Learn how even small companies can strengthen supply chains through analytics and automation in this talk with Agustin Lopez Diaz, Schneider Electric’s North American supply chain officer. Lopez Diaz illustrates this point by discussing Schneider’s $100 million–plus plan to reshore production in the U.S. The project includes the company’s new Nebraska facility, which uses sustainable water sources for production, resulting in several national awards for sustainability. Listen to his advice for smaller companies: Take the leap! Embrace data and automation now! Don’t miss this look at the future of manufacturing.

Jimmy Carroll: [00:00:39] Hi, everybody. My name is Jimmy Carroll. I’m the vice president of operations at Tech B2B Marketing. And welcome to this episode of Manufacturing Matters, where I have the pleasure of being joined by my friend and colleague Winn Hardin and Schneider Electric‘s North American supply chain officer, Agustin Lopez Diaz. Agustin, thank you so much for taking the time.

Agustin Lopez Diaz: [00:00:57] It’s a pleasure to be here.

Jimmy Carroll: [00:00:59] Yeah, well, the pleasure is ours. So, for those who don’t know in our audience, could you tell us a little bit about what you do there and what your business is most excited about right now?

Agustin Lopez Diaz: [00:01:06] You bet. Well, so I’m in charge of the North America operations. So basically I run all the factories for North America. And also I’m in charge of logistics, products coming in. So all for the North American market. And we’re thrilled to see the growth and this resurgence of supply chain and manufacturing, in the U.S. in particular but also at large in the region. So thrilled to be here.

Winn Hardin: [00:01:35] So you deal with the output of Schneider’s production. I wasn’t sure if that also included the inputting of components and the complete supply chain.

Agustin Lopez Diaz: [00:01:43] Well, I am in charge of the complete supply chain. So end to end, including the parts.

Winn Hardin: [00:01:51] So supply chain has been the hot topic since 2019. I mean, we all had a lot of difficult lessons during that two- to three- year period from 2019 to 21–22 time frame. Now we’re in a different economic environment where procurement has even gotten a little bit more complex in terms of whether it’s built in America or different, all the different criteria going on there. What are some of the areas of supply chains that you’re hyper-focused on right now as being important for this phase?

Agustin Lopez Diaz: [00:02:21] Yeah. Well of course, first and foremost, U.S. for U.S., so we’re localizing a very significant part of our production from overseas down into our factories in the U.S., where we have many. And we continue to grow that footprint.

Winn Hardin: [00:02:40] Over 200. Is that what I heard?

Agustin Lopez Diaz: [00:02:41] Two hundred in total for the entire group. We have 60 sites in North America, 35 factories that are currently working very, very hard these days.

Winn Hardin: [00:02:53] Gotcha.

Jimmy Carroll: [00:02:54] Do you sleep?

Agustin Lopez Diaz: [00:02:55] Not a lot.

Winn Hardin: [00:02:58] You don’t even need kids.

Agustin Lopez Diaz: [00:02:59] So we’re working hard and we are really focused on that. And I think to the best of our ability to mitigate the tariff and all this trade compliance implications that are definitely keeping us up at night.

Winn Hardin: [00:03:13] So reshoring is a main component.

Agustin Lopez Diaz: [00:03:14] It is a big, big, big component. It’s also the trade agreements, right? Whenever possible. So trying to optimize to the best of our ability for our customers.

Jimmy Carroll: [00:03:24] So manufacturing is a constantly evolving operation throughout the world, right. How can companies — a two-part question — how can companies in general be more resilient? How can they build a more resilient and adaptive supply chain? And then how is Schneider doing that?

Agustin Lopez Diaz: [00:03:38] Well I think those are the two words really of what the supply chain is meant to be today. So I’ll probably add a component of competitiveness. But definitely resilience, adaptability, flexibility, and competitiveness is what we characterize our strategy pretty much in supply chain. I think it’s about, first and foremost, really approaching supply chain differently. We’re lucky at Schneider. We have a ton of products that are really focused on driving efficiency in our production sites, flexibility, automation, software connectivity, and so on, analytics. So that gives us a lot of opportunities for simplification, adaptability, and resilience for that matter. In Schneider, we have one program that is being proven to be quite successful. We call it Power of Two. And basically what we’ve done is we analyze every product to the component level, and we have set double production in pretty much all our critical components. So about 96% of our production today has a dual production somewhere in the U.S. and overseas to make sure that we create that continuity for our customers.

Winn Hardin: [00:05:05] Regardless of where those customers are located.

Agustin Lopez Diaz: [00:05:07] Regardless of where the customers are located.

Winn Hardin: [00:05:08] The old wisdom was try to produce domestically as much as possible, regional markets. But now that’s not always necessarily the case, you know, to benefit from either technology trends, energy trends, availability of labor forces, right? I mean, there might be some consolidation, not just put a plant in every major country where you’re trying to serve a domestic market. You mentioned data analytics being a key component of that. Are there any other digital, digitalization, digital twins, any other tools that are helping you, especially as you’re looking at — I mean, you’re talking about reshoring as well as redundancy in production. That’s not easy to achieve.

Agustin Lopez Diaz: [00:05:44] Easier said than done.

Winn Hardin: [00:05:45] Yeah. I mean, unless you’ve just got a mountain of money over there. So how are you using digitization and tools in addition to analytics?

Agustin Lopez Diaz: [00:05:53] Well, that’s a great question. I think that’s probably one of the biggest challenges to execute the strategy that we have, right? So we want to be resilient, flexible, and competitive. And all of those are almost against each other by nature.

Winn Hardin: [00:06:18] I want the best in class and I want the cheapest.

Agustin Lopez Diaz: [00:06:19] Exactly. That’s right. I want full resilience and adaptability. But we give it a shot, right? And I think this is where analytics definitely plays a big role. So we have an end-to-end  supply chain analytics, from forecast to managing POs with suppliers. So we’re lucky. Schneider initiated that digitalization, that supply chain of the future many years ago. And as big as Schneider is, I have full visibility for every single component everywhere in the world, from every supplier, from every plant, to any customer. So we have enabled the capability to be able to see everything that we have at the suppliers, in transit, and to our customers. So that’s really giving us a lot of possibilities to make decisions, make trade-offs. We were talking yesterday with some of your colleagues. Again, just take tariffs, for instance. We’ve created an analytical model that gives us the possibility to optimize the best available trade-off in terms of tariffs, localization, cost equation, lead times.

Winn Hardin: [00:07:46] Just from the Schneider perspective but also from the customer perspective?

Agustin Lopez Diaz: [00:07:48] Customer and suppliers. Really end to end. And that gives us tremendous possibility to make the right trade-offs. And it’s a combination of external software platforms and of course a lot of homegrown adapted tools that give us that visibility almost in real time.

Winn Hardin: [00:08:08] It’s good. I mean, a lot of companies, manufacturers, smaller than Schneider, not as multinational as Schneider, really faced an adapt, get smart, or die situation in 2018, 2019, 2020. But Schneider’s been around for a really long time. I’m not exactly sure when you put your first piece of equipment in service. You got a number for me?

Agustin Lopez Diaz: [00:08:30] Well over 100 years.

Winn Hardin: [00:08:31] Well over 100. And since you’ve been a multinational all that time, that’s allowed you to kind of build these tools, these analytics tools, this global supply chain visibility over a very long time. And now you’re saying you’re able to utilize that expertise and those tools to not just help Schneider be efficient and achieve the competitive goal but also the vendors and the suppliers.

Agustin Lopez Diaz: [00:08:54] Exactly. That’s exactly right. So we think about ecosystems, right? We are the energy technology partner of our ecosystem, our customers, and our suppliers, which are also always dual, both suppliers and customers. And we continue to focus around that. And you know, data is the new gold. So that’s probably the piece of advice or learning that we’ve gotten is the data that we have collected through our connected devices all over the world and our analytics models is giving us really an edge and I think is setting us for what comes next, which is really an end-to-end self-healing analytics, which is what we’re moving towards.

Winn Hardin: [00:09:38] Closer to lights-out operations too I’ve heard. That was kicked around in one of our earlier discussions we were having. I would love to delve deeper into that. And you would definitely be the man to have that conversation with, because deep down, we’re robotics geeks, as well as power gen and distribution. So we’ll do that for the next episode when we get to see you. I don’t want to take us too far off track.

Jimmy Carroll: [00:09:59] Well, I want to piggyback on that question, and Agustin you started talking about it a little bit, but Schneider’s been around a long time, and they’re a large company with significant resources. If you — hypothetically right, because you’re not going to — but if you went to work for a much smaller company and they brought you in to improve supply chain, what would be the first one or two or three? And I know this is sort of a tough question, right. But what’s the most important piece of advice you could offer or the very first thing that you would do if you started there?

Agustin Lopez Diaz: [00:10:29] I think just take a leap of faith and start getting data, start working on analytics and connected devices. I mean, we are lucky in Schneider. We do have all these tools. We have full visibility end to end. On any given day, we sell about 40,000 different SKUs in the region. Every year we sell almost 500,000 different SKUs. So we would not be able to do it without having those analytics, digitalization, and now automation. So I think that has to be the key. And when you are in a smaller company, it’s difficult to take that leap of faith. It’s a big investment. It’s difficult to drive that discipline in the shop floor, to drive the right collection of data.

Winn Hardin: [00:11:22] Especially in the manufacturing environment, which tends to resist change.

Agustin Lopez Diaz: [00:11:24] Yeah, exactly. I guess when you’re sitting in a shop floor, it’s almost like a waste. And in manufacturing we hate waste. We want efficiency and value added. I will dare to say that’s the new value add is driving that data connection and data quality to make the right decisions. That is the new muda is not having that.

Winn Hardin: [00:11:50] That makes perfect sense. How does this tie into the concept of sustainability? I understand Schneider has got a pretty prestigious award.

Agustin Lopez Diaz: [00:11:58] Yes. Yeah. Well, we have a couple. We have quite a few, but there’s two that we’re particularly proud of. We were named Time magazine’s Most Sustainable Company, which is obviously an incredible honor.

Winn Hardin: [00:12:20] It’s an honor to just be considered.

Agustin Lopez Diaz: [00:12:21] It’s an honor to be considered. And it’s of course even better to get it. It’s awesome and we’re super proud of it. And we also were, for the second time in a row, a Corporate Knights most sustainable company. Schneider is the only company ever in the history that has achieved that record. So, yeah, back to back. So we’re super proud, and it’s a day-to-day commitment to sustainability, to doing things in the right way. And I think we’ve reached a point where to a large extent sustainability is paying by itself. So we have a number of projects. We just got recognition of one of our factories in Lincoln, Nebraska, because we delivered just an outstanding, sustainable program where we’re utilizing the water of our own process to improve the comfort, heating in Lincoln. You need a lot of that. So we’re using our same system with some partners.

Winn Hardin: [00:13:37] So you said this was a sustainable program that paid for itself?

Agustin Lopez Diaz: [00:13:39] We’re actually getting some savings. We’re getting some productivity, which we love. So we love sustainability. Our employees love it. It grows engagement. Everybody is super engaged about it. And we are even saving some money. So it’s really a perfect score for us. And we’re continuing with that moving forward.

Jimmy Carroll: [00:13:59] Just to kind of, again, piggyback, because it opens up a lot of ideas. What are what are some technologies that are notable when it comes to manufacturing and promoting sustainability? Data comes to mind, right? Like with the rapidly advancing state of GPUs and even FPGAs and edge computing in general, that helps with data processing. But what are some ways that Schneider has seen, both with you and your customers, promoting sustainability in manufacturing?

Agustin Lopez Diaz: [00:14:33] Well, we have several modules. We have Resource Advisor, which is our vehicle. All of our plants have that, and it is energy efficiency, sustainability, monitoring. So all the kinds of metrics. It optimizes parameters throughout the day: use, energy usage, combination, and whatnot. So that’s been incredibly helpful to drive both efficiency and sustainability. I think our  automation and control mechanisms enable that. But not only that. They’re driving a higher level of efficiency. As you know, we have the most efficient data centers in the world. So I think to us it is sustainability at design. So everything that we’re doing when we design, we think about energy efficiency and therefore sustainability. So I will say in general it is all the three layers of the connection, from the hardware to the analytics, that are driving our operations. I can tell you today, most of our factories in North America really operate the building efficiency and the production efficiency through Resource Advisor.

Winn Hardin: [00:15:45] So it sounds like Schneider was developing a lot of that EcoStructure toolset. Those different modules. You guys were eating your own cooking for a while, and now we’re just bringing them to the marketplace.

Agustin Lopez Diaz: [00:15:55] Yeah, we’ve been using it pretty much. I mean, our CEO was very obviously eager to make sure that we have all the AVEVA modules that are controlling all our machines. As you said, it’s really the entire infrastructure of the EcoStructure that is really giving us a lot of edge in our factories. And we are happy to say that we’ve been recognized as a Lighthouse from the World Economic Forum. Several of our factories in North America and around the world for that.

Winn Hardin: [00:16:27] It’s critical. I mean, we can’t manage what we don’t monitor, right? So the more we connect up our systems and our production networks, the better off we’ll be and the more in control we are. Can you talk a little bit — how does sustainability fit both within the giant, this larger shuffling of production, which I know this is a big question, but I’m also curious in workforce management, because they seem to be related. Talk to me about workforce management, reshuffling of production, and sustainability. Take a part of it. Any slice of that apple.

Agustin Lopez Diaz: [00:17:00] Right. Well, again, factories are becoming an interconnected ecosystem without a doubt. The way we are operating and driving that efficiency. I think we believe very strongly in reducing every single aspect of our waste and variation throughout the process, which includes how we are managing the digital efforts and the automation efforts in our shop floors and how we are analyzing it. I mean, we’re aspiring to have really an end-to-end control, from forecasting to execution in the most efficient way. And we believe that efficiency and sustainability are almost the same. So in supply chain, we strive for the highest level of efficiency. And we know that the higher the efficiency, the more we can positively impact our planet. So that’s how we’re thinking about it. So that’s how we are adjusting all the aspects of the different echelons to the best efficiency possible. And that obviously works on the workforce also.

Winn Hardin: [00:18:16] So is it fair to say that you’ve kind of got a changing perfect profile for these incoming employees, and we’re looking for the digital nomads with that kind of expertise?

Agustin Lopez Diaz: [00:18:26] I think so, yes. So for us it’s a cultural change. Like sustainability was a cultural change a few years back. And now it’s part of who we are in the company. It’s why people come to Schneider and stay in Schneider. I mean, it’s not a coincidence that we have this recognition. It really happens because we have that culture. Now we’re navigating into this new energy landscape, and we are creating a culture of efficiency and competitiveness and digitalization and AI.

Jimmy Carroll: [00:19:01] Agustin, I want to be respectful of your time, but I want to ask one more question and kind of bring it back to the beginning. You mentioned the word resurgence when it comes to American manufacturing. And you also mentioned another R, which is reshoring. Do you believe that that starts with the supply chain? And if not, what role does the resilient supply chain play in American manufacturing resurgence?

Agustin Lopez Diaz: [00:19:24] I mean we’re fully in, right? We just announced hundreds of millions of investments in our manufacturing footprint in the U.S. We believe that this is not a short-term thing. It’s going to be a mid- to long-term investment where we’re going to see benefits. I think the U.S. overall is getting more and more efficient. Our own automation and control – it’s  getting much more cost-efficient. And we have gotten to a point where our factories in the U.S. are really as competitive as pretty much anywhere else, from a cost perspective.

Agustin Lopez Diaz: [00:20:11] I think we’ve got to look at it end to end. And when we look at it 100% end to end, of course we have the huge benefit of flexibility, speed, and adaptability. Being local, close to the market. And really cost competitiveness is getting really there. So we will continue to do that. We are doubling down on that. I mean, in the past two years we brought our external production from out of the region into the region. We were 60% coming out. Now 90% of our production is in the region, for the region. And we’re going to continue to do that. And I think the U.S. is really going to see an incredible time for innovation, automation, digitization, and AI. So we’re super excited about it.

Jimmy Carroll: [00:21:10] It’s absolutely remarkable to hear from you and learn about how Schneider is helping bring all this to fruition. And we really appreciate the time and all the efforts that you guys are doing to do this. So thank you so much.

Winn Hardin: [00:21:23] Yeah. Agustin, before we let you go, is there anything that we didn’t touch on that you want to touch on before you go?

Agustin Lopez Diaz: [00:21:27] It was brilliant. I think it was super insightful, and thank you so very much. Hopefully it was interesting for everybody that’s going to hear it. And thank you. Incredible pleasure to be here with you guys.

Jimmy Carroll: [00:21:41] Again, the pleasure is ours. And if anybody would like to follow along, we’d recommend you follow Schneider on LinkedIn and check out se.com. Go to the blog, and if you have any questions for Agustin, we’d be happy to take them and pass them along. Manufacturing-Matters.com. And thank you so much.