Hamilton Sundstrand applies lean, quality techniques to supply chain
By Purchasing Staff -- Purchasing, 6/14/2007 1:13:00 PM
In the extremely competitive—and rapidly growing—aircraft manufacturing business, Boeing, Airbus, Embraer, Cessna and other OEMs are looking to their suppliers to do more. That is, they expect their suppliers to perform more assembly, kitting and systems integration work in their facilities.
These first-tier suppliers have limited resources. As such, they’ve examined their internal processes and determined those that are core to the business. Those that are not core they’re outsourcing to their suppliers. While these second-tier suppliers are often capable of doing the work, they may not have the capacity to take on the increased volume.
Such is the case with Hamilton Sundstrand, a United Technologies Corp., a company that designs and manufactures aerospace systems for commercial, regional, corporate and military aircraft in Windsor Conn., and some of its suppliers. UTC’s supply management operation received Purchasing’s Medal of Professional Excellence in 2006.
Hamilton Sundstrand is providing nine systems to Boeing’s new Dreamliner 787. These include an auxiliary power unit, environmental control system, electric power generation and start system, remote power distribution system and others.
Like many first-tier suppliers to the aircraft OEMs, Hamilton Sundstrand was more vertically integrated 20 or 30 years ago than it is today. It did much of its own manufacturing. Over the years, the company has made some hard decisions on which processes are core to its business and has shut some facilities. One was a machine shop in Colorado that produced systems for fuel pumps and components for auxiliary power units used by Boeing and other aircraft OEMs. The company was doing business with a supplier that its supply management operation knew could do the work for it—Modern Industries in Phoenix, Ariz.
“Modern had established itself as a very good supplier to Hamilton,” says Jay Lapointe, vice president of supply management. “Its quality and delivery were virtually perfect, and it was priced right for the products it manufactures relative to the competition. The supplier was positioned very well to take on new business.”
So the supply management team negotiated a new agreement with the supplier and began to transition the work from the Hamilton Sundstrand facility in Colorado to the Modern Industries site in Arizona.
From the start, there were challenges. “When you’ve been manufacturing parts for 20 years and make the decision to transition the work to a supplier it’s not as easy as sending down the tools and blueprints and saying have at it,” says Lapointe. “You really have to transition the knowledge that goes with manufacturing the parts.”
Hamilton Sundstrand’s supply management team soon realized that while the supplier was capable of doing the work, its internal manufacturing process would not be able to handle the increased volume. “If it didn’t significantly revamp its process, it would not be able to absorb the new business,” says Lapointe.
At that point, Hamilton Sundstrand deployed a team of lean experts, that includes representatives of supply management, to Modern to share its thinking on lean manufacturing. Lean initiatives focus on shortening leadtime, reducing assets and improving flexibility and customer responsiveness by eliminating waste. The team also shared the company’s thinking on quality and its ACE (achieving competitive excellence) operating system.
Hamilton Sundstrand’s lean team studied Modern’s manufacturing process--that is, the way parts move through the factory and transition from one building to another. The team was looking for a way to introduce more flow to the process which adds manufacturing capacity.
“To their credit, management at Modern was very open minded about lean,” says Lapointe. “They saw the benefits that can be achieved from applying lean tools and ingraining lean into the company’s culture. They saw lean as strategic to their vision to be in the business of supporting tier-one suppliers to the aircraft OEMs. Also, they were restructuring and setting up a new facility to take on this work.”
The team was on site at Modern and worked closely with the company’s employees for several months. “We laid out plans [manufacturing] cell by cell for the new site,” says Lapointe, “and Modern established its own team of lean experts. While we had our fits and struggles, the transition has gone very well. Both companies are better off because of the engagement.”
Lapointe recalls that the lean team approached Modern’s manufacturing process cell by cell and posted metrics measuring its performance. “Eventually everyone in the facility who isn’t involved the project wants to be included. They see the improvement. You get a competitive spirit that becomes contagious.”
Hamilton Sundstrand soon began to realize such benefits as improvements in ontime delivery and quality performance. “We have a supplier that clearly supports our needs as well as we were when we were doing the manufacturing internally,” says Lapointe. “And, from Modern’s standpoint, their revenues and profits are up. They’re also manufacturing for other customers, which in turn, benefits Hamilton Sundstrand.”
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