Cessna wins 2003 Medal of Excellence
Doug Smock, Editor-in-Chief -- Purchasing, 9/4/2003 2:00:00 AM
Cessna Aircraft wins the 2003 PURCHASING magazine Medal of Professional Excellence for its transformation from a transaction purchasing organization to an integrated full supply chain process and for the results they achieved:
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86% improvement in quality,
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28% improvement in materials' availability,
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11% improvement in production inventory turns, and
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62% reduction in production suppliers, with increased emphasis on companies identified as "growth" partners.
What impressed me in a visit I made to Cessna this year was the integration of a strategic supply chain process into Cessna's overall business plan. Michael R. Katzorke, chief architect of the strategy, created a storyboard that explained every individual in the company's role in the supply chain strategy. Moreover, he created a transformation center in which to train managers and engineers in the supply chain strategy.
Issues included in the supply chain process at Cessna include sustaining production (that is, planning, order launch and expediting of existing production), strategic sourcing (supplier selection, negotiation and improvement), new product development (developing new aircraft and incorporating suppliers' latest technology and products) and materials management.
Those are the areas that need to be included in a modern view of supply chain. If your company still operates purchasing as a silo, you need to read this article, which starts on page 25, and start making changes. Other ideas on supply chain management can be found in the article on page 46.
There are other interesting aspects to the Cessna approach. First, supply chain financial goals are aligned with corporate financial goals. Finance and buyers now work together ensuring that year-over-year performance targets are agreed upon and linked to the financial systems of the parent company, Textron. Cessna doesn't order price reductions per se; it requires cost reduction linked to value engineering, Six Sigma, and global sourcing.
Second, Cessna works in concert with an enterprise-wide model of commodity leveraging instituted by Textron two years ago. For example, the Textron lead on indirect materials is Steve Harding at Bell Helicopter who tries to find one or two suppliers who can meet all of Textron's requirements for chemicals, cylinder gases, safety supplies, office supplies, and a wide variety of other products. A report on Harding's work will be available at www.purchasing.com by the end of the month.
Congratulations to the Cessna team and good luck on your efforts to think in terms of supply chain management.
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