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In this Q&A, we sat down with Sidney Johnson, one of the newest members of the Resilinc Advisory Board. Sidney has over three decades of global direct and indirect procurement and supplier management experience. As an accomplished Chief Procurement and Supply Chain Officer, Johnson has served on multiple board committees, including the National Minority Development Council, the International Trade Centre (a joint agency between the World Trade Organization and the United Nations), and the Institute for Supply Management.
As Head of Procurement at Harman International to SVP of Global Supply Chain Management at Aptiv, we learned about this supply chain thought leader’s extensive experience in the world of supply chain and procurement. Below, he shares how a tsunami changed his outlook on supply chain resilience and how he rebuilt supplier relationships following a billion-dollar bankruptcy.
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You recently joined Resilinc’s advisory board. What do you hope your experience can bring to the team?
Before working at HARMAN, my last role was at Aptiv (previously called Delphi for several years). At Aptiv, I sat in both the chief procurement and global supply chain officer roles. In those roles, we closely aligned with 3,000 total suppliers globally, constituting about 6,500 individual manufacturing locations.
We operated in the Americas, so we spent significant time in places like Canada, the US, Mexico, Brazil, Argentina, and Honduras, but we also operated all around the globe. We were also in Europe, North Africa, and Asia. I actually lived in Luxembourg for five years while I was at Aptiv, setting up our operating and procurement companies—and I did the same thing in Ireland as well.
One of the biggest experiences I bring to the Advisory Board is my understanding of supply chain and supply chain risk. Having lived, worked, managed, and led global teams for 13 years, I saw what building a strategy from the ground up looked like.
What did the process of building a supply chain risk management program look like? What did you learn from building that strategy with your team?
My team and I put together a strategy for what we ultimately wanted our supply chain risk management program to look like. We employed a couple of strategies that sounded simple, but they were difficult to execute—and they took time.
A simple thing that we always said was that we wanted to buy where we consumed. For example, if we were consuming in Mexico, then it would be okay to buy from American manufacturing, but if we could buy in Mexico then that’s even better. If you can keep it all within country, you can eliminate issues like logistics and footprint, border crossings, threats around customs, and border patrol.
Another thing I learned about managing risk is that bad things happen—they just do. I spent my first ten years in the automotive industry in either engineering or quality. If I had a bad product line, I had to figure out how much of the product I needed to reevaluate to ensure it was a good product. That’s where shortening that supply chain and lead time is extremely important.
When did you first work with Resilinc? What motivated you to hire Resilinc?
That was during my time at Aptiv. We started working with Resilinc around 2011 or 2012. Why did we start working with Resilinc? A couple of things happened. Let me tell you this—significant emotional events drive change. Remember the tsunami in Japan? After that tsunami, a lot of companies (particularly those in the auto space and around chips) suddenly had trouble getting silicon.
When I went to the board meeting to present after the tsunami, protection of supply was the topic of discussion. We knew that we couldn’t do much about what was going on, so we had to ask ourselves, “How can we prepare if this happens again? What should we do to make sure we will be in a better place—especially compared to our competitors?”
That drove us to uncover the people we needed to work with in the risk mitigation space to improve our supply chain resilience. We knew we wanted to mitigate risks and be able to manage when bad things happened. We also knew we wanted a process for responding to issues. But one of the biggest things we needed was outside help understanding how to put these things into place to execute our strategy—and that’s when I met Bindiya.
What did you learn from implementing multi-tier mapping with Resilinc?
We had a couple of “ah-ha!” moments. I might have been buying chips from four different companies, but when I drilled down into the supply chain, almost all of those fabs came from one company: TSMC. Everybody else was using TSMC as well.
When you start to drill down into the supply chain, the funnel gets quite narrow. Two to three layers down, it’s all the same players. If something happens to them, it affects the entire industry. That was one of those “ah-ha!” moments where I realized what truly understanding your supply base at a Tier-2 or more meant. You start to see other risks that you otherwise wouldn’t pay attention to.
It’s really scary to find out that your parts are only coming from one supplier—it really is. You realize a 10-cent part could shut down an entire car maker.
How do you think UFLPA will impact automakers?
It reminds me of 5 or 6 years ago when we went through something similar with the DRC (Democratic Republic of Congo). The mining in the DRC was tied to forced labor and the gun trade – it was bad. Congress said they wanted everyone to understand the materials they were using coming out of that region of Africa.
We sat down with our engineering team to understand what was in our product at a base level. Then we contracted a third-party in-country to do the work for us so that we clearly understood where our materials were coming from, what that value stream looked like, and what may or may not be in our portfolio.
We even had conversations about how to engineer those materials out of our portfolio. We asked questions like, “How do you make a new material or get a replacement material?” If you get a replacement material, then you have to validate it, you have to test it to make sure it actually works and meets the specifications and product performance characteristics of the old materials. That is a long process. It’s extremely expensive to make design changes to an existing product.
I think this has similar tenants to what is happening with UFLPA now. It will take that same kind of focus and strategy in the company across multiple functions to get a true understanding of where you potentially have forced labor in your supply chain.
What is the importance of supplier collaboration? Have you ever had an experience where you had to help a supplier out, such as a bankruptcy?
I was promoted to Chief Procurement Officer of Aptiv in February 2006. My prior role was the VP of the largest division within Aptiv. I got promoted to that CPO role because Aptiv filed for bankruptcy in October 2005. After I was promoted, roughly a billion dollars of my suppliers’ cash belonged to the court.
So, to answer your question, yes. During the financial crisis, we had a number of suppliers that were filing for bankruptcy and didn’t have cash on hand. We had to do our best to help our suppliers. We even considered buying some of them because they were so critical to our supply chain.
When Aptiv exited bankruptcy—almost four years later to the day—we had a problem with our suppliers around relationships. We had to go back and build relationships with our supplier because we had harmed them. We had work to do, so we created a category strategy around building core strategic partners. We had to get our supply base structured and aligned with our business realities and what the new business would look like after exiting the bankruptcy—but it took a long time to build that trust.
This is what I used to tell my team and tell people in the conference rooms: suppliers are just like us. We make business decisions every day about who we’re going to take care of and who we’re not going to take care of. Bad things happen in manufacturing plants, and when the bad things happen, who are you going to look out for? And who is going to have to wait?
Suppliers have decisions to make about what program they put their best talent on, and they make that decision consciously. Quality engineers, process engineers, program managers—they are not all alike. Some are better than others, so I used to tell suppliers: I want the best of everything you have. I want your best talent. I want your best technology. If you’re working on something new, I want to be the first to know.
But in exchange for that, I will be your best customer. I will give you access to my technical people, my quality people, my operating people, my upper management. I will give you visibility into new products coming down the pipeline that I want you to be a part of. I’m committing to you that I will help you grow as a company as a part of this partnership and provide access to you that I don’t provide for others in exchange for the best of everything you have to offer.
Here is the point people need to clearly understand. You can say you will do all those things, but you better make sure that your entire organization is in line with that strategy—not just the procurement team or the supply chain team.
