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This is the handout slides from Manchester Business School's presentation at the GBCC in Seattle. The team was made up of myself, Marc, Mili and Richard and was based on the supply chain management issues that Boeing were facing at the time.
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Build-to-HomeGrounded Boarding Take offMaintenance
PESTLE
• Political• Economics• Social• Technologi
cal• Legal• Environme
ntal
SWOT
• Strengths• Weakness
es• Opportunit
ies• Threats
Analysis
Problem Solution Implementation Finances
Analysis
China – WTO & AirbusGlobal Recession
Technological Strategic WindowSuppliers Developing Core
CompetenciesLegal Issue – Pratt & Whitney
Oil PricesEnvironmental Regulation and
ReformProblem Solution Implementation Finances
Current Supply ChainDevelopment of 787
Reliant onOUTSOURCING
PROBLEMSDelays and penaltiesThreat of IP theftTwo-tier outsourcingResponsibility vs. Accountability
- lack of control
Parts
Boeing:
35%Japan: 35%
Italy: 26%
Problem Solution Implementation Finances
Grounded Boarding Take OffMaintenance
Solution
Supply Chain Management
High
Low
HighLow
Complexity of Supply Market
Imp
act
on
B
usi
ness Kraljic MatrixNon-critical
Many suppliersLow impact on
business BUT still may cause delays
StrategicFew Suppliers
High impact on business
Good relationship is key
Example: Food Service Equipment (Diethelm
Keller Aviation)
Example: Wingbox (Alenia)
Problem Solution Implementation Finances
Customer Relationship Management
“Safe Pair of Hands”
Soft ApproachFoster trust through transparency of operations
and soft-sell techniquesR Cheap, quick and easy to do
Q Repeated delays may make it difficult to believe
BUT WE RECOMMEND: Hard Approach Make a guarantee to deliver that is favourable to
the clientR Significant improvement in customer relations
Q High RiskProblem Solution Implementa
tion Finances
Leveraging the Experience
Lessons learned
• To reduce dependency on individual suppliers by:• Using multi-sourcing• Bringing them closer to us• Effectively monitor and manage suppliers• Build on supplier knowledge• Find a way to increase job security
Build-to-print and Build-to-performanceTAKE THE BEST OF BOTH WORLDS
Problem Solution Implementation Finances
Grounded Boarding Take OffMaintenance
Implementation
LT Implementation Plan
Begin planning Sky Valley
Supplier management programme
2-part identification of suppliers
Non- Critical
vs.Strategic
Problem Solution Implementation Finances
LT Implementation Plan
Begin planning Sky Valley
Supplier management programme
2-part identification of suppliers
Methods used to grow Sky Valley
Develop Core Competencies
Non- Critical
vs.Strategic -Bargaining
Power &Cost Savings-Incentives to
relocate-Affiliate branch
-Acquisition
Problem Solution Implementation Finances
LT Implementation Plan
Begin planning Sky Valley
Supplier management programme
2 part identification of suppliers
Methods used to grow Sky Valley
Develop Core CompetenciesTake
Advantage of Benefits
Lower Costs- Less
inventory- Transportati
on- Transaction
Synergies-
Procurement Economies of
Scale-
Communication
- Wastage
Labour- Pool of workers
- Commitment to region: job
security
Grounded Boarding Take OffMaintenance
Financials
FinancialsGrowth:• $32bn by 2013
commercial aviation• Following this – 3.2%pa
Incremental Cost of Sky Valley:• Incentives to re-locate :
~$2bn in in first 10 years until critical mass is reached• Higher salaries: more
workers in the USA – based on global wage differences and COGS growth rate
Problem Solution Implementation Finances
Benefits• Reduced penalties:
>$1bn in first 5 years • Transport cost savings:
increase as Sky Valley grows: 50% “near-sourced” by 2015• Labour Dispute
Savings: $150m annually
Qualitative• Efficiency• Communication• Synergies
Financials
Problem Solution Implementation Finances
$1bn NPV
Discount rate of 11.5%
Alternatives
Alternatives
Strategy
Do Nothing
Stop Outsourcing
Sky Valley
Feasible
R
T
R
Suitable
T
R
R
Acceptable
T
R
R
Conclusion
Conclusion