Aerospace and Defense Case Study
Problem: One of the world’s largest integrated aerospace and defense firms discovered, after an audit of their worldwide transportation spending, that the company was spending an inordinate amount of money on expedited transportation of inputs to its numerous production facilities. In discussion with company executives, Keough Associates confirmed that the firm was in fact spending roughly three times more on expedited freight than we would expect for such a manufacturing operation.
Upon confirmation of what the firm already suspected, the A&D company agreed that there were probably other significant savings opportunities elsewhere in their supply chain; the company was eager to determine how their other processes would stack up against the sort of best practices on might encounter at a leading-edge manufacturer like Toyota. This effort dovetailed nicely with an ongoing corporate endeavor to consolidate applications and to standardize business processes across the firm’s many divisions.
Solution: The A& D company engaged Keough Associates to perform a comprehensive evaluation and analysis of its supply chain processes. Keough Associates employed the SCOR (Supply-Chain Operations Reference) model to evaluate the firm’s practices across 16 distinct supply chain process areas:
- Supply Chain Planning
- Supply / Demand Alignment
- Inventory Management
- Repetitive Buying
- Inbound Materials Management
- Order Management
- Warehousing / Fulfillment
- Deliver Infrastructure
- Transportation Management
- Returns Receiving & Warehousing
- Returns Transportation
- Strategy & Leadership
- Process Viability & Control
- Industry Standards
Keough Associates benchmarked the company’s processes, from best to worst practice, against the CSCMP (Council of Supply Chain Professionals) supply chain process standards through on-site visits at each of the 12 in-scope facilities. With the exception of the Enable processes, Keough Associates also documented the as-is state of these processes in detail, employing several leading business process modeling tools; as part of the evaluation of the company’s enabling processes and assets, we documented in depth each facility’s IT architecture, including key business applications and methods of internal and external systems integration. Keough Associates also collected a wealth of quantitative data (overall process costs, labor required, facilities and capital equipment employed etc.) to help facilitate meaningful quantitative comparison among facilities.
Result: This engagement is not yet completed. The culminating activity is a strategy workshop which will bring together the top executives from each in-scope facility to compare findings across the various sites to identify opportunities with both high strategic value and high return on investment. The workshop is designed to build consensus among a group of executives with very different performance objectives and, based on this, to develop a strategic roadmap of investments for the next two years. Needless to say, another objective is to explore the root cause analysis of the company’s overspending on transportation and to recommend organization, technical, and business process improvements to remedy the situation.