Eclipse Aviation’s founder says aerospace companies must behave like Wal-Mart suppliers. But can the industry make the logistics leap?
He is a 57-year-old, running a small company making castings for the aerospace industry and, without a successor, is keeping his business ticking over until he can retire. The last thing he wants to do is blow his nest-egg on the expensive computer-aided tooling he is told he needs to speed up his production and secure his key customers’ business for the long term.
The above example is fictional, but is typical of thousands of small enterprises throughout the global aerospace industry. Suppliers who have invested in costly equipment in previous upturns only to see it sit idle in the next downturn are wary about getting their fingers burnt again.
And yet the people running companies at the other end of the supply chain, such as Vern Raburn of Eclipse Aviation, are telling companies like this that they must become more like Wal-Mart suppliers if they want to survive in tomorrow’s aerospace industry.
That means delivering the right quality and quantity of products exactly when they are needed and having the resources to do so. Successful retailers in the fast-moving consumer goods (FMCG) sector often beat their rivals not because they offer different or better items on their shelves, but because they manage their stock with ruthless efficiency, keeping to a minimum the time goods sit in storerooms. That frees cash to allow the likes of Wal-Mart and Tesco to keep prices down.
Eclipse says its model is no different. The reason it can afford to sell its Eclipse 500 very light jet for less than $1.5 million, says Raburn, is because its production line will be so efficient, with parts arriving the day before they are needed. That’s how Wal-Mart works.
Yet the aerospace industry has been slow to learn from sectors such as FMCG retailing and the automotive business because it has been cosseted by traditional batch procurement methods, with long lead times and loose delivery targets.
But can it change? One of the biggest developments over the past 25 years has been an end to vertical integration. From Boeing down, companies want to focus on what they do best – designing, integrating or “adding value” to products, and outsourcing work that someone else can do more cheaply. In a global industry, that often means going overseas.
That makes perfect sense as long as this lean manufacturing is matched by lean distribution. With the widget passing through half a dozen layers of the supply chain before it ends up on the end-user’s aircraft, it only needs one kink, one missed deadline, to stop the process in its tracks.
It is this lack of discipline that frustrates bosses like Raburn, and as demand cranks up in the industry – from Raburn’s personal jets to the Airbus A380 – the situation is only likely to get worse. Maybe outsourcing has gone as far as it can and integrators at the top of the chain must realise they cannot have their cake – everything but assembly done elsewhere – and eat it by demanding it all just in time.
Source: Flight International
