By APICS CEO Abe Eshkenazi CSCP, CPA, CAE | 0 | 0 | February 03, 2012
“There are not many businesses in which the next six years’ worth of customers form an orderly queue, putting down fat deposits and topping them up with further installments as they wait in line.” This is the compelling opening sentence of an article in this week’s Economist on Boeing, titled “Faster, Faster, Faster.” As detailed by the Economist, the situation at Boeing is as follows.
“In 2011, both demand and production of Boeing aircrafts were up. After a two-year delay, Boeing finally delivered the first 787 Dreamliners. Boeing faced issues with suppliers who were not able to meet commitments and others who delivered faulty parts. All the while demand keeps growing and production keeps lagging.”
According to the article, Boeing’s commercial airliner division head, Jim Albaugh, attributes the production issues Boeing is experiencing with the Dreamliner to the company contracting too much of the work. Boeing-owned factories are the final stage in a global supply chain that comprises more than 1,200 suppliers. Ensuring these suppliers see Boeing as their priority and getting them to ramp up their own production to meet Boeing’s demand in a still uncertain global economy have not been easy tasks for the aerospace company.
The Economist says Boeing should “learn to be more open with [suppliers] about its production plans and a bit less paranoid about whether such information might reach the ears of its competitors.”
Who can you trust?
Supply chain and operations management professionals know that deciding how much information can be shared with suppliers is not as simple as the Economist suggests. It is not possible__nor is it desirable__for every supplier to have access to the same level of information from customers. Therefore, it is important to take a strategic approach when sourcing critical components.
The APICS Principles of Inventory Management course discusses the different types of supplier relationships that can run the gamut between tactical and strategic. These include vendors, traditional suppliers, certified suppliers, partnerships, and strategic alliances. The need for collaboration and transparency between businesses is higher at the strategic end of the spectrum. Relationships with strategic suppliers are based on a higher level of both trust and control, which facilitates better collaboration.
This spring, APICS members and customers have the opportunity to learn more about this topic at the new APICS Strategic Sourcing Seminars. The first is being held in conjunction with the APICS Twin Cities Chapter on March 20, 2012. On April 14, the seminar will be offered in Greensboro, North Carolina, in conjunction with the APICS Piedmont Triad Chapter. For more information about these events, please log on to the new APICS website at apics.org/seminars. We and our partners hope to see you there.
In other news
How APICS Operations Management Now relates to you
Operations management is everywhere. Today, operations management professionals have unprecedented impacts on the global economy. Consider these questions and how today's edition of APICS Operations Management Now relates to you and your career.
- Has your company experienced a situation where it needed to drastically increase production to keep up with demand? If so, how did this affect your supplier relationships?
- To what degree are supplier collaboration and transparency important at your organization?
- How do you define strategic sourcing?