Journal Record: Aerospace execs debate supply chain challenges

• June 08, 2011
  
  

  Aerospace execs debate supply chain challenges

  By Kirby Lee Davis�
  Kirby Lee Davis is the Tulsa Bureau Chief for The Journal Record. Contact him at 918-295-4982
  Posted: 06:20 PM Tuesday, June 7, 2011

  TULSA – Tinker Air Force Base’s Maj. Gen. Bruce Litchfield summarized his supply chain challenges in 12 words – getting the right part at the right time at the right place.

  Cathy Stukel, American Airlines’ managing director of inventory management and distribution, added four more words – at the right cost.

  That marked one major difference between the military and commercial approach to this vexing issue, as discussed in the first panel at Tuesday’s 10th Annual Aerospace Summit and Expo, sponsored by the Oklahoma Aerospace Alliance at the Tulsa Convention Center. It also pointed to another difference – the greater emphasis commercial firms put on analyzing and projecting parts life span and maintenance. But as Stukel said, such databases and probability programs do not make the problem much easier to solve.

  “It really sounds like each airplane should come with a crystal ball,” said Hally Cole, Boeing’s KC-135 FDLM program manager.

  Litchfield acknowledged the growing importance of Stukel’s cost factor in battling materiel supply constraints, but when weighed against the Air Force’s national defense role, he didn’t give it the same priority.

  “Right now there’s no doubt that efficiencies and cost reductions are one of our big drivers of defense because it promulgates down from our nation’s debt problem,” he said. “We have to be just as efficient as possible. We’re going to have to reduce our defense budget. The question is, how do we do that and keep the readiness up?”

  Stukel used American’s broad maintenance network to outline the commercial approach to the problem. The company uses five aircraft fleets to serve 250 cities in four countries. That requires 1,900 departures a day by 620 aircraft, some now out of production.

  While many Oklahomans know of Tulsa’s huge American Airlines supply base, one of only two the airline employs to service its entire fleet, that base represents just the foundation for the airline’s supply chain. American also operates 198 supply warehouse locations, eight Class One warehouses with 25 sub-locations and 26 Class Two warehouses, all to make the airline’s $1.6 billion investment of 295,000-plus parts as available and workable as possible.

  To match the company’s busy schedule, the supply bases often handle aircraft at night, providing their scheduled or immediate needs through the wee hours so that the jet may carry passengers again the next day if needed.

  But with all that infrastructure in place, Stukel said American still faces major parts supply issues.

  “You don’t have very good information that will tell you where those parts are going to fail,” she said. That forces airlines like American to buy, stock and route more parts than they necessarily need, borrowing them from other airlines when their available supply runs short. “It’s very challenging to predict where parts need to be.”

  With Oklahoma’s strong position in this sector, panel moderator Lt. Gen. (retired) Donald J. Wetekam suggested vendors and users alike could use this summit to share ideas and reach potential solutions.

  Such answers could have economic benefits for Oklahoma, since this industry niche plays a large role in the state economy. Boeing’s Defense, Space and Security division has some 800 employees in Oklahoma City and even more in Tulsa, said Cole. While Tulsa has American’s major supply base, Oklahoma City can point to Tinker, one of the Air Force’s three primary maintenance and logistics centers and one of the city’s largest employers.

  Despite the last recession, Spirit AeroSystems actually increased its Sooner State work force by over 350 people over the last three years, said Mike Sutherland, the firm’s Tulsa director of supply chain management. Spirit now employs 2,500 in 1.9 million square feet at Tulsa and McAlister. That’s one-sixth of the $4.2 billion company’s 15,000 workforce, occupying 15.3 million square feet around the globe.

  Sutherland projected supply chain problems could grow under today’s recovery efforts. Spirit alone anticipates its corporate parts purchasing volume will increase 67 percent through the fourth quarter of 2013.

  With 1,300 suppliers, Sutherland said the company could face any number of supplier constraints, logistics control issues, problems cropping up from raw materials lead time, commodity price fluctuations and other problems.

  Stukel said American needs more consistent lead time performance from its suppliers, and reduced lead times when possible. Databases should receive annual updates at a minimum, she said, with more provisioning information provided.

  While it struggles to get all of its own various computer systems to talk to each other, Stukel said the airline is trying to spur more industry information sharing by electronically providing parts forecast information to suppliers – a sometimes difficult option when some suppliers even shun electronic ordering and billing.

  “It’s surprising that we still have paper purchase orders in the system,” she said. “There’s no quick way to order things. There’s no confirmation they received it.”

  While fostering competitive markets, Litchfield said the Air Force needs to cultivate more partnerships with its “big vendors.” By sharing more information on future parts needs and usage requirements, he projected they could improve their productivity and delivery costs.

  “We need more transparency on the government side,” he said. “Industry must show what that means, what it needs.”

  Cole noted the limitations the government’s typical one-year contracts place on companies wishing to foster such partnerships. She also pointed out how Washington’s regulatory policies designed to foster competition may spur supply issues.

  “We can’t just go buy parts from someone who we know can get it to us,” she said. “The sad truth of the matter is it’s extremely, extremely expensive to run competition.”

  Several of the panelists praised efforts by Oklahoma’s state and local governments to aid their industry. As Tinker expanded through about two-thirds of the 3-million-square-foot former General Motors plant, Litchfield said the air base had added more than 2,000 mechanics over the last few years.

  “You can’t do that if the community’s not supportive,” he said. “That’s what I find in spades in Oklahoma. It’s great to be here.”

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