Facing a $9 billion backlog, Cessna Aircraft Co. is turning to its supply chain for help filling the orders.

Demand for Cessna's business jets is strong. In 2006, the company delivered more than 1,200 aircraft, and reported revenues of about $4.2 billion. That's up from $3.5 billion in 2005.

The company is growing; it employs more than 13,000 people, up from 8,000 just four years ago. But, in an effort to be more efficient, and competitive around the world, it's also changing its business model and expanding its Lean initiatives. Cessna, which historically was vertically integrated, is purchasing more parts and larger assemblies today than in the past.

When the supply chain management operation received Purchasing's Medal of Professional Excellence in 2003, buyers were sourcing 48,000 part numbers. Today, this figure is more than 62,000, with many part numbers representing large assemblies such as an entire tail section of an airplane. The company buys these parts from 791 suppliers, and has long-term agreements with 280 of them, representing 95% of its $1.8 billion annual spend on direct materials.

While Cessna's supply base performs very well, many of the company's suppliers are not accustomed to providing some of the parts or larger assemblies that the aircraft maker requires, says Brent Edmisten, director of strategic sourcing and integrated supply chain (ISC) strategies at Cessna in Wichita, Kan. "So we are approaching suppliers we know are able, and we're going to their facilities to help them develop that capability." Cessna Aircraft Co. is a Textron Inc. company.

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The ISC operation (which is the melding together of the supply chain and operations functions) has developed a process for selecting suppliers for development, based on business complexity, risk and opportunity.

Many Cessna suppliers do not fit the model for supplier development. This does not mean that ISC takes them off the radar screen. For these suppliers, they developed a supplier value improvement process (SVIP). Through SVIP, Cessna and its suppliers collaborate to solve quality, delivery, reliability or cost issues. In essence, these suppliers are performing well; ISC works with them to take them to the next level.

Of those suppliers critical to Cessna's ISC strategy—suppliers with high business complexity, high risk, and high opportunity, the company selects a group of 4-6 suppliers for its development process.

For Cessna, supplier development is all about knowledge transfer. That is, a commodity team and others spend time at the supplier's facility to train its personnel on use of such tools as Lean, Six Sigma and purchasing best practices. With what it's learned, the supplier, in turn, then works to improve its capabilities on its own.

Edmisten:  “It was a huge improvement for the supplier’s overall business, beyond what it does for Cessna.”

Kirkendoll: “A key success factor in our supplier development process is the relationship between Cessna and the supplier.”

One such supplier is PZL Swidnik, a provider of welded seat assemblies and engine mounts based in Poland. Before Cessna selected the supplier, it had been doing this work internally.

Prior to working with the aircraft maker, PZL Swidnik struggled for years with on-time delivery and quality performance. Cessna's development efforts "had a huge impact on its ability to take on more work, and to handle the work," says Kirkendoll, adding that ISC helped the supplier with its processes for building seat frames. Based on success with the parts, the supplier applied what it learned to its processes for engine mounts.

"As a company in the former Eastern bloc, PZL Swidnik was not used to producing for performance," she says. "We spent time on culture, the layout of their facility, and developing their people. It was the first time they looked at building parts for flow and optimizing for productivity and profit."

One area that Cessna and PZL Swidnik worked to improve: scheduling. In fact, Cessna learned that some issues the supplier was having were due to the aircraft company sending a schedule for different amounts of parts each month. Now, it provides a consistent order schedule, a simple improvement achieved by replacing discrete orders with a level load process.

Cessna also worked with the supplier on ways to reduce inventory. "We got them together with one of our other suppliers, a distributor that helped manage their inventory and is now delivering raw material cut to size when they need it," says Edmisten. "It was a huge improvement for their overall business, beyond what they do for Cessna."

In fact, Cessna's efforts have led to improvements in: on-time delivery, from 42% to 97%; quality, from 37,732 ppm (parts per million) to 1,257 ppm and cost reductions of $1.5 million.

For stories on developing a Lean supply base at Rockwell Collins and Hamilton Sundstrand, go to: www.purchasing.com/LeanCessna.