Materials management is centered at the plants
By Staff -- Purchasing, 8/10/2000 6:00:00 AM
Part of the restructuring of the purchasing group at Boeing Commercial Airplanes Group (bcag) has been the implementation of a materials management organization. The goal: "To manage in-plant inventory and to improve the flow of parts through the factories to shorten leadtimes and increase inventory turn rates, while reducing overall costs," explains Karen Jones, director of operations and materials management in the Supply Management & Procurement Division.
The majority of this organization's 290 employees are located in Everett and Renton, Wash. They are responsible for developing common processes, practices and procedures for supply chain management located at the company's commercial airplane factories, as well as managing operations, tooling, the Everett and Renton Distribution Centers, package engineering and bar coding.
All this dovetails with the corporate efforts to establish lean manufacturing and execute a comprehensive business re-engineering initiative known as Define and Control Airplane Configuration/ Manufacturing Resource Management (dcac/mrm). That initiative is aimed at lowering the cost and increasing the efficiency of Boeing airplane con-figuration and production processes. That's because the common elements for promoting supplier efficiency are to cut parts-delivery cycle times and parts defects to production. That's why materials management has several initiatives under way:
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Develop best practices by benchmarking other companies' materials management operations.
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Create a Materials Excellence process as a framework for supplier and bcag personnel performance audits.
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Establish cross-functional groups (with purchasing and logistics) to further cut costs of packaging and containerization, material handling and storage, and in-plant delivery.
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Standardize methods for parts ordering, receipt and KanBan delivery to the production line.
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Implement inbound bar coding and link it to existing electronic data interchange systems.
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Expand in-plant inventory reduction efforts.
"All we have to do is to simplify ordering and delivery scheduling techniques, reduce in-plant inventories, and minimize the risk of parts shortages," Jones says. That's why our goal is to have the right parts, at the right place, at the right time, at the right quality and at the right cost." However, implementation of common approaches, tactics, practices and measurements that links production and aftermarket parts at each assembly and refurbishment factory is a somewhat complicated endeavor, she acknowledges.
"Just the first step, the reduction of unnecessary in-plant inventories and the development of new 'provisioning guidelines' that switched the system to smaller but more frequent parts deliveries from suppliers and internal fabrication, took all of 1999 to accomplish," Jones notes. Upshot: Materials management identified $175 million in cost savings and avoidance last year at the two Puget Sound assembly plants.
Last year, the materials leaders in Puget Sound also established the computerized metrics to measure supply chain performance-which is being used to measure the operations of in-plant personnel (manufacturing, purchasing and materials management) and the supply base. "The materials managers are providing the raw intelligence needed by the group's procurement staff to make their decisions on suppliers and costs," Jones explains. Also, the parts-release systems have been changed from semi-annual releases of blanket orders to weekly or monthly releases that are more in tune with production schedules. "Manufacturing has recalibrated its computerized bill of materials systems so parts are ordered for delivery when needed in the assembly schedule," she says. "In turn, materials management has recalibrated packaging parameters and tightened the delivery windows considerably." So, there's a lot less materials in stockrooms or on the floor, packaging waste has been reduced, and "on time" now has a specific definition for suppliers.
A lot of time is spent on the protective packaging of items purchased by and shipped to bcag. "Costs may be reduced through the elimination of repackaging, time savings in handling unitized or palletized shipments, establishment of reusable container programs, decreased weight or cube of trailers, and audits of supplier packaging charges," Jones explains. "Also, damage to parts from transport and handling can be minimized by assuring adequate packaging. That's why materials management and the packaging engineers are establishing standards and prescribing specific packaging for selected parts."
And there's room for value added in materials management. One of the organization's goals is to expand the kitting and sequencing of externally delivered parts.
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