If companies are not being driven to pursue low-cost countries of supply, then they are going overseas to pursue revenue opportunities. A company that wants to sell airplanes in Asia must have a strong economic presence in the region. If a business wants to grow successfully in Europe, it must consider sourcing, building and delivering its products in Europe. The reality is that leaned-out, global supply networks must be carefully managed to overcome inherent challenges of geographic distance and transnational borders.
Government regulations related to international trade and the flow of information add additional risk to doing business overseas. Export Control regulations cover not just the physical movement of goods, but also sharing sensitive data with colleagues on a global design team. The cost of inadvertent non-compliance is very high: The average fine related to International Traffic in Arms Regulations (ITAR) violations in 2005 was $16 million.
Do our suppliers play a key role in platform design?
Long-term, strategic relationships with suppliers result in numerous business benefits. Many companies rely on suppliers to design and deliver key components, but in the process OEMs can lose control of their core intellectual property. Companies that decide to competitively source sub-components every few years often find they no longer have the latest technical documentation in-house. Keeping control of core intellectual property such as technical designs while working with a global, multi-enterprise team will be an increasingly important issue for companies in the future economy.
Do we manufacture less than 50 percent of the parts and assemblies that go into our platforms?
For the first time in Boeing's history, the majority of a new airplane design will be fabricated by global partners. The 787 will be delivered as 11 major subassemblies, which Boeing will assemble and test at its facility in Everett, Wash. Boeing now operates as the final assembler of the airplane, coordinating the 135 structures and systems from partner locations spread around the globe from countries such as China, Japan and Poland. Boeing has to synchronize demand/supply and logistics information across multiple supply chain tiers so key components arrive at Boeing's Washington facility at just the right time for final assembly over a three-to-four-day period.
Many companies have, or are implementing, manufacturing strategies that rely on unprecedented outsourcing to strategic partners and suppliers. Companies must adopt the processes, technology and management skills needed to maintain visibility and control over these fragmented processes in order to ensure the final outcome meets customer expectations.
Could we make use of an early warning system to reduce supply risk and identify supplier issues (e.g., low inventory at a key point in the supply chain) before it becomes an issue?
To effectively compete in the global economy, manufacturers must leverage the combined strengths of their partners and suppliers. Going it alone is rarely a viable option. But, supply chain executives must face the reality that not only has supply chain risk increased, it has moved out of sight, off-shore and into the depths of their multi-tier supply base. And, non-performance anywhere in the chain can still strike at the heart of a company's operations, reputation and financial success. OEMs must gain commitment to common processes and effective flow of information so that potential risk can be identified before it impacts end-customer delivery.
Have we reached the limits that our internal systems (e.g., enterprise resource planning (ERP), materials resource planning (MRP)) can support in facilitating external collaboration across business processes (e.g., design, sourcing, operations, service parts management)?
Enterprise software is designed and deployed to manage information, processes and resources within the organization that owns the system. Therefore, these systems are rarely appropriate to manage processes that flow among the external partners of a particular value chain. A new breed of multi-enterprise collaborative solutions is evolving that allow data, information and processes to be commonly defined, implemented and managed across organizational boundaries. They leverage the investments in enterprise systems to gather information from different sources and create a single, common view of supply chain performance. The result: Each participating company receives the situational awareness to make the best business decisions possible.