Lean, but not mean, Rockwell Collins excels

Following a Lean philosophy and pushing strategic sourcing, the material and supply organization surpasses operational goals—and wins our Medal of Excellence

By Susan Avery, Purchasing September 1, 2005

Spend time with Clay Jones, chairman, president and CEO of Rockwell Collins and the conversation soon turns toward winning or, to be more precise, what it takes to win. He'll talk about the company's objectives of material availability, competitive total cost of ownership and asset management outlined in the Rockwell Collins annual strategic and financial plan. And, he'll talk about how employees work together to meet them. The objectives flow from Jones through the operation to the supply chain.

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Seagate Technology Honors Supply Chain Excellence for 2005

News source: Yahoo! News

Wednesday August 31, 7:59 am ET

SCOTTS VALLEY, Calif., Aug. 31 /PRNewswire-FirstCall/ -- Seagate Technology (NYSE: STX - News), the world's leading hard drive company, today announced the winners of its Outstanding Supplier Awards for 2005. Belton Group, Hoya Corporation and Xyratex, Ltd. all brought home this year's top honors. Seagate unveiled the winners at its 5th Annual Suppliers Day conference in Singapore.

The awards are presented to those suppliers delivering consistently high performance in the areas of Quality, Technology Availability, Delivery, Flexibility and Cost Management.

The Belton Group, a leading manufacturer of Arm Coil Assembly and Hook-Up, was this year's Outstanding Supplier in the Mechanical Components category. In addition to delivering on aggressive volume requirements, Belton consistently outperformed its peers to meet Seagate's quality, Six Sigma, Lean Manufacturing and technology metrics.

Hoya Corporation, a leading provider of glass substrates and media, supplies glass substrates for multiple Seagate products. Hoya was awarded the Outstanding Supplier Award in the Media/Suspension category. During Seagate's fiscal year 2005, Hoya was instrumental in providing products for Seagate's rapid growth in the Mobile and Consumer Electronics markets. Hoya's execution, technology and flexibility were key elements of Seagate's success throughout the year.

Xyratex, Ltd., a leading provider of capital equipment to Seagate's manufacturing sites, was honored as Outstanding Supplier in the Manufacturing Capital Equipment category. Xyratex responded pro-actively to Seagate's accelerated demand schedule, and its 24-7 response accompanied by a highly efficient supply chain helped dramatically reduce total lead-time for new equipment.

"Our mantra for our suppliers is 'Drive Quality,'" said Karl Chicca, Seagate senior vice president of Global Materials. "The importance of reliable storage continues to grow within traditional and new markets, like consumer electronics, and our suppliers must not only provide components that meet our stringent requirements, but must continue to raise the bar on quality.

"Much of Seagate's success in fiscal year 2005 can be credited to the quality, technology, delivery and flexibility of our supply base. We continued to improve our industry-leading supply chain over the last year and received tremendous support from our suppliers to meet our customer demand. It was no small feat and I thank them for their hard work and contribution."

About Seagate

Seagate is the worldwide leader in the design, manufacturing and marketing of hard disc drives, providing products for a wide-range of Enterprise, Desktop, Mobile Computing, and Consumer Electronics applications. Seagate's business model leverages technology leadership and world-class manufacturing to deliver industry-leading innovation and quality to its global customers, and to be the low cost producer in all markets in which it participates. The company is committed to providing award-winning products, customer support and reliability to meet the world's growing demand for information storage. Seagate can be found around the globe and at www.seagate.com.

NOTE: Seagate, Seagate Technology and the Wave logo are U.S. registered trademarks of Seagate Technology LLC.

Cessna works to streamline supply chain, reduce costs

News source: Kansas.com

Keeping it moving

BY MOLLY MCMILLIN
The Wichita Eagle

On the shop floor on the Citation jet line at Cessna Aircraft Co., a green flag sits on top of a kit of parts. The flag signals that the parts needed to assemble the lower tail cone of a CJ3 business jet are there and ready for the operator.

In the midst of several kits sporting green flags, however, is a kit with a red one: Two parts are missing.

Production increases and changes in manufacturing make parts shortages more glaring today. And late or missing parts make it more difficult for planemakers to get their aircraft to customers on time.

While it's meeting its demand schedules, Cessna is working with suppliers to reduce and eliminate shortages as part of a larger effort to streamline its supply chain operation and bring costs down.

"We are certainly committed to and are going to make our (delivery) schedules," said Don Beverlin, vice president for supply management at Cessna.

Of the 160,000 different parts that go on Cessna's fleet of aircraft, the company buys 60,000 of them from 850 suppliers -- everything from engines to rivets.

Next year, Cessna expects to spend $400 million more on parts and materials -- an increase of 36 percent -- than it did in 2005, Beverlin said.

Cutting costs

As an industry, planemakers found themselves needing to hold or reduce the price of their aircraft while their own costs were rising.

"We found ourselves in a position where our airplanes were too expensive because we had let the cost get out of control internally and externally -- and that's our supply base, too," Beverlin said.

"Then we had to roll up our sleeves and really go to work and drive costs out."

For example, Cessna has cut costs and reduced the price of a Citation X while making a number of options standard equipment, Beverlin said.

It has put in lean manufacturing practices to raise productivity and become more efficient. It adopted a "just-in-time" method of inventory so it doesn't keep an abundance of costly parts on the shelf.

And it worked with suppliers to lower their costs as well.

"We went in and we squeezed on that excessive margin," Beverlin said.

"Once you get that margin to an acceptable level, we collectively have to make money," he said. "Now how do you drive out costs?"

Complications

Planemakers' abilities to improve the supply chain has been complicated by a number of issues.

A stronger economy and new products have reawakened the aircraft market. Orders and deliveries are up.

Shipments of general aviation aircraft were up 38 percent in the second quarter of 2005 over the same period a year ago, according to figures from the General Aviation Manufacturers Association (GAMA.)

Cessna's order backlog, for example, is a healthy $6.4 billion. As orders increase, so does the demand for parts.

"The supply base is of limited size," Beverlin said. He said most planemakers do business with the same suppliers.

"There is a whole lot of overlap there," he said.

Cessna felt the impact of the economic downturn after the Sept. 11 attacks later than other planemakers and rebounded sooner, Beverlin said.

"The supply base has been chasing us ever since," he said.

Suppliers were slower to ramp up than planemakers, Beverlin said. They wanted to make sure that the economy's improvement was not temporary.

Now, suppliers are hiring and competing for a limited pool of skilled workers, Beverlin said.

In addition, demand for raw materials, such as titanium and aircraft-grade aluminum, is high. That increases the cost and extends the time it takes to receive them.

"Supply is not meeting the demand of the industry," said David Steiner, manager of operations at Plastic Fabricating, a Cessna supplier. "We have to wait for material. As we wait, our lead time goes out."

GAMA spokesman Jens Hennig said members of the Washington trade group have talked about the situation for several months.

With orders and deliveries on the rise, "we're working our way through getting everybody back to have a balanced supply chain," Hennig said.

A hands-on approach

Cessna is working with suppliers to help them bolster their operations, reduce delivery times and streamline operations to meet the growing demand for airplanes.

Cessna can't continue to improve productivity without bringing suppliers along, Beverlin said.

"What was good enough in 2001, isn't good enough now," he said.

For example, some suppliers now deliver parts directly to the shop floor next to the operators who use them. Cessna wants to increase that practice.

It also requires suppliers to keep a certain number of parts on Cessna's shelves, never letting that number go below or above a set amount.

"Once they draw it down, I've got to be ready to ship to fill the bin," said Ron Ross, president of Globe Engineering, which makes metal components for Cessna.

With the forecasts Cessna provides in its long-term agreements, "that's not a problem," Ross said.

Two years ago, Cessna started meeting with suppliers in an effort called a "supplier value improvement process," Beverlin said.

Together, they analyze the process to find any "pinch points" that could delay deliveries, he said, and work to find solutions.

Cessna has helped suppliers find ways to become more efficient, provided tooling, acted as an advocate to get raw materials and provided materials to train workers.

At times, Cessna has assisted Plastic Fabricating with getting needed materials, Steiner said.

"They'll call the vendors, or they'll find an alternate material," he said.

Sometimes, Cessna engineers have redesigned a part to use another material that's easier to get.

In the last 60 days, Cessna has focused on working with suppliers on delivery schedules, Beverlin said. During that time, it identified 35 suppliers with the most parts shortages and has met with 27 of them so far.

As they looked at the causes of shortages, Cessna officials discovered that their own processes were responsible formost of them, Beverlin said.

"It has been enlightening for us," he said. "The good news for me: We can fix it."

There is more communication and follow-up now between Cessna and its suppliers, said Excel Manufacturing vice president and general manager Marwan Hammouri. He said Cessna is more open-minded about making changes.

Excel, which makes precision parts for Cessna, was chosen to help give the planemaker input on improving its processes.

Cessna's "supply management is definitely a lot better than what it used to be," Hammouri said.

Beverlin is pleased with the results of the effort to improve the company's supply management.

"I think the journey that we've been on since 1997 reflects a continual improvement to our supply manufacturing process and a maturing of that process," he said.

The results suggest that the company is doing the right thing, he said. "And the supply base is performing better."

But there's always room for improvement.

"And that's what we'll do," Beverlin said.

Innovation: Technology breeds improved communication

News source: Purchasing.com

Tools encourage early supplier involvement
By David Hannon
Purchasing September 1, 2005

In addition to the innovative sourcing and supply chain management strategies in place at Rockwell Collins, the material and supply organization has effectively leveraged technology and software to streamline supply, improve supplier quality and relationships, and drive spend to preferred suppliers.

Perhaps the technology with the greatest impact is the supplier portal. According to Phil Krotz, director of Lean Supply, the material and supply organization started work on the portal in 2003 by first gathering input from its Supplier Alliance Advisory Council, a group of 17 top suppliers in various commodities. Krotz says members of the council provided feedback on everything from the "look and feel" of the portal to the "kind of information they'd like to see and the frequency of that information."

With an idea of the functionality their suppliers wanted, material and supply looked at the tools available on the software market but didn't find anything that suited its needs at the time. So the team decided to develop the portal tools internally, using its SAP system as the backbone. "We decided to use an off-the-shelf solution for the portal framework, which does the log-in, identification and authentication functions," says Sam Slingluff, a commodity specialist closely involved in developing the portal, adding that the individual modules were developed in-house.

The first functionality targeted for the portal was the efficient exchange of technical documents and information between suppliers and buyers. An E-Drawings tool allows suppliers to log-on to the portal and access large technical drawings online instead of via e-mail or a CD, which significantly streamlines the RFx stage.

To further streamline the RFx functionality, an e-RFQ application was developed that searches the ERP system for contracts that are coming up for bid six weeks out and sends alerts to suppliers to bid on them through the portal. Once a predetermined number of competitive bids are received, the system evaluates the bids and can automatically send a purchase order to the winning bidder or let a buyer evaluate the bids before making an award.

The Supplier Scorecard module on the portal provides data on each supplier's quality and delivery performance. Suppliers are sent an e-mail every month with the data including current scores as well as six-month averages to help identify longer-term trends. "They see their total score up front and if they want to, they can drill down into individual lots that there was a problem with," explains Krotz.

The Order Status application lets the highest-volume suppliers see all their open orders and confirm delivery dates, push-out dates, split orders and change quantities. That data is delivered directly from the SAP ERP system in near real-time. "All the information the supplier inputs or changes goes directly into our SAP system so our buyers get the information real-time," explains Slingluff.

A forecast tool lets suppliers see Rockwell's future demand expectations for the items they supply and plan appropriately based on the forecast.

The number of suppliers on the portal has grown as the functionality of the portal has advanced. The first year, there were 280 or so suppliers on the portal—today there are more than 1,300 suppliers, most with multiple users. Krotz notes that the primary focus of the portal to date has been on the direct commodity suppliers, but says, "We're looking to include indirect suppliers, although it's more difficult to include indirect goods and services in a portal environment."

To determine the future direction and functionality of the portal, suppliers have been invited to develop a "value stream map"—a map of where the portal is now, where it should be in the future and the steps in between. "With that, we've laid the groundwork for the next three years' development and set functionality goals," Krotz says.

Product development
Internally, Rockwell has also developed an innovative tool that helps bridge the gap between buyers and designers in selecting parts and suppliers. Historically, Rockwell had used an internally developed system called the Global Component Information Systems (GCIS) as a central repository for part numbers and suppliers. But as the emphasis on Lean processes grew and the goal was to push more of its spend to preferred parts suppliers, a more advanced tool was developed to help designers select parts from preferred suppliers.

The Impact tool is based on i2 Technology's framework with some customized Web utilities to let users gain quicker access to part information. The key to the system is that "preferred" suppliers are not designated as such based solely on price—the material and supply organization consults with commodity teams in assigning an overall score to each supplier based on a combination of variables.

"A designer can input the attributes of a certain part and there may be 20 parts in our system that fit that description," says Scott Wagner, director of application engineering. "But the Impact tool lists them based on our scores to show designers which parts and suppliers we prefer based on those business rules."

The result has been positive—when given a choice, designers do select the preferred suppliers based on performance as well as cost, especially when designing new products. (Wagner says it is more difficult to drive parts to preferred suppliers for existing designs).

But perhaps more important, the Impact tool has improved the relationship between engineering and supply—something any CEO or CFO would be happy about.

"We conducted a survey with engineering after the tool had been out about a year asking if they liked the sorting of results to see what parts were preferred," Wagner says. "The results showed 65% of engineers polled viewed it favorably. And 45% said the tool reduced their reliance on application engineers when selecting parts. The need for application designers is not going away, but the role of that position is changing to focus on more strategic issues."

Beyond the basic component selection capabilities, the Impact tool has been integrated with the ERP system which facilitates a "BOM healthiness check." The system can evaluate a bill of materials for the percentage of preferred vs. nonpreferred suppliers on the BOM or review for component obsolescence. Rockwell releases about 600 printed circuit-board designs a year. To establish a baseline when the Impact tool first went live, Wagner put 45 of those designs through the tool. "We found about 74% preferred parts being used and 24% nonpreferred," he says. "We did it a year later and saw a 5% improvement in preferred parts."