an employee journey to our company – and think about that in a horizontal fashion so we are not introducing needless handoff from function to function to function?

Gary Cantrell: For the folks that are just starting their journeys, one of the things we have found is that we have always been an organization that tends to be collaborative across the silos. But in any large organization you are going to have those silos develop over time as people work on things day-to-day. With a digital transformation, collaboration must go up exponentially. There is a tremendous amount of innovation that takes place by the subject matter experts at our sites, at our divisions, and some here at corporate as well. The key for us in getting any kind of speed out of it is making sure that, to the best that we can, we are doing things once and not repeating the same lessons again only to find out that we did it three different places.

High: You referenced the innovation center that you have developed. How has that been staffed? Is it net new employees? Was it drawing in people from existing divisions of the organization? How did you curate that?

Muir: “Curate” is a good word because it is a little bit of everything. We house select folks that lead the large scale, day-to-day, existing, historical relationships there. We also have our Radius front-end design group that takes over probably one-third of the footprint that exists within that facility, and that is on purpose because that is the kind of engagement we want to spark with our customers. It is an open type environment, and by that, I mean we allow customers to roam through there with a good level of freedom. We want them interfacing at all different levels of our organization. The automation expertise that exists there, and everything we are doing in 3D print and machine-to-machine and automation, is largely the top of thought leadership across our company. These are rough numbers, but I would tell you maybe twenty-five percent of that infrastructure in that area existed when we opened the center and we have added seventy-five percent of that since we have been there. It is the same thing in Gary’s world from an IT standpoint. We have brought in different individuals who have a different skill set and experience set in that regard.

High: Bill, you have referenced work that Gary was doing regarding IT’s role in developing analytics, for example, which you identified as an offering that is available to customers. Gary, it suggests that yours is a role that is both internally and externally focused. Can you talk about the purview that you have as CIO and that your IT team has more generally?

Cantrell: We oversee the overall operations of the IT systems that you may expect. There is a lot of emphasis that has been placed over the last few years on making sure the systems are integrated. When we talk about the digital backbone, we ensure we have information flowing across the organization in a seamless fashion. We facilitate the movement of products between sites seamlessly. That foundational operational piece is a big chunk of it, and that spans both what we do at the corporate level as well as what we do at the individual site level. We have a matrixed organization on that front.

Two and a half years ago we stepped into the analytics space to drive some decisions on the supply chain and in the traditional manufacturing space, but we also started using analytics to improve our production processes. The Microsoft experience we had a few months ago at Hannover Messe where we were using analytics to improve what I will call our “first pass yield” has increasing become the core focus of what we are trying to do on the innovation front.

We spend an increasing amount of time partnering with external companies, as well as those that are in the sites on the front production lines to identify new opportunities, new innovations that are either going to help us be more productive, or opportunities we can take to our customers. We have done this a couple of times on the analytics front where information that we had put into play in our production lines was shared with customers so they can take that back to their processes and leverage analytics, as well.

High: How geographically distributed is team that delivers all that we have been describing?

Cantrell: It is global. Of the roughly 1,200 people in the IT organization, about half of those are in the corporate structure and half are in the site structures that support the businesses. We have a couple of hubs that are critical to the operations. One is here in St. Petersburg, Florida, and the other one is in Malaysia. From an innovation standpoint we have strategically significant teams in Scotland and Guadalajara. Those four make up the core. When I talk about collaboration, as you can imagine, time zones get to be a bit of a challenge; there is an extensive amount of cooperation that takes place when we try to push projects across quickly. For U.S/North America and for Asia, although what we are trying to accomplish is similar, the challenge is that there are big differences we must consider and that is where those geographic teams come into play. We do have a couple of key partners in Germany; and we have two partners in India that do some strategic work with us depending on the projects. We also have partners on some of our intelligent digital supply chain activities. It is diverse.

High: Given the changes Jabil has gone through internally and externally with the customers with whom you collaborate, what role would you suggest change management plays in all of this as you move from older methods, processes, even roles and responsibilities to newer ones?

Cantrell: There are a couple things that have come up for us. The first questions customers will ask us are around security. The other focus is on speed and agility. Trying to move fast there was an historical cadence on how thorough some of the testing was, how mature the processes were. Now there is a desire for speed by our customers. Our ability to address their concerns around the changes we are making to make them feel comfortable that we have done our due diligence and used disciplined processes to make and mature these changes is front and center. I would say if you are just starting the journey, start the communications early with your customer. Make sure that you share in a transparent manner what you have done and lessons that you have learned. Many times we found that sharing the challenges or hurdles that we had gotten over helps them understand where the pitfalls were and how we got around them and gets them comfortable with the changes we are making.

Peter High is President of Metis Strategy, a business and IT advisory firm. His latest book is Implementing World Class IT Strategy.

 

This article was written by Peter High from Forbes and was legally licensed through the NewsCred publisher network.