Digitization and the 3M Supply Chain

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Paul Keel, Sr. Vice President of Supply Chain Management at 3M

Paul Keel, the Sr. Vice President of Supply Chain Management at 3M, was gracious enough to explain to me how 3M was working to improve their supply chain capabilities. 3M is a global company headquartered in St. Paul, Minnesota in the United States.  This $30 billion multinational runs a global supply chain that includes around 200 manufacturing plants, 100 warehouses, and 25 customer-facing divisions.

“For many years,” Mr. Keel said, “the world has thought in linear terms.”  If we invested more in certain areas, we would get certain predictable returns. But in a competitive, global economy that is just not good enough anymore. “We are trying to shift from a linear to a geometric curve.” 3M has recently intensified their “digitization” efforts.

There are many opportunities. 3M can focus on equipment reliability, on plant optimization, on better synchronizing production across a group of plants, or on optimizing an end to end supply chain that includes upstream suppliers and downstream customers.

But whichever level 3M focuses on, Mr. Keel says there is a common theme: “Friction occurs at the connection points.” And part of that friction is due to a lack of “trust” across different internal and external groups. Digitization provides the information that allows different parties to get to a point where they can more efficiently work with each other. “I don’t mean ‘trust’ in the emotional sense.  We all work very well together and ‘trust’ one another to do our very best.  I mean ‘trust’ is the empirical sense.  A statistical track record that our suppliers will perform as they promise us they will, and 3M in turn will perform as we promise our customers that we will.  This is data.  Digitization.”

Mr. Keel provided some examples of digitization at the connection points in different portions of their supply chain. 3M has a large specialty chemical business that purchases chemical feedstocks and creates intermediate adhesive components that then get used to manufacture many of their finished products. “In our old supply chain materials from the supplier would have flowed barrel by barrel, truck by truck, and tanker by tanker. It would have been a linear flow.”

3M is establishing a “geometric network” with one of their largest upstream chemical suppliers, BASF.  They have a physical supply chain that connects BASF factories to 3M factories. And to support that physical supply chain they have also invested in digitization. “Their systems talk directly to our systems.  Our planning system speaks directly to theirs. They see our consumption, and we can look upstream at their capacity.” This helps secure and protect supply even in instances when unexpected demand events occur.

3M has similar digital connections to other partners. In some cases, if both companies are using the same brand of ERP for instance, the two systems can talk directly to each other with no middleware. In many cases, there is cloud middleware in between the two companies that translates and makes intelligible the signals and responses that flow back and forth.

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