Treatment system suppliers now competing through supply-chain collaboration

Citation

(2005), "Treatment system suppliers now competing through supply-chain collaboration", Aircraft Engineering and Aerospace Technology, Vol. 77 No. 5. https://doi.org/10.1108/aeat.2005.12777eaf.003

Treatment system suppliers now competing through supply-chain collaboration

Treatment system suppliers now competing through supply-chain collaboration

Keywords: Aerospace, Aircraft components

Suppliers specialising in treatment systems for complex aerospace components must find new techniques to respond to changing requirements that are being established by original equipment manufacturers (OEMs). Among these requirements are an ever-increasing reliance on outsourcing and the continuing quest for shorter cycle times and reduced costs. The particular challenge for treatment providers is that customers dictate the recipes for finishing components. The chemistries and physics of treatments such as coating, plating, anodising and painting are generally fixed in terms of process requirements and the precise durations of various steps involved. Therefore, for treatment system providers to respond to customer expectations for continuous improvement, new strategies, tactics, policies and procedures must be devised, tested and developed. The need to adapt to the outsourcing trend is essential if treatment providers are to maintain the competitive characteristics leading OEMs look for in suppliers (Plates 5-10).

Plate 5 Operator checking thickness of SOB: DSCF0252: immediately after drying in paint booth, coating thickness is checked and this aero-structure is on its way to the next step in the process

Plate 6 Employees at schedule board. DSCF0180: highly visible planning and sequencing boards assist operators in maximizing flow through the anodizing department

Plate 7 Pacing monitor with 90 per cent and 98 per cent visible on CRTs: DSCF0160: the read-outs on these pacing monitors enable the leads and process technicians know at a glance whether their two production lines are on schedule

Plate 8 Aerospace parts, blue lighting tones on parts. DSCF0051: utilising innovative racking and handling procedures, Hytek Finishes can process high volumes of aerospace parts quickly

Plate 9 Photo of parts in yellow bags at Nickel tank. DSCF0001: these nickel tanks were installed in response to a customer's new programme requirements. Supply chains that have the ability to make rapid investments are most effective at capturing new-work opportunities

Plate 10 Red mobile packing cart with aerospace parts on it: DSCF0217: a packaging technician wraps finished aerospace components at a mobile packing table adjacent to the last stop in the routing. This is one of the many concepts developed at Hytek to keep parts moving

Hytek Finishes Company, based in Kent, Washington, USA, illustrates this point. One of the Pacific Northwest's largest providers of anodising, organic coating, and plating services, Hytek is a part of the Advanced Materials Group of Esterline Technologies. The company is currently exploring a variety of new practices to stay abreast of on-going changes in the aerospace manufacturing sector. One key strategy Hytek has committed to following is finding ways to respond effectively to the consolidation of global aerospace manufacturing.

As the number of component manufacturing businesses worldwide shrinks, the number of prospective customers for aerospace treatment specialist also shrinks, even as the volume of work increases. Intensifying the challenge, this smaller group of buyers shows a preference for “one-stop-shopping”. This preference results in buying patterns that are consolidating more control of complex supply chains in the hands of outsourcing specialists. These outsourcing specialists make themselves attractive to OEMs by delivering fully finished components – and in some instances fully finished and inspected subassemblies. Hytek sees the value of establishing relationships with suppliers of outsourcing services to be an effective response to industry- purchasing trends.

As with any change to the way organisations do business, risk is involved. Hytek recognised that it is critical to make sure that there is compatibility inbetween prospective supply-chain collaborators. This compatibility covers such areas as company size, similarity of customer base, experience working with common components, level of technical expertise, approach to doing business, information systems that can interface with one another, and willingness to work together in a manner characterized by trust, flexibility and an open sharing of information. Lastly, it is essential that the goals of the organisations involved are congruent. With these criteria having been examined and met, the two organisations will find decisions are much easier to make, because what is mutually beneficial is ordinarily obvious to both parties.

One outsourcing specialist with which Hytek has developed a relationship is Alcoa Prime Services (APS), a unit unique among Alcoa businesses – and one that reflects changes in aerospace-supply-chain dynamics. Headquartered in Whitehall, Michigan, USA, APS is organised to be a comprehensive outsourcing provider. This unit has a charter to satisfy aerospace customers by outsourcing within Alcoa – or outside it – wherever the greatest value for customers can be found. In addition to providing finish-to-print, contract-management services for metal components, APS can also serve customers' needs for design and engineering support in the new product development phase. In the post-metalworking stages, APS can support customers' needs for additional service by accessing the broad base of machining, surface-finishing, inspection, kitting and subassembly service providers it has qualified over the years.

An overview of the collaborative working arrangement established between these two compatible organisations offers a glimpse into the supply chain of the future. The challenge of measuring up to customer expectations is mitigated once a company is no longer working alone. Significant synergies can be created when two or more companies band together in a supply chain to compete for aerospace business. In fact, this is a fundamental requirement of supply-chain competitiveness. To get outsourced business in the first place, an outside supply chain must typically offer order-of-magnitude improvements in the areas of cost, cycle time and delivery reliability. As surface treatment providers are typically the last stop in complex routings for components that are often behind schedule, their ability to perform is typically the most visible to customers anxious to receive their parts. Hytek is the last stop in the routing for 95 per cent of the parts it processes, so APS looked closely at the performance capabilities of the finisher before entering into an agreement to supply a large, complex, investment cast titanium aero-structure.

The first area APS explored was compatibility of approach to the aerospace business. In this regard, Hytek's track record with lean manufacturing aligned well with APS's use of the Alcoa Business System (ABS), which is a toolkit of best practices that have demonstrated the ability to eliminate waste in every department of a business. Following its lean manufacturing principles, Hytek had been able to reduce overtime in its operation more than 10 per cent during the previous 12 months. In addition, Hytek has doubled the operation's customer base without increasing the square footage of the plant. APS saw this as a positive sign.

A second area of scrutiny was attitude of service to customers. Prior to the new business opportunity APS was offering, Hytek had upgraded its facility and installed processing tanks much larger than were previously found in the plant. These new tanks could easily accommodate the 350lb aero- structures the APS-managed supply chain hoped to be working on. APS was impressed by the forward-looking management style at Hytek and values an organisation's ability to anticipate future needs and adapt to them in a planned fashion.

The third item on APS checklist was organisational chemistry. The continuous-improvement program at Hytek is designed to get employees talking and thinking. If employees know the company values their improvement ideas, the innovations that will deliver on the promise of outsourcing can be counted on to materialise. Hytek uses a skill-based wage program to motivate employees to become cross-trained in a variety of treatment jobs and invests in company wide education in lean manufacturing. Hytek has established a culture where cross-trained employees can swarm where the work is to keep parts moving quickly through the plant. APS saw the value of a supplier with a strong commitment to cross-training and education.

The fourth item involved an assessment of the quality of the outcomes likely to result from the two companies' collaborating. The probable outcomes became immediately apparent. Hytek employees recommended a new fixture be designed and built in-house to facilitate moving the heavy parts through the shop and also to facilitate manipulating the part during various finishing processes. In addition, the team recommended building extra fixtures, even though the projected volume of work did not indicate that they were likely to be needed. Extensive experience with Murphy's Law (“If anything can go wrong, it will – and at the worst possible moment!”) impressed APS with the wisdom of this recommendation.

Lastly, APS took a reading on Hytek's willingness to make changes that would benefit the customer and give the two organisations a mechanism to keep getting better working together as a team. Policies and procedures within each company needed minor adaptations to facilitate improved communication, scheduling and tracking. More importantly, APS is planning a rollout of a production tracking system to serve as a real-time communications tool for the status of each part in every supply chain APS manages. To maximise the relationship, and widen the gap between their own and the supply-chain-responsiveness levels of others, both organisations would have to make a commitment to mastering and using the new system when it becomes available.

Agreeing on the above points and confident that the two organisations could work together effectively, they pursued and captured a major aero- structural component program that was outsourced to an APS-managed supply chain with six suppliers in the routing, the last of which was Hytek.

Winning the work was a collaborative effort. Cycle-time reductions were achieved by contributions from both organisations. For example, APS reduced “paperwork” cycle time 75 per cent, thanks in large part to a recent investment that upgraded its order-entry system. Hytek's continuous improvement culture quickly found ways to trim cycle time down to 5 days from 8 – a 40 per cent improvement. The quest for incremental improvements proceeds every day, as well as the search for major improvements, such as those that occur from consolidating steps in the routing.

APS reports that supply-chain collaboration improves supply-chain members' ability to offer customers the results they seek. For instance, APS says that during a recent 6-month period of collaboration with one major customer, inventory turn times increased from 6.9 to 8.9 per cent per year. This change for the better represents a 29 per cent improvement for an entire portfolio of outsourced parts that APS manages, a savings in time and money the customer found justified its outsourcing effort. APS indicates that savings in this range are by no means special. Another customer who outsources a smaller number of parts with the company went from an average of four turns per year when the work was done in-house, to 12 turns per year with an outsourced supply chain that had seven stops in the routing.

Information for this article was collected in interviews with John Jenkins, General Manager, Alcoa Prime Services and Clifton Johnson, President, Hytek Finishes Company.