 Revathi Advaithi, CEO, Flex 
Interviewer: Alan Murray, FORTUNE


Brainstorm Tech 2022: Building More Efficient Supply Chains 

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thank you so good to see you, thanks for being here. You know I think we should start. You you run one of the largest companies that many people have never heard of that. Right. So why don't you tell, tell, explain what flexes and what flex does and how big flex is? Absolutely. So flex also called flextronics. We're manufacturing services, design services company and we make a little bit of everything, lots of different end markets, everything from medical, automotive tech to consumer products. So think of something, we probably make it for our customers. We are around in around 30 countries, around 1000 customers, 100 80,000 employees. Around 26 billion in revenue. And of course in the middle of the supply chain conversation that's happening now. And so what? Well let me ask you this, you you flex and other companies like plus we're part of offshoring contract manufacturing, all the things that really made the global economy that we grew accustomed to and now it's changing. Uh I mentioned the word friend showing how how big is the change? You probably have a better view of this than anybody we could have on this stage. How big is the change? How fast is it happening and what does it mean? And you know, alan I think in the conversation just before somebody talked about ensuring and reassuring. So let me just kind of frame the problem first. I mean we're talking about supply chain resiliency actually, which has become the forefront of conversation for every C suite I would say across the world and if you think about supply chain um resiliency, they're kind of two big concepts that everybody is talking about One is where do you manufacture things and why? And that's where the whole idea of re shoring on shoring is going on. And then the second is around the digitalization concept that will get to probably in a few more questions, but on the idea of on shoring re shoring, you know, the world's gone through in the last few decades, a whole bunch of changes, right? It was all about labor arbitrage. Where could you get efficiencies of production and everything moved to china and through all the trade issues and the pandemic and the supply chain crisis. The big focus is where do I make it, how can I bring bring it closest to the and consumer? And I would say progress is definitely accelerating and um it's somewhat, you know, will be slow because it's a complex equation that's been created over many years, But it has definitely started at flex itself, I'd say close to 80-plus% of a lot of our programs that we're doing now involved moving some form of production closes to the end consumer for our customers, 80% of the work you're now doing is some form of re shoring or moving closer? That's an amazing statistic. And do you, is there any reason to think that will slow down or reverse itself or do you think this is a trend we're going to be living with for quite a while? I think it's a trend that will live with for quite a while because one thing that is changing is the conversation is just not about cost of the product itself, right? People are becoming sensible about total cost, freight costs are escalating or going up significantly the risks of the, you know, geopolitical risks and where product is made, it's hard to quantify. So it is, you know, I think the train's left the station on this, this is going to go through decades of kind of change again, where you're gonna see bill of materials change in a pretty significant way, As everybody looks at where is the best place to reduce risk? And um, I think that trend is definitely on the move we've had on this stage in the last 24 hours, this debate over whether inflation is transitory or there's some fundamental longstanding pressures like that that might cause prices to rise for the longer term. Can you do this kind of on shoring without having some effect on prices. You know, I think there will be some effect on prices because at the end of the day Asia had developed a highly efficient supply chain and it is hard to compete with that if you look at it only in a cost by cost basis. But I think organizations that are able to look at it more holistically will be able to take the long view of you know costs in one year will be offset by total cost over a long period of time. So you will see some level of inflation I would say resulting from this, you see that today freight costs you heard from, you know the Fedex Ceo is has escalated over the last year and people pay for it. So there will be some level of inflation associated with it. You are, we're talking about supply chains and as fascinating as that has become you know, whoever thought we would be talking about supply chains on the but I'm glad we're talking about it is fascinating but but we should also talk about I mean you're one of the largest manufacturers in the world. Uh We should talk about manufacturing and how it's changing. Give us a sense of of the 10 year view of how manufacturing is going to change. And I'll talk about manufacturing in two parts because you can't um separate out supply chain from manufacturing because everything has to arrive into a factory before you make it. Right. So the whole supply chain has to change pretty significantly. You heard all this conversation about ai and digitalization and I'd say to some extent it hasn't touched supply chain the way it should right? Because data is not that available across the ecosystem in the supply chain. It's not like google where consumers are, all their data is available. And you're able to kind of mind the search engine for all the data here individual customers and suppliers have all their data sitting in their independent E. R. P. Systems. So finding a way to mind that level of information sitting in the supply chain and making A. I. Relevant to supply chain is going to be really important because otherwise we will have another semiconductor crisis like you have today. And the result of that could be significant if you don't solve. It's a good data and information whose whose job is it to make that happen? I mean how do unite all those databases? It is tough. I would say you know flex is an initiative going where we're trying to bring customers together. I'm working with the commerce secretary in an effort. She's driving to bring that information together. But it is difficult because every company wants to protect their I. P. And their information. So I'd say a lot of work to be done on the digitalization side of supply chain and then on the manufacturing side you know you can't move and re sure things very easily if you don't have labor available. Think about the demographics issue that exists everywhere. So automation and driving a high level of automation into manufacturing is critical. That is. And the good news is it's available today. You saw the demonstration that you saw earlier. Things like that in manufacturing are critical if you can reduce the amount of time in a warehouse if you can reduce the amount of time you're doing servicing of equipment. Um if you can launch programs through digital twins and simulation, which is what we're doing in a covid time. Those are all kind of technology that can really accelerate how you manufacture. So if I look forward, you know, for in a decade I would say my vision would be you know, you walk into a factory, you should be able to have managed everything of it sitting from your home, you should have been able to program your equipment, send your demand planning work and should be just managing the product as it moves through the factory. That if that is doable then you can see a lot of manufacturing moving and reassuring because labor of availability is a big issue. Yes. So we should talk about that. The war for talent. I mean you're in the middle of it. What are you seeing there right now at the first two fronts. One is you know, we have two sets of people that we employ, right? One is manufacturing, labor is a significant issue. You know, you can't talk about moving manufacturing to the U. S. Or any other part of the world and not have people and skilled labor available. So that's one significant challenge um that we're working through. But in terms of talent itself um I'd say you know we're not a tech company so we don't compete for the typical tech talent but we're like every other company that's working through the issue of attrition is high. You know, people have different priorities of what they want today. Um, so I'd say it is challenging, but we have, you know, ways of working with local communities and technical schools that meet more our requirement of the kind of talent we're looking to hire and so we're doing those types of creative things to really drive, um, and keep our production going. But I'd say, you know what, it's, you have to be an appealing company for talent to want to work for you. And at the end of the day, I always say it's all about the culture, if you have the right culture will have the right people and you don't expect that to change either. The talent. I don't think so. Well, it depends on if the economy slows down and everybody keeps talking about, you know, are we going to have the demand we have, then maybe it reduces some, but I don't see the fundamentals changing in terms of the wall or in talent, will you have a view into a lot of companies order books? Do you see any slowdown? Well, not yet, not yet, not yet. We're hypothetical for you. That's right for us. It is hypothetical, you, you see some a little bit in the consumer space. Um, so that everybody's hearing and, you know, talking about cell phones and laptops and, you know, vacuum cleaners and things like that, but we're not seeing any demands slow down. It's a unique time, Alan, you know, you know this well, right, inflation is high, demand is very strong. Supply chain is absolutely bottlenecked. It's a very unique time to be able to look at it and predict like when does all this come together and when you really see demand slowdown, I want to be sure to give people an opportunity to ask questions if you have any, please raise your hand and and and grab grab one of the paddles. But everybody, I want to ask you about your journey because you're running one of the largest manufacturing companies in the world. There's not a lot of women who run manufacturing companies that hasn't been the friendliest space for women. How did you get there? What? Tell us a little bit about your unique journey to this position? Yeah. First, alan uh say there's not a lot of women running anything, so not manufacturing, it's, you know, tech or any sector. I think the largest challenge we have and it's probably in any sector is that we see a lot of women going into kind of functional roles like HR legal finance. We have a hard time convincing people to come into business rules and manufacturing as such is really tough. You know, you have to be able to work in the factories, navigate the factories, You have to be very global. Um So it is a very difficult space for women. Well, I love manufacturing. I'm a mechanical engineer. Not many women want to be a mechanical engineer. I just love watching things being made. It just fascinates me. I just couldn't imagine sitting behind a computer and programming software. That's just not me. You did your engineering degree in India in India. That's right. A mechanical engineer. And you came here to work for, I came here to do a master's and then I realized I needed a job. I was broke. So I joined a company called etON and their power management. Energy management weren't a lot of women had eaten at the time. No, no. Yeah, there's not a lot of women now either. I would say in the industrial space. And so, you know, I joined them in the manufacturing shop floor as a shop floor supervisor in Shawnee Oklahoma. And then just worked my way through all the different jobs there. And uh that's how I ended up here. So I'd say in general, women have to be able to take vigorous sector. You are, you have to take risks in the jobs you take and you have to put yourself in an uncomfortable position and be able to take jobs that you, you know, it's not obvious and apparent that you're going to do well in. And I had great sponsors all that help. Well, we're glad you did as well as you did. Thank you for sharing what's going on in your space? And thank you for being a brainstorm tech.