While waste inventory in the supply chain is undesirable regardless of the sector a business operates in, such inefficiencies in the aerospace and defence industry can cause serious repersussions if you don't get the balance right!
For many, embracing a lean approach by optimising and streamlining inventory management represents the first step in the process of turning a cost centre into a profit centre and exceeding customer demand. But identifying where the problems first exist presents a significant challenge, considering the variables associated with spare part provision and pre- and post-assembly line stock – not to mention the obstacles unique to the sector.
Inefficiencies in inventory management can be disastrous for front line military personnel, so the need to streamline processes and operate a zero tolerance approach to waste is more than just a ‘nice to have' - it's a critical investment. But is it possible to achieve this level of efficiency in reality? Does implementing the latest scheduling and optimisation software represent a quick fix or a long- term solution? And what other factors need to be considered?
Right time, right place
Having the right part available, at the right time and in the right place is what the supply chain strives to achieve. But whether or not it is possible to achieve this in practice, whilst under the constraints posed by the aerospace and defence (A&D) sector, is another question altogether.
Demonstrating value for money to customers and ensuring tax payers' money is spent wisely requires suppliers within A&D to eliminate waste wherever possible, but security issues around obtaining long-term usage forecasts mean it can be a tough balance to get right.
“The data needed for scheduling in an A&D setting is often highly sensitive, which can make planning difficult and often means meeting a variable demand at short notice and under tight deadlines,” explains BAE Systems' head of supply chain for support programmes, global combat systems – vehicles, Graham Gall. “Nevertheless, it's an essential part of the service we provide and, whereas in other sectors the consequences of an inefficient inventory management structure will mean certain products aren't on the supermarket shelves in time, in A&D inefficiency in the supply chain can really mean the difference between life and death, and that's something that just can't be compromised.”
Ensuring customers get the biggest bang for their buck without risking service levels means weeding out the waste and fine tuning the entire inventory management process.
According to Graham Best, director and co-founder of specialist consultancy, The Service Business, discovering how your business is performing and identifying the areas of waste - and benchmarking current performance against the ideal - are the building blocks of tangible inventory optimisation.
“It's easy for businesses to get stuck in a rut when it comes to inventory management and it's sometimes difficult to see the wood for the trees when you're dealing with the same problems day in and day out,” he states. “Taking a step back and looking at the bigger picture, questioning the efficiency of existing processes, people and technology is the foundation of inventory optimisation.”
Weighing up the technology
In the past decade technology has changed and simplified the way many businesses operate. Aftersales service, and specifically inventory management is no exception. Scheduling and planning software has the ability to optimise inventory management, eliminate waste from the supply chain and ultimately save thousands of pounds on excess stock.
Obtaining a clearer visibility of forecasting needs and working closely with suppliers and customers alike not only opens up clearer communications paving the way for more productive working relationships, but also provides a holistic view of supply and demand - what the real cost drivers are and how much leadtimes are costing in terms of inventory timings and parts availability.
Technology's role in achieving this level of visibility and a subsequent reduction in waste is significant, yet many companies with such infrastructure in place are failing to shed the excess fat. Best claims one reason for this is that implementation is one thing and utilisation is another.
“Underutilisation of technology is a universal theme across sectors,” he notes. “When it comes to scheduling and planning software, buy-in from all relevant personnel is a must. Businesses often underestimate the investment needed to encourage workers to swap the old for the new, which leads to inconsistent working and breeds inefficiencies.”
Acting on information supplied by such technology becomes a problem if the workforce in question fails to trust the data produced. Gall, who has been instrumental in BAE Systems' recent inventory management culture overhaul, believes that without adequate staff training, technology is rendered useless. He explains: “Implementing the best technology on the market is the easy part – ensuring staff know how to use it to its full potential requires investment of both time and resource. But, if you're serious about the end goal, it needs to be a priority. You wouldn't try to drive a car with an empty fuel tank but if you purchase technology and fail to consider staff training needs, that's exactly what you're doing.”
But it's not all about technology. Equipping personnel with the right knowhow is fundamental. Planning on such a scale, at short notice and to tight deadlines requires a high level of competence which comes from hands on experience, joined up and consistent working practice and an ability to prepare for the unexpected.
Gall supports this theory: “Many inventory systems in standard manufacturing environments embrace a just in time approach to spare parts provision in order to ensure a lean operation. But in A&D, this approach has to coincide with being in a position to react quickly to changing or unanticipated demand. Being prepared for the unexpected is rule one for the armed forces and therefore needs to be a top priority for their suppliers. Getting the balance between having enough stock to fulfil unexpected need and keeping static stock to a minimum is a difficult balance to achieve but necessary all the same. In my experience, this can only work if planning personnel within defence and industry work effectively together.”
Fine tuning the process
Achieving an efficient inventory management structure is a continuous process, involving a high degree of commitment in terms of people, processes and the correct utilisation of technology. It's attainable and now more than ever, should be at the top of every corporate agenda if staying ahead in a competitive market is a priority.
“Remaining lean and agile when it comes to inventory management puts BAE Systems in a position of readiness and sustainment,” Gall concludes. “It is a never ending process, but worth the investment when it means we're able to become more responsive to a variable demand, recognise and satisfy the unspoken requirements of our customer base, and ultimately maintain the high standards associated with the BAE Systems brand.”
www.theservicebusiness.com
