WCI helped reduce inventory by 50% & supply chain transactions by 90%

Supply Chain restructure delivers significant benefits

The manufacture, supply and servicing of gas turbine engines is a complex affair. Parts and materials have high value, volumes are comparatively low, lead times are long and levels of inventory significant. The technical specialisation of many components means that choice of supply is limited. Add to this the scale and complexity of Bills of Materials, the frequency of technological change and the levels of compliance and control required by a heavily regulated industry, then the inherent complexity of supply chains becomes quickly apparent.

Already at the forefront of gas turbine engine technology and a global reputation for developing world-beating products, our client engaged WCI to design and implement a far-reaching program to completely overhaul its supply chain operations.

Key Challenges
Analysis of current practices highlighted a number of complexities in the way the supply chain was structured and the way in which it was being operated. Many of the parts required to assemble the engine were being received at the single part number level. A consequence of this is that the supply of parts was not aligned to the requirements of the assembly process.

This structure also resulted in a high number of supplier interfaces being directly managed. The many suppliers received regular MRP signals that encouraged them to deliver parts to their customer at a constant rate, irrespective of the current progress in assembly. Inventory was also out of control with high levels of working capital committed, yet only 23% of current inventory could be used. The balance of inventory could not be consumed as complete kits-of-parts could not be created for the next stages of assembly.

Solution
Working alongside a strong client team, WCI developed a model for success to address the current issues.

The model contained four key elements.

1) Identify packages of work and kits-of-parts aligned to the assembly process
2) Develop the integration capabilities of suppliers to deliver complete kits-of-parts aligned to the build requirements
3) Create a tiered structure in the supply chain to drive accountability for complete build packages and reduce the number of direct suppliers
4) Redesign planning and control techniques to pull complete packages of work in-line with the current build requirements

Initial implementation of the solution focused on a single civil aerospace engine. This engine was chosen because of its relatively high volume and the fact that changes here would deliver significant benefit and could be rolled out fairly easily to the other engines in the same product family.

Guided by the central team and making effective use of the consultancy support, local teams were established within the main manufacturing plants and were given responsibility to redesign the supply chain for individual ‘Build Packages’ or sub-modules for each element of the engine.

Starting with a detailed specification created by the final engine assembly plant, the teams analysed the current supply chain and compared it with the stated requirements. By following guidelines developed by the central team, the local teams redesigned the supply chains with an aim of rationalising the design onto a standard template for all the engines in the family. In this way best practice could be applied from one engine to another. The final, optimum solution for each supply chain was justified using a financially-based, business case model.

The redesign was not a trivial task and included changes to the supply base, integration activities, inventory holding, planning and control techniques, information systems and performance measurement! Consequently, interaction with the rest of the organisation was critical with many people and functions becoming involved in logistics, operations and IT.

Benefits
Completion of the pilot implementation on one product reduced associated inventory by 50% and reduced supply chain transactions by 90%. WCI has enabled the business to embrace the necessary skills and processes to extend the programme to all other products and deliver corresponding levels of benefit.