Supply Chain Management is a decisions collection that uses and synchronizes activities in order to integrate suppliers, manufacturers, transporters, customers and warehouse efficiently. Its purpose is that the proper service or product is well-distributed at right site, quantity at the correct time, to make sure minimal cost and to satisfy the customers need. The aim of supply chain management is to meet competitive advantage that is sustainable.
A firm’s supply chain in the aerospace atmosphere is very complicated. The reason is that the company has various suppliers and clients. Therefore, the logistic functions enable the physical flow of goods from the raw material manufacturers to the retailers and, finally, to the last consumer. The supply chain within the company includes the sources of raw material, production of the end product and their distribution. Sourcing of a firm mandates to select the suppliers, negotiate for the contract, and formulate the buying procedure and process orders. The production transforms the raw materials to the product. Distribution manages the flow of raw material to the end products from the manufacturer to the client.
The Enterprise Resource Planning System integrates the company’s information systems. They process and stores data, which as applied to all business units in order to aid the management in making business decisions. ERP influences the way the firms work daily, and enables information to flow in all the processes of the supply chain in the company. Boeing 787 is majorly affected by the distribution network, where it involves moving material between places and locations.
Management in distribution entails packaging, handling of goods and people at the retail outlets such as the airport and management of the internal fleet of the carriers. Therefore, the function of supply chain management is production of products that meet the customer’s need. Its goal is to ensure efficiency and cut costs via a joint effort across the available system. Its scope involves the companies’ operations from a lower level via the working and tactical levels, since it incorporates integration of manufacturers, wholesalers, distributors, and the last users.
Supply Chain Management: Challenges and Opportunities
The purpose of this discussion is to develop better understanding of the supply chain management practices and strategies that Boeing 787 pursues as well as to find their long-run mechanism for supply chain management in future. The paper discusses synthesis and review of quality issues, ability of the supplier to follow the increasing demand and transportation cost. It also explores the opportunities that occur due to the supply chain. At the end of the paper the conclusions will be made and the possible recommendation from the study indicated.
The paper will try to identify the importance of the supply management, its challenges and opportunities as well as the effects of poor supply chain management. The research finding will be of significance to the company’s program; it will represent the practices in the organization, enabling the main role of the suppliers in terms of strategizing their development, design, after-market support, and production. This may be reached when implemented in the early stages of concept development, and incentivized with the firm as partners who share risks with a lengthy jurisdiction to integrate their system involving the connection control at both subsystem and the system level (Neef, 2004).
Boeing Company has outsourced its services to the suppliers who locate in the modern regions such as the Eastern Europe and the Asia region. Lastly, the airspace producers are adopting the information technologies to allow greater sharing of data and communications with their suppliers. It is also distributed to other partners found in different geographical locations as part of a wider flow involving the relationship of the supplier to the lower level (Hugos, 2003).
The logistics of supply chain is important to a company’s success. Logistics of supply chain, whether outsourced or internal, forms a fundamental dimension in the success of any given company or firm. The reason is that the revenue of a firm depends entirely on how the goods leave area of production that relates directly to the logistics of supply chain. Even if a company offers service, they will require products and a warehouse for stocking and inventories. In the current world, there is no commercial firm will will survive without logistics in the supply chain.
Current Situation with Supply Management
Transportation gives important links between varieties of stages in the supply chain. The decisions in transportation affect the cost and the way the supply chain responds. The key transportation decisions that firms make are the strategies It involves the most critical way of distributing products and services to the markets that are geographically dispersed from the producers in an effective way (Schramm, 2012). The second strategy if choosing the proper mode of transport from various possible alternatives begins by comprehending the drivers of transport decisions. Then there the issue of transport cost structure is involved as well as comprehending the effect of product and the characteristic of the demand on the supply chain total cost.
Although Boeing 787 chain of supply has promising potential for decreasing the time and cost of development, there is a variety of supply chain challenges and risks. There are different types of challenges in the supply chain ranging from the technology, risk processing, and supply to demand challenges, labor risks, and IT system. Therefore, Boeing met the following challenges that resulted to a chain of delays (Neef, 2004).
Supply Chain Challenges
Although “build-to-performance” technique to production of 787 portrays a significant move towards the opportunities in global supply, it has a suppressed nature to certain processes such as “build-to-print”, which was initially adopted by Boeing. This outlines the foundation for the issues in the supply chain in the present development (Abeyratne, 2012). The proposed cut in the manufacturing expenditure through using component producers (who have greater deal of autonomy) led to increasing cost in wastage components and delays in the products due to overdependence on the suppliers. This has changed the critical relationship with clients and internal engineers (Schramm, 2012).
Boeing depends on global strategic parties to build and develop the entire department of the dream liner that their technological prove is unknown. A break in chain supply causes essential delays in the general production. At the beginning of 2001, dream liner announced the delay in planning the first flight (Blanchard, 2010). Claiming the challenges, such as shortages of parts, the software and integration of the system activities, even in the event the Exostar and web planning system, to influence the supply development of activities, there is coordination implementation if the prompt and efficient information provides partnering supplies, for example Vought. Therefore, the partnering suppliers outsource their tasks, with a higher possibility of little know-how (Hunsberger, 2011). The lack of knowledge about choice of the partnering suppliers delayed the development and manufacturing operations.
The design of Boeing 787 chain of supply is the cause in delays due to inefficiency present is the synchronized deliveries of the major department from the dream liners’ strategic business partners (Schramm, 2012). If there are delivery delays, the schedule of delivery delays the whole plane. Unless it stores stock inventories, then the delays will be inevitable. Therefore, relying strictly on the partners to coordinate the developments activities with their suppliers affects negatively the supply chain. There is a need to increase coordination of activities of the suppliers.
Since Boeing used unusual structure of supply chain to build and develop the dream liner, it is very crucial for the company to establish a leadership fraternity that incorporates members who are competent in the supply chain management to expect certain risks and prevent them in advance. The 787 program had a team of leaders who were not competent enough. Therefore, the company needs to reorganize the supreme leadership of the company (Hunsberger, 2011).
Boeing improved its effort in outsourcing; the staff was concerned about security of their work. The concern led to a demonstration. These affected even their partners. Their anticipations related to the possibility of cancelling orders, delay in delivery, the spare part manufacturers’ reduced working time (Shapiro, 2001).This resulted in dissatisfaction of the union to outsource more. The reason is that the strike of workers caused stoppage in the entire labor.
The customers lost the trust and confidence in the plane ability. The customers started cancelling their orders and shifted to leasing contracts. Delays in delivery caused the financial fines and cancelling orders (Lam, 2005).
One of the fundamental benefits of Being 787 design concept was to enable the plane to use different types of engines at intervals. Due to the difficulties in technicality and incongruity of the parts, it took two weeks to change the engines instead of intended one day (Geunes & Pardalos, 2005).
Technological Security Issues
The present electronic configuration of the plane put the passenger’s entertainment on a similar flight control computer network. This increased the security issue, especially for the terrorist attacks (Chan, 2012).
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Supply Chain Opportunities
The supply chain services form an important segment of Boeing in order to support the services of aerospace. Their aim is to improve the plane availability and cut costs according to preference of the clients. Although the services are drafted in such a way to improve availability of the airline and cut costs, these aims are met by providing clients with the following benefits (Geunes & Pardalos, 2005).
Visibility of the total asset, maintenance of information, and collection of data from the field is another issue ensuring that decision-making is well-informed to identify the largest relationship between the plane readiness and affordability. Lastly, in order to provide the prompt and correct shipment of the supplies to ensure that these services are well supplied and benefit the customers, the Boeing Company uses the following policies (Frazelle, 2002).
Accurate, efficient, and timely information should be shared between the company and its clients to meet the most appropriate level of service delivery. Consequently, the integrated information system, real-time, and online information system ponder the design of web architecture and are mixed with database that is very comprehensive. This leads to a reliable forecasting demand, visibility of the total asset, maintenance of information and data from the field (Burt, Starling & Dobler, 2003). Additionally, there are logistics that are reliable and management that is trigger based. They yield the improvement in reliability and find cut cost opportunities that the airline managers can establish trade-off between the stock levels and costing that make them maximize the relationship between airline readiness and affordability (Shapiro, 2001).
Finally, they involve the use of the best business warehousing practices, docking practices and creativity asset, sharing contracts with other airline partners, and the component producers. This ensures that the proper part is docked to the right place at the perfect time worldwide (Chan, 2012). Industries in each quarter have their collection of opportunities for the supply chain that benefits them. Varied mix of performance features is needed for firms in the supply chain in each industry. In order to thrive, the firm in the supply chain should work jointly to explore the opportunities that present it in the market. The highest revenue for the firm can respond to the business opportunities that the market provides. Firms which are not able to respond to the opportunities effectively will not gain the competitive advantage (Chopra & Meindl, 2001).
For maturity, the opportunities exist in coordinating with the chain partners to offer a wider variety of products to the industry and raise the broader fluctuations in the demand of the product as one maintains the highest level of customer satisfaction (Frazelle, 2002). In order to be steady, Boeing needs to organize the supply, demand, and market balance. The reason is that the opportunities lie in every company optimizing and fine tuning the internal duties to ensure maximum efficiency and best general profitability of the supply chain. In order to ensure development, Boeing needs to stock new products and market where their supply and demand is minimal. These opportunities exist in partnering with firms in the chain of supply to gather and collect intelligence about the condition of the market needs, delivery, and build that will appeal the customers (Shapiro, 2001).
In order to ensure growth, the company’s demand should exceed the supply. The opportunity exists in building shares of the market and recognize by working with partners of chain supply to offer high level of the services of the customer determined by the order rate and perfect response time (Burt, Starling & Dobler, 2003).
Conclusion and Recommendations
Freight transport is considered to be the fundamental characteristic in the present supply chain. The demands for this type of transport continue to rise. The increase is due to the rising demand for products and decisions of the supply chain management. Supply chain has become complex and more reliable, efficient, and responsive thus, increasing the demand for such type of transport (Frazelle, 2002). The broader outsourcing of the supplies and larger distribution of the end products is widening the supply chain, in both downstream and upstream directions. The sourcing strategies are steered by savings in manufacturing, purchasing, and costs of labor. This is facilitated by simplified flow of information between various firms around the world. The short-term recommendation is based on the theory of supply chain management, where the current risks are addressed to the kind of supplier they are working with, after which they find the solutions. Basically, this is a strategy against the non-critical situation.
Another recommendation is the re-assessment of the present relationship of the suppliers with an opinion towards the greater management on what is produced and time of delivery. This move encourages the relationship in customer management. The first recommendation entails managing relationship and securing reliable suppliers as well as high quality products (Bookbinder, 2013).
The most important question is how Boeing can leverage the experiences learned from 787 to create a competitive advantage that is sustainable (Chopra & Meindl, 2001). There are following long-run recommendations which must be adopted to improve the development of the supply chain. Firstly, the company needs to near the source of future business projects to improve management supplier. Expanding this concept, the company will gain from outsourcing benefits from the vertical group of supplies with smaller challenge and uniform research efforts.
In addition, requiring from the critical and strategic suppliers to move the vertical cluster will strengthen their relationship further and offer an incredible chance to support the company’s future. Suppliers such as Sky valley should be used (Bolstorff & Rosenbaum, 2003). Additionally, the company needs to develop a society that encourages creative design and perfect assembly allowing closer exchange of ideas and issues to imitate competitive advantage source (Bookbinder, 2013).