"AEROSPACE LOGISTICS AND SUPPLY CHAIN MANAGEMENT"- GMCStream Inc. contributor - Bruce L. Brager
“I don’t know what the hell this ‘logistics’ is that Marshall is always talking about, but I want some of it.”
These are the words of Admiral Ernest J. King, commander of the United States Navy, early in World War Two. Later in the war, King’s views had changed. “The war has been variously termed a war of production and a war of machines. Whatever else it is, so far as the United States is concerned, it is a war of logistics.” King was right on the mark. Winning a war consists of doing things. But in battle, and in every other activity, you need the tools to do the jobs. You need them where you want them. You need them when you want them.
Aviation logistics, or supply chain management, to use a more comprehensive term, has two distinct phases in civil and military aviation. One is obtaining and moving supplies for all stages of the production process - making the airplane. The second is using the aircraft to move people or supplies when and to where they need to be moved – a part of someone else’s supply chain management. The book Logistics and Supply Chain Management, by Martin Christopher, defines "Supply Chain" as "the network of organizations that are involved, through upstream and downstream linkages, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate consumer." The idea of the supply chain is to carry out the process from initial planning to the item or service in the hands of the consumer, most effectively and at least possible expense. One standard method for reducing cost is known as "just in time," where raw materials are delivered right before they are needed. One of the earliest examples was the construction of the Empire State Building, in the late 1920s. A century ago, when the building built, Manhattan was already crowded. There was no room to store all construction materials on site. The construction material was brought to the place when it was needed. Just in time comes with a significant issue that must be solved – what happens with delivery delays, from causes ranging from a snowstorm to a war. For this reason, there must be a safety cushion for all the possible delivery delays. Experts in the field sometime call this risk management. The trick here is to plan how much of a buffer is most economical and practical for a project.
The full process of supply chain management, the entire process of getting the product or service to the consumer, starts with a plan. The plan has checkpoints, benchmarks to measure progress, and things to watch for; namely, potential problems and potential opportunities. Just remember the old Russian saying – The plan was good, but they forgot about the ravines. Anyone who works along the supply chain, no matter what the field, works with and serves different levels and types of customers. In other words, are called internal customers within the supply chain. External customers are the ones who buy the products or use the services. One excellent way to improve the supply chain to take a lesson from good salespeople who know how to partner with the customer. Salespeople can learn customers' needs and wants and how to meet them.Supplier relationship management defines the interaction between the company, its major suppliers, and its secondary suppliers. The communication usually refers to outside suppliers, subcontractors - virtually the rule in today’s aviation production industry. In this era of globalization, relationships with suppliers are often most complicated part of the supply chain process. Various components of a product may come from different countries, with all the complexity of international trade and politics. Regardless, the material is still needed, when and where it is needed.
Manufacturing flow management is the first segment of the supply chain involving the steady movement of material at one or a few sites. Supplies, raw materials, and components must move to manufacturing points. They must ship to where will be assembly, into parts or final products, completed. Manufacturing flow management includes moving material through the plants, the actual manufacturing process. Flow management considers supply risk for raw materials. Risks can include factors such as weather on shipping routes, labor strikes at any phase of the process, and political uncertainty. Everyone who works in any phase of the supply chain must remember that they select, procure, store, or distribute products to meet customer needs. According to the Lockheed Market web site, “The mission of Lockheed Martin’s Global Supply Chain Services business is to provide on-time and affordable global management and services.” The purpose is not to work efficiently.
ON GOING CYCLE
During the supply chain process, as products or components reach production, they must be stored until they move to the next level, or until the customer needs them. At the beginning of each supply chain cycle - the supply chain cycle is ongoing -- managers gather information about each activity in the system. They carefully analyze that information to make decisions and future coordinate actions. Managers can use feedback reports, or whatever they decide to use, to gauge how well their system is functioning. For example, a feedback report might list facilities that are have run out of stock or overstocked; percentages of those facilities reporting at each level; or quantities of losses and adjustments, by level. Reports can also address a single facility or product. In addition to providing feedback to facilities, the feedback reports are used to present data for decision making throughout the supply chain. The statements can also be valid and useful to other stakeholders, not just those in the chain of command above the immediate decision maker. The idea is to follow the initial plan but also to keep alert to any potential problems or opportunities.
The supply chain can only work if well-trained, efficient staff monitor stock levels, place orders, and provide products to clients. Money is a significant factor in any supply chain. Allocation and management of finances directly affect all parts of the supply chain, including the quantities of products procured, the amount of storage space that may be available, the number of support vehicles maintained, and the number of staff working in the supply chain. Mobilizing resources and securing budget items for aviation industry commodities and supply chain activities are extremely important to ensure that products are available and that the system operates effectively. Monitor quality during the supply chain process; not only the quality of the product but also of the work. Procurement decisions must follow the supply plan that developed during planning. Quality of the storage conditions and transportation mechanisms should have a means of monitoring. The inventory control system designed so that products they need and at the time they need them. Aviation workers must adhere to standard guidelines when serving clients. Monitoring customer satisfaction can provide data for use by decision-makers in changing product selection. Remember, serving customers is at the top of the supply chain cycle and that means getting the right goods to those customers. In addition to the elements in the formal supply chain, two additional factors—government policy and flexibility/adaptability— directly related to supply chain operations. Fiscal and budget policies are often some of the most influential policies affecting supply chain and production, whether compared to securing funding for product procurement or paying for critical infrastructures, such as commercial airports or military air bases. Aviation industry program managers and other personnel working in the supply chain can influence these policies, but they may face significant challenges when trying to change them. These managers and staff must stay current on policy changes.
Adaptability and flexibility are characteristic of all successful supply chains. Systems must be designed to be flexible and able adapt to continually changing circumstances, such as changes in demand for a product, or changes in funding policies for logistics and supply chain activities. You cannot redesign the supply chain every time a new product is introduced, or when consumption increases. Supply chain managers must be able to obtain the resources necessary to address changes in demand. The system’s ability to meet changing needs will have an impact on commodity availability. The supply chain must continue to function when reforms implemented. The supply chain process must be adaptable. The public sector and private sector, procurement of aviation supplies and equipment is a complicated process that engages different stakeholders over an extended period. Given the number of stakeholders, the strict nature of procurement procedures, and the often-high value of funds allocated for procurement, it is not uncommon to have challenges during the procurement process. While there may be a wide range of problems with an impact on the purchase, the more common and critical procurement challenges revolve around several things. Accurate data is essential for ensuring the procurement process results in the correct quantity of commodities that will best support the program’s projected needs. Each of the process steps, from quantification of requirements to delivery of goods, requires a specific amount of time to complete. While some steps can be done in parallel and will vary in the time required, some often fixed at a set period. For example, most national procurement regulations will stipulate the amount of time a bidder has to respond to an international bid. In many countries, national policies require that funding for procurement allocated and available to the program, or procurement unit, before bidding documents can be publicly released. Some believe that private sector purchasers can have more flexibility.
Counterfeit and substandard products are a significant risk for the supply system in any field. To address this risk, public sector procurement processes and national regulatory agencies must establish and carry out appropriate quality assurance measures to ensure that only quality products enter the supply system. Procurement addresses this responsibility through the technical specifications, issued with the bidding document that identifies critical product quality requirements, such as product certification requirements, standards (when applicable), labeling and packaging requirements. These requirements become the contractual obligations the supplier must comply with when a contract awarded. The bidding and contract documents should also include the buyer’s right to conduct pre-shipment or post-shipment inspection and testing, as required, to confirm that the product complies with the stated quality assurance requirements. Procurement personnel should also consider implementing quality monitoring at every step of the procurement process. There should be as much transparency as possible throughout the entire process. Special interests, suppliers, procurement personnel, and others may seek to influence product selection, manipulate order sizes. They may try to manage supplier selection and contract award decisions to increase sales and profit margins for their benefit. Procurement officials must support an open procurement process by consistently applying appropriate procurement regulations and procedures, and international best procurement practices that promote transparency. Airline representatives do not just walk into an airplane production plant and place an order for 100 passenger jets, cash and carry. Production can take some years. If a new airplane model, the airline, or the government, may want one or two models for testing, in addition to the test models produced by the aircraft company. Payment can also be an issue. A one hundred airplane order can cost 10 billion dollars. One does not flash a credit card to pay for those 100 airplanes. Airlines and airplane manufacturers might have to work out a complicated financing plan, where the airline helps pay for the production of the aircraft.Boeing is planning a reorganization and streamlining of its supply chain. As recently reported in the Puget Sound Business Journal, a spokesman for Boeing said that “The new supply chain organization will be structured to be more efficient, effective and nimble. Its design focuses on improving strategy development, procurement processes, contracting and fulfillment operations, in addition to streamlining bureaucracy that impacts on our teams and suppliers. . .”
Supply Chain Support
The aviation fuel supply chain may be the primary supporting element in the aviation supply chain. Aviation fuel delivery uses competitive transportation methods to air – trucks and ships. Aviation fuel comes with issues. Aviation fuel cannot switch to alternatives and renewables. Aviation fuel is necessary to be able to use the products of supply chain production. But aviation fuel has its issues with location, production, storage, delivery, and cost. According to the Federal Energy Information agency, the number of American refineries has been cut over in half in the last three decades. Aviation fuel production is less than 10 percent of the total fuel industry. Aviation fuel production and supply must be steady, unlike automobile gasoline, for example. This need can be met by more careful planning for needed supplies, and by ordering supplies as early as possible. Use modern information systems to lock in supplies and, perhaps, prices. Remember always that plans are necessary at the start, but they never work out exactly as expected. American oil refineries, for example, are concentrated in areas which are also vulnerable to hurricanes. One does not have to debate climate change to know that some storms will occur. The trucking industry has had to double its average fuel deliver the mileage in the last decade. There is a shortage of truck drivers, one likely to continue. Truck driving is a hard job, with nowhere near the glamour as in the movies or music. Increased regulations on drivers add expense, to the independents or the companies that employ them. Aviation gas is considered a hazardous material, requiring specialized training and equipment. The idea is to move resources, raw materials or finished products, from point to point. Those in the field have long recognized that proper management of the process starts with knowing where the items are during the particular parts of the process. Location awareness is only adequate planning, detecting small variations and problems before they become large programs. The right plan becomes particularly important with "just in time" delivery of raw materials and finished components. The question is how to do more than have transporters check in from time to time. Supply chain firms want to be in touch with their supplies all the time.Satellite communications provide part of the answer; a way to keep in touch with logistical shipments, quickly making corrections if and when needed. Less expensive systems than satellites alone have been developed, relying both on satellites and cell towers. Alstom is a France-based manufacturer of rail cars and other items for urban transit. According to their website (http://www.alstom.com/usa/) one-quarter of all metropolitan rails, cars produced by the company, including vehicles for the Amtrak Acela trains in the northeast United States. The company uses a “broadband-trunking” system made by Huawei (http://e.huawei.com/en/solutions/business-needs/wireless-private-network/broadband-trunking). A multi-media system utilizing wireless cellular can be useful in areas where conveniently available. Satellites can provide communication and monitoring where cell towers are not available, such as at seam and can ease problems such as roaming charges. Natural disasters will not knock out satellites. Use of both technologies provides increased flexibility and better overall coverage, and better supply chain management.
Military Supply Chain
Military aviation shares many similarities with its civilian counterpart. But it also has significant differences. Cost is less of a factor in military supply chain planning, though it does play a role. Private aviation must keep some equipment and facilities on stand-bye but spends the bulk of its time in operation. The primary occupation of military aviation is to be ready to act, and sometimes with little warning, Military equipment must stay maintained and fueled, able to do its job. It must be where needed and when needed. Operational assessment is an essential part of the supply chain, but with much less of a margin for error. The supply chain remains as crucial to the military as it was back in World War Two. Defense hardware can also be uniquely complicated, with its supply chain. Some parts must be built to order each time is needed. Military parts are more likely to be broken in use, by the nature of their use. Critical Job Shop Production ramps up the complexity of the planning process. Additional complexity comes with part of the military procurement privatized process. Most larger military equipment has always been produced by the private sector, under government contract. Privatization now includes maintenance and fuel supply. The expanded view of privatization adds complexity but is expected to increase efficiency and lower cost. By its very nature, the military must be able to respond to unforeseen events. The military must be able to meet with flexibility, agility, and efficiency. One can predict possible problem areas – military action in North Korea is far more likely than in Canada – but the details of an incident and the measures necessary in response cannot be known until they occur. The primary supply chain needs knowing in advance. Effective information systems can supply much of the data required.
Transparency at every phase of the military supply chain, keeping security in mind, is necessary to maintain agility and flexibility. Part of monitoring the production and procurement process lets military procurement people see how the process is proceeding, stay in control, and make any necessary changes. Information systems can now connect all phases of supply chain information. Dangers of hacking and the increased recognition of the need for cybersecurity will be the subject of another article.
In summary, when things go well, and they usually do, the aerospace industry needs good quality items and products, it requires them in set places, and it needs them at set times. When things do not go well, problems need to be spotted as early as possible and corrected. Either way, supply chain management’s job is to get industry what it needs to do its job.