Content area
Full Text
Poor supply chain visibility has rerouted how the aircraft company manages purchasing, sourcing, and its relationships with suppliers.
Is integrated supply chain management the answer to corporate competitiveness? Or is it just another of those nifty ideas that ensure full employment for business consultants?
Those or similar questions must have been common around the Cessna Aircraft Co. in Wichita, when in 1997 the company announced plans to launch a new five-yr supply chain management initiative and hired Michael Katzorke to head it.
Clearly, Kartzorke had his work cut out for him. Making a conversion from a very traditional, conservative management structure to one that would make numerous and substantial changes in everything involved in purchasing, sourcing, and supply chain management seemed for many to be an exercise in wishful thinking.
In addition, there was another question, "Why?"
Cessna, a subsidiary of Textron, did not appear to be a company in need of radical changes. With a 57% share of the business jet market, it had good financials, a satisfied workforce, good customer satisfaction stats, an excellent reputation for quality, and generally high marks as an innovative company.
Still, there were plenty of things to worry about.
* Supplier on-time delivery was poor (at around 45%). * Quality was suffering at the hands of redundant inspection and rework of supplier components.
* Supplier prices and costs were escalating.
* Appropriate supply chain metrics were totally lacking.
As vice president of supply chain management at Cessna, Katzorke began to view the job ahead as a three-pronged one (see chart) made up of sustaining production (i.e. planning, order launch, and expediting of existing production); strategic sourcing (supplier selection, negotiation and improvement); and new programs (developing new aircraft and incorporating suppliers' latest technology and products).
His earliest impressions of Cessna in 1998 were of "materials management, circa 1975." Very typical of much of the aircraft-building industry in the late '90s, "Cessna's procurement organization was tied to transactions and was highly tactical in most cases," he says.
More ominous from a supply standpoint, suppliers appeared to be operating in a divide-andconquer mode with three sets of negotiation-specs with engineering, price with purchasing, and aftermarket with aftermarket support personnel. Purchasing, in effect, operated primarily as a tactical, transaction processing, price...