Supply chain beats the clock
Pratt & Whitney Canada turns to suppliers for help with building a new jet engine. Now, P&WC can make them for such customers as Cessna and Eclipse faster than anyone in the business.
By Susan Avery -- Purchasing, 4/6/2006
To capitalize on an emerging market that will be booming in a few years, Pratt & Whitney Canada needs to deliver a jet engine every four hours—a feat that would be impossible without the input of its supply base.
By now, nearly everyone has heard of the air taxi—and the strong demand for the light and very light jet planes being built by aircraft companies Cessna, Eclipse and Embraer. Probably fewer are aware of the impact that demand is having on the supply chain.
Nowhere is this impact more evident than at Pratt & Whitney Canada Corp.'s (P&WC) engine assembly facility in Longueuil, Quebec. P&WC, a United Technologies Corp. company, builds the PW600 family of jet engines that powers the Cessna Citation Mustang, Eclipse 500 and Embraer Phenom 100.
To meet demand of these customers, P&WC had to change the way it thinks about building jet engines.
The numbers are big. Eclipse already has orders for more than 2,360 jets; it will begin filling them upon FAA certification expected later this quarter. Eventually, Eclipse plans to build 1,000 planes annually at its facility in Albuquerque, N.M. These figures are for just one customer. Cessna and Embraer have sales forecasts equally as optimistic.
These numbers come together in recent research by Forecast International, Newtown, Conn., that shows the market for the engines built by companies like PW&C generating $165.9 billion in revenue through 2014. The biggest benefactor of this new class of aircraft, according to the researchers is P&WC.
Watch a live video of the PW engine.
But P&WC is used to making small quantities of engines for a number of different customers. In a typical year it makes about 2,000 engines for helicopters, turboprop planes and other aircraft as well as engines for industrial applications.
Filling the customers' orders means P&WC has to deliver an engine every four hours. It usually takes P&WC eight days to assemble, test, package and ship a new engine. Getting this leadtime down this low is unheard of in the industry.
Until now.
"The sales volume is important because it was the catalyst for us to change the way we build and assemble the engine—and how we design the supply chain," says Danny DiPerna, vice president of operations at P&WC. "It is a profound concept that started us thinking in different ways."
Equally important in the aviation business are customers' cost, technology and engine performance targets. So there wasn't any question that P&WC could do this alone. Design and the supply chain had to be totally interconnected. For the PW600 program, DiPerna and his team saw an opportunity to build the engine using a Lego-block type concept where each of the engine's components are fitted together to form the finished product.
First, the supply chain
P&WC set its sourcing strategy for the new engine in 2002, two years before it launched the product. Katherine O'Flaherty, manager of PW600 operations at P&WC, says that it's the earliest they've selected suppliers for one of its programs. O'Flaherty is responsible for the supply chain (both internal and external) for the new engine.
What it means to buyers
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"We had to reduce this number to 20 or 25 so that design and sourcing can sit at a table with suppliers," says Benoit Beaudoin, vice president, supply management, P&WC. To get to this figure, the team selected integrators, consolidators and distributors rather than component suppliers. They based their selection decisions on suppliers' core capacity and capability for building major engine components.
Taking more responsibility for providing pre-tested kits or modules (Lego blocks) to P&WC that it can assemble, test, package and ship to its customers, the suppliers source smaller components (in value and technology content) from tier-two suppliers. P&WC, for example, sources its exhaust cone module and fuel shut-off mechanism from a turbine exhaust case (TEC) manufacturer that nowpurchases components from tier-two suppliers. This is new for the TEC supplier, which typically provides TEC components alone. It's gone from being a component supplier to a tier one-type supplier.
In addition to core capacity and capability criteria, P&WC also asks suppliers to be in a position to replenish its production line in a four-hour period. Its tier-one suppliers are onsite at the facility to ensure the line is never starved for components. If there's a quality issue, the suppliers need to be able to resolve it immediately using root cause and corrective action.
Suppliers selected became part of the company's integrated product design process. That way, "they can influence component design to ensure we are designing for produceability as well," says Beaudoin. "Ultimately, they all have to come together the right way every time."
Integrated product design (IPD) is a phrase that UTC companies use to describe concurrent engineering, meaning that while it was developing its new engine, P&WC was also designing its assembly line—and manufacturing lines at supplier facilities.
Some tough customers P&WC has three customers for its PW600 engine. The first was Cessna Aircraft Co. which selected the PW615 for its Citation Mustang in 2003. Shortly thereafter P&WC announced that Eclipse Aviation chose its PW610 engine for its Eclipse 500. In 2005, Embraer decided on the PW617 for its Phenom 100. “While each aircraft maker is targeting different parts of the market, they are all looking for a way to change the value proposition to their customers,” says Andrew Tanner, vice president of business aviation at P&WC. Essentially, they are bringing a product to market that does everything more expensive planes do for a fraction of the selling price, he explains. The aircraft makers have rigorous supplier selection criteria—quality, reliability, performance and cost. At Eclipse, P&WC has been involved in product development from the beginning, closely collaborating on design, says Bill Bonder, vice president of supply chain management at Eclipse Aviation in Albuquerque, N.M. “Design of the plane and the engine are tightly managed by both Pratt and Eclipse,” he says, explaining that the Eclipse 500 very light jet is very different from more traditional aircraft programs. “Our program has really forced Pratt to think outside the box and they’ve responded terrifically. It’s amazing what they are doing.” The relationship is a good example of a strong purchasing/supplier partnership, says Bonder. “We are in constant communication. That’s a critical success factor in managing all our suppliers, and it’s definitely evident that it’s making a difference with Pratt.”
Building the engine
Because of the volumes involved and the move to Lego-block type construction, P&WC figured its new engine might be a good candidate for an assembly line or Model T type production system similar to those used in the auto industry. Typically, the company uses individual workstations to build its engines. Before making the move, the team benchmarked production at Toyota and at sister company Carrier, where they attended a 3P (production preparation process) event.
A 3P event simulates assembly of a new product through the design and development cycle. Cross-functional teams of designers, manufacturing and process engineers, suppliers and operations experts apply lean manufacturing principles and non-negotiable productivity constraints to cardboard and other product and process mock-ups early in the design.
"Really, a 3P is a super kaizen event that brings together all the players to build a supply chain that will produce the product," says DiPerna. "After attending the 3P event at Carrier, we realized that it's the only way that we can communicate our idea effectively and accomplish what we set out to do."
Since then, P&WC has held about 20 3P events at its facility. Through the events, the team developing the PW600 started to think differently about how to build the engine and supply chain. "We have to drive a pulse or drum beat that triggers the supply chain to deliver to a takt time (customer demand rate) of every four hours," says DiPerna.
At one event, the team simulated production with cardboard boxes representing components used to build the engine. Their goal was to reduce the time it takes to build it, from eight days to eight hours. "For that steady pulse or drum beat, we made the decision to use a moving production line, like in the auto industry," says DiPerna. "It is not the norm and I believe we are among the first in our industry to assemble an engine this way."
As a result, P&WC is using carts to move the engines along a 60-ft. assembly line with precision timing from beginning to end. And, it has in fact demonstrated that it's capable of building an engine in 3.9 hours. "We can do it," says DiPerna."The beauty of the moving line is that it's a real-life threat to every one of our partners, including our internal partners such as manufacturing. Our partners must be ready with parts, have strategic inventory on hand and ensure quality is impeccable so that there's never a delay on the line."
To help suppliers who are unable to deliver modules to the assembly line in process, P&WC uses a forward stocking location provided by a 3PL located nearby.
At a more recent 3P event, teams focused on identifying and eliminating roadblocks for the supply chain. Individuals from supply management at P&WC led supply chain readiness reviews, providing a detailed risk assessment of supplier readiness; configuration reviews that ensure suppliers and P&WC engineering are aligned with design requirements and material flow readiness reviews, clarifying logistics guidelines for the program. Suppliers contributed by communicating their challenges and creating action plans to eliminate roadblocks.
Supplier input
Suppliers have also influenced product design and assembly through integrated product team (IPT) sessions, points out O'Flaherty.
IPTs, which design specific engine components, consist of a manufacturing analyst, project engineer, buyer, designer and supplier representatives. An IPT for the bypass duct on the PW610 created its initial drawings for which the supplier produced some samples. Early on, the bypass duct was having quality issues—performance metrics showed more than 40 deviations. The IPT made changes to the requirements, and the supplier built additional iterations of the component. A year later, performance metrics showed zero deviation.
Today, P&WC is close to its goal of building an engine from start of assembly through delivering the finished product in less than eight hours, an accomplishment that would not be possible without the close cooperation of its supply base.
"Our challenge is for our suppliers to bring it all home or we will not be able to do it," says DiPerna.
| Suppliers participate in 3P events
Pratt & Whitney Canada holds 3P (production preparation process) events to determine production system guidelines for its engine programs. Engineering uses the results in product designs. For the PW600, these events include critical supplier input and two-way communication on production readiness. A typical 3P is a full-week event that groups individuals from different functions of the company. Events where suppliers are involved include PW&C representatives from operations, quality and engineering. Each event has a specific scope and objectives. Participants are grouped in teams focusing on specific topics reviewed with the suppliers. Each team is accountable for a set of goals and deliverables for the end of the week. |
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