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defence procurement A meAns to An enD Jamil Rashid explains why supply chain change programmes could be key to transforming how the whole defence and aerospace industry works. The UK aerospace and defence industry is working hard to raise the performance of its supply chains and, in so doing, accelerate its competitiveness within the global marketplace. Reduced auditing via recognized supply chain accreditation, a consistent approach to supply chain development and performance measurement, and improved supply chain relationships are all in the mix. A significant number of industry suppliers are now being consistently measured and assessed by most of the primes. This means that they are likely to have to undergo fewer audits, saving time through duplicated effort. For the same reason, the primes save resources … because the lower tiers of the supply chain are doing some of these audits on behalf of the industry. Although the primes are now working more closely together to reduce confusion in the supply chain, there is a much greater prize: changing how the industry works — how it is managed and how it communicates — transforming all business-to-business transactions, not just the supply chain. Focus on Leaders To fulfil this potential, the industry needs to focus far more time and energy on supply chain business leaders. One of the reasons why long-term improvements sometimes fail to materialize is that improvement plans between companies tend to be one-offs: once these initial plans have been implemented, it is unusual for further plans to be created that follow through to further improvements. Success will be truly demonstrated when the process owners are really working together, regardless of the involvement of improvement teams. And only then will businesses in the supply chain really talk the same language, which is so vital to creating sustainable improvement plans that will become a way of working. How to achieve this common language? Leaders need to sit down, clarify and document how the strategies of their organizations fit together and drive through supply chain initiatives, from the top down. Failure to take this critical step is why supply chain partners who are trying to do the same thing in their efforts to improve performance are, in reality, often poles apart in terms of their understanding and communication of strategy, planning and measurement. What you get is people talking very different languages — suppliers saying “but you don’t pay on time” and customers complaining that “you don’t deliver on time” — instead of having a consistent structure within which both parties are happy to operate to understand the real problem. Unstructured arguments just create barriers ... and the result is massive waste. 20 Develop Improvement Structures Improvement plans need to become a part of how businesses routinely communicate and will only be truly effective when they are central to the behaviour of managers at all levels of the organization. Again, this is where leaders have a critical role to play. They need to be involved, to ensure that all key continuous Case study A tier one UK aerospace manufacturer was experiencing longstanding poor delivery performance, despite several internal improvement initiatives focusing on manufacturing processes. An organization-wide business improvement process identified the supply of PCBs as the key factor influencing on-time delivery. Three critical suppliers were invited to join the project team, which created improvement actions focusing on the deployment of strategic stock, better forecasting and demand pull on high volume parts. Work orders launched on time increased from 50% to 80%; on time delivery improved by 10%; and communication (plus relationships) was improved. These are good results, but a closer look at the leadership behaviours of the three businesses concerned points to missed opportunities: • The three managing directors had very little contact after the initial improvement initiative. This is not untypical, because many business leaders see supply chain initiatives as a means to short-term improvements and industry recognition rather than a way of changing how the business works. • The improvement plans were not linked to the strategy of the businesses concerned, so actions were not given the necessary priority and there was poor understanding of the potential benefits to be gained. • The plans were not detailed enough, so people were not always clear on what they had to do, actions were assumed to have been completed when in fact they were not and the reasons why were not fully understood. • People seemed to be doing things because they were part of the ‘supply chain initiative,’ rather than something that the business really needed to do. • The leaders of the businesses seemed to have little detailed knowledge of how activities were progressing and it was evident that they did not review them on a regular basis. • The companies were clearly not convinced by each other’s knowledge of improvement techniques, purchasing methods, etc. Consequently, they did not focus their energies on working together to implement the most effective solutions. Although this is quite normal in many team environments, the teams never moved past the ‘storming stage,’ which a true long-term relationship would demonstrate. Overall, none of the businesses or their leaders truly changed their behaviours in the longterm from a ‘supply chain perspective.’ Also, most of the improvements gained from the initial workshop programme were not rolled out as a way of working, because they were not embedded into the minds of the leadership as a way of working. Although those more actively involved in the project saw the need to cascade the programme throughout the organization, it was only seen as ‘the supply chain initiative.’ Interestingly, in common with the vast majority of supply chain activities, the initiative was focused heavily on manufacturing, even though the assessments demonstrated many opportunities across the organization, some even more important to implement than the manufacturing element. How much more effective might it have been if, for example, the sales and development project teams had been involved, working together to develop long-term improvements? www.scemagazine.com may/June 2009
improvement plans need to become a part of how businesses routinely communicate and will only be truly effective when they are central to the behaviour of managers at all levels of the organization. improvement activities show clear links to strategy, that all key improvement suggestions are based on hard data and analysis (not assumption and gut feel) and that all key activities are planned in detail. Senior management needs to be there, imposing consistency, structure and detail to ensure on-time task completion. And the individual teams responsible for the lower level improvements need to develop highly visible plans that really demonstrate what needs to be done to achieve key milestones. The key indicators that demonstrate if a business is really serious — if it is really going to make this become part of the ‘way of working’ — is how well improvement plans are incorporated into the overall business plan and, crucially, how often the milestones are truly reviewed and pushed at a high level. The reality is that most organizations could do much more in both of these areas. Ask the Right Questions So, leaders need to create the management structure in which strict rules are applied and an environment in which teams understand the issues and can be helped to manage the implementation of the solution. And they need to ask the right questions. Are people clear on why they are doing what they are doing? Are managers really involving their teams? How are you measuring your activities? How are you linking these to your goals? Only when leaders get the right answers to the right questions will supply chain improvement partnerships truly work. The aerospace and defence industry is creating a strong platform to build on and is certainly heading in the right direction. But there are further challenges to embrace: above all, as the industry strives towards increasing global competitiveness in a very challenging market, supply chain improvements need to be seen as a way of making businesses as a whole work better — in a more structured and disciplined way. If it can rise to this challenge, the entire industry will benefit and the drive for a more effective supply chain will truly become a means to an end, not an end in itself. • About the Author Jamil Rashid is the founder of JARA, a consultancy that has delivered performance improvement programmes to FTSE 250 companies in the aerospace and defence sectors, and has close relationships with a number of significant industry bodies and academic institutions, including WEAF (West of England Aerospace Forum), SBAC (Society of British Aerospace Companies) and the Lean Aerospace Initiative led by the Universities of Bath, Cranfield, Nottingham and Warwick. For more information, visit www.jara-management.com or contact Jamil Rashid on +44 208 261 4591. 2009 may/June www.scemagazine.com 21
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