Supplier Base Optimization – The Manufacturer’s Strategy to Lead

Supplier Base Optimization – The Manufacturer’s Strategy to Lead

Manufacturing is one of the largest sectors within the US economy. Aircraft manufacturing, with its total sales (defense and civil aircraft) contributes 1.8% to the GDP and forms the technological backbone of the industry. This sector may face a sluggish growth for a medium to short term period, but experts expect a good to moderate growth in the long term.

This can be supported with projections made by Boeing who is expecting a substantial growth. The industry requires producing approximately 29,000 new aircraft between the years 2009-2028 for several customers valued to roughly $3.2 Trillion. (Source: Congressional Research Service).

In spite of continuous government expenditure, it is facing a downward trend in the defense aircraft manufacturing sector, and moreover the analysts predict challenging times ahead.

The civil aviation industry, where 70% of the components are outsourced, is faced with growing competition and numerous challenges to optimize the production function. With decreased lead time, manufacturers and suppliers are losing orders to their competitors and the rate of supplier approval and money invested is increasing at a staggering pace.

By having the right supplier base management system aircraft manufacturers can open up communication across technology platforms and create greater efficiencies and fewer errors along with profit maximization and sustained performance.

Technological developments have resulted in the reshuffling of the total supplier base of the US aircraft manufacturing sector with significant implications on customer-supplier relationships and potential national security.

Drastic reduction in the number of suppliers has created added responsibilities for the existing suppliers in terms of design, assembly, material management, risk sharing, and even participation in fostering the internationalization of their customers’ supply base.

With final aircraft assemblers like Airbus and Boeing depending on their supplier(s) to deliver the sub-assemblies and parts to them, supplier base management takes an additional importance in terms of cost competitiveness, quality and performance of the final product.

The supplier base management systems used across most manufacturing organizations is not centered on the supplier’s corrective actions. Data is collected and stored and handled in many different ways by different groups. Some parts of the process are paper based requiring hard copies of records to be signed and stored in document vaults, others used local systems developed on legacy and proprietary technologies.

In most cases, the supplier corrective procedures are emailed as attachments, faxed or mailed between company and supplier and entered into various systems manually. The challenge is to create a supplier management system centered on the supplier’s corrective actions.