Success Stories
From the Aerospace Industry:
BLMC has worked with Aerospace companies in the areas of manufacturing and supply chain processes, as well as Customer Service strategies and processes such as the spare parts approach. We have had substantial success in reducing the raw material inventory as well as the amount of time that procurement has to spend on managing thousands of part numbers. We have worked with clients in simplifying their manufacturing processes using lean manufacturing techniques to reduce cycle time and increasing capacity. We have helped Aerospace companies develop service strategies that positively impact the customer while improving their own profitability. In the environment of thousands of part numbers and demand uncertainty, we have simplified business processes to generate substantial improvements in profitability and revenue for our clients.

Read some of our Aerospace success stories:

Success Stories
Story #1 Synopsis:
Aircraft Manufacturer... Simplifying the Raw Material Procurement Process and Reducing Inventory

Problem:
The raw material inventory was increasing as volume went up and the excess and obsolete write-offs were approaching $19M per year. The purchasing organization was spending 36 hours per week, on average, expediting orders and placing new orders. The uncertainty of the aircraft forecast out two years was causing premature and high material positions on too many part numbers. There were over 1700 vendors and the bottom 20% of them were causing serious quality problems with the production schedule.

What We Did:

• Working with the client, we surveyed how each of the 200 buyers and purchasing agents spent their time.
• We looked at the buying rules for the A,B,C, and D level items and revised them to reflect a longer period between purchases for C&D items. We also looked at the shortages and what caused them…forecast, quality, late purchase, etc.
• We analyzed the informal inventory and the uncertainty areas of the forecast, vendor shipment performance and quality performance…then we set up a buffered inventory strategy that allowed a pull process for re-ordering items…this was computerized and reflected a monthly refresh based on the uncertainty results from the forecast and the vendor performance.
• We developed an aggressive vendor managed inventory strategy and reduced the number of vendors by 66%...we also put over 60% of the part numbers under this strategy.
• We pursued eliminating the bottom 20% of vendors and significantly improving incoming quality.

Impact:

• The raw material position was reduced from $90M to $45M and ultimately $25M on a $2.5B revenue stream.
• The excess and obsolete inventory write-off substantially decreased.
• Vendor Managed Inventories addressed most of the shortage issues that were driven by forecast and vendor schedule.
• The reduced vendor population increased the purchasing power by 5-7% reflected in lower prices.
• The procurement organization gained back 13 hours per week on average to concentrate on strategic buying decisions, rather than the transaction driven mode they were in.
• Quality of incoming parts were increased by over 10%, and the inspection process cycle time was reduced by over 1 week.

Success Stories
Story #2 Synopsis:
Aircraft Manufacturer... Reducing the Manufacturing Cycle-Time of an Aircraft and Increasing Capacity by Over $1B Per Year

Problem:
This client was taking over 330 days to build an aircraft. They were constrained by their facilities and needed to spend a lot of capital in order to provide for capacity in a growing market. It was losing market share as a result…

What We Did:

• We did a detailed RBWA (Routing by Walking Around) analysis on the long lead time parts, and came to the conclusion that over 90% of the time was in queue and storage or inspection.
• Using Lean Manufacturing techniques, we advised the client on how to move the quality inspection of each part being built in the components shop from a centralized function to one that was adjacent to where the part was being built… shortening the feedback to the operator on the quality of his work, and simplifying the inspector’s job to just that area of manufacturing.
• We helped simplify the process around setting up machinery and tools for production, and thought through how to do more work at a work station on the existing tools while reducing the number moves of the part through the process.
• The client spent a lot of money on rapid setup and very fast machining capability. They had also spent time and money on the final assembly of the aircraft to reduce the number of positions in the line…they were doing more work at any position than before.
• We installed pull systems from each plant so that inventory got to the right place within a week of its need and not before.
• We established buffered inventory positions of raw material and set up buffering strategies between the plants and key machining centers.
• We worked with their planning people to set up a new ERP system and the rules of engagement for that system.

Impact:

• The cycle time for one aircraft went from 330 days to around 100 days.
• The Annual production was increased by over $1 Billion in revenue without any significant hiring.
• The company was able to focus on a new aircraft design and the new supply chain that was attached to that design in a more rational manner, and at a lower cost.

Success Stories
Story #3 Synopsis:
Aerospace Parts Manufacturer... Reducing the Manufacturing Cycle-Time and Substantially Increasing Profit

Problem:
The client was spending over 40 weeks to procure components and 63 weeks to manufacture their product in 14 factories worldwide, a key element of any aircraft today. Their inventory was out of control; their labor costs were rising and their customer base was planning on a 20% increase in output. They were out of gas and were being blamed for not being able to support this growth.

What We Did:

• We ran a detailed analysis of the manufacturing process (RBWA) and the procurement process. Over 90% of their cycle time in manufacturing was in batch and queue…mostly movement between plants.
• We installed lean manufacturing in 6 of their large plants, substantially lowering the lead time by 80%, and reducing the WIP inventory at the same time.
• We suggested the consolidation of some factory work into a smaller number of plants, resulting in the closing of some facilities.
• We put programs in place to reduce the vendor base by 50% and to lower the lead time for procurement to 4 weeks or less…gaining purchasing power at the same time.
• We changed the buying rules and periods to lower the number of transactions in procurement and moved over 50% of their raw material to vendor managed inventory on a buffered pull decision strategy.
• We changed the quality strategy from one of quality control and inspectors to one of more inline quality inspection as the product was being built…shortening the feedback time to the operators on the quality of their work. We substantially lessened the time spent in inspection…incoming and at the end of the line.

Impact:

• Cycle time for manufacturing began to approach 16 weeks and moving to the goal of 6 weeks.
• Capacity increased over 40% without increasing staff with nominal capital expense due to new technology or more efficient manufacturing processes.
• Average lead time for procurement moved below 4 weeks during the engagement.
• WIP inventory was reduced by hundreds of millions of dollars…over 60%.
• Raw Material inventory was reduced by over 50% and purchasing power was restored on the order of 7% lower costs for material. Over 50% of the inventory went under a vendor managed strategy and was pull based…simplifying the procurement transaction and work.
• Profitability of this company surged, making it the most profitable aerospace company in the industry.

Success Stories
Story #4 Synopsis:
Aerospace parts Manufacturer... Increasing the Customer Service Profitability and Gaining Market Share

Problem:
The client, an aerospace component manufacturer, made most of its profit from its spare parts and service business and was under pressure from the airlines to help subsidize their spare parts inventory positions. It's product repair depots were taking over 12 weeks to repair a single product and their backlog was increasing. It discovered that over a third of its customer base in the non-airline repair depots was being acquired by another aerospace giant, and they were in a position of losing the depot repair business altogether.

What We Did:

• We performed an RBWA on several repair depots and determined that the unavailability of key spare parts was causing the lead time to move out substantially…even though these were predictable parts.
• We set up a lean manufacturing process through the depots and reduced the cycle time to less than 1 week; increased the buffered inventory position of key parts in each depot with expedited delivery of those parts from the parent.
• We set up a strategy for the client to become the technical director of repairing these parts in several unionized airlines worldwide… with ownership of the spare parts help by this aerospace company, but getting a service fee for the technical direction and spare parts position.
• We strengthened the IP position of the repair process, so that anyone who wasn’t trained or supported by the client would void the warranty on the product.
• We helped think through a buffered spare parts inventory strategy for the company and reduced the shortage lists to both the repair depots and the airlines.

Impact:

• The repair depots became the lowest cost, most predictable option for third party repair houses and their business substantially increased.
• The Technical Direction strategy spread to most of the unionized and non-unionized airlines and secured predictable demand for the company.
• The other aerospace giant decided not to enter this repair marketplace, and developed some joint ventures with this company over time.
• Profitability surged….inventory decreased…customer satisfaction put them as one of the most responsive component customer driven companies in the industry.