Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 1

Logistics Officers Association2016

Supply Chain Lessons Learned for the Next Generation Aircraf

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 2

Logistics Officers Association2016

787 TechnologiesCommon Core Open Systems Architecture

Advanced Flight Controls More Electric

Systems Architecture

Wireless IFEIntegrated Health

Management e-Enabled Systems

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 3

Logistics Officers Association2015

A Brilliant Background

• Developed 8 commercial aircraft previously– Many, many more when including “series” types

• Launched all previous development aircraft on time

• Developed many breakthrough innovations– First two man cockpit– First ETOP’s operations

• Strong customer confidence– Nearly 1000 787 orders

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 4

Logistics Officers Association2016

A Great Plan

•Known Technologies

•Integrated Product Teams

•“Lean” Implementation• Production and Supply Chain

•Global Outsourcing• Intellectual Capital• Parts and Subassembly

•Process Oriented Culture

•Strong Past Performance

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 5

Logistics Officers Association2016

The 787 Rollout

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 6

Logistics Officers Association2015

Corporate Strategy

• Shifted from design manufacturing model to supply chain model– Distributed engineering – Created tiered supplier definitions/structure

• Pushed responsibility and financial risk lower to suppliers– Reduce upfront costs– Create better cash flow– Pull breakeven forward

• Focused technology development and insertion• Significantly decreased development time

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 7

Logistics Officers Association2016

Another Way to Look at the Big Levers

Business Model Organization

Technology

ProcessesSupplier InteractionCentralized vs Decentralized

Intellectual CapitalExperienceRelationshipsOrganizational Influence

MaterialsToolingFacilities

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 8

Logistics Officers Association2016

SCM Recommended Practices•Develop a complete end to end supply chain strategy early – Include supplier management

•Map out the supply chain at multiple levels to identify key risk points – theory of constraints – critical path analysis

•Assist tier I suppliers to mature their supplier oversight, monitoring and performance metrics reporting processes

•Develop leading supply chain indicators that identify risks

•Build a supply chain organization that can actively monitor and manage multiple networks and linkages across an extended supply chain

•Assure the supply chain organization fully understands all the activities coming through the supply chain

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 9

Supplier Strategies

Supplier Power

• High switching costs• Monopoly• Long term contracts• Unique technologies or

capabilities• Regulatory protection• Political

Supplier Power

• High switching costs• Monopoly• Long term contracts• Unique technologies or

capabilities• Regulatory protection• Political

Supplier Power

CostHigh

HighLow

Low

Re–design or integrate with other components

Re–design or integrate with other components

Develop other sources of supply Develop other sources of supply

Joint cost reductionJoint cost reduction

Integrate with other suppliersIntegrate with other suppliers

CompeteCompete

IncentivesIncentives

Establish a good “should-cost” capabilityEstablish a good “should-cost” capability

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 10

Key Risks to a Supply Chain

• Blocked or constrained transportation channels

• Unplanned disruptions to information-technology systems

• World-wide shortages of materials and components

• Suppliers that are unable to deliver as promised

• Unreliable, unpredictable political, regulatory or legal conditions

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 11

Logistics Officers Association2016

It’s All About the Supply Chain

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 12

Logistics Officers Association2016

Process Recommendations•Establish process health metrics for each process

•Establish a review schedule for all processes• Review-

• Effectiveness• Efficiency• Lessons learned from other processes• Process changes in interconnected processes• Training and education adequacy• Recommendations

•Process improvements should focus on simplification• Cost and velocity will improve

•Own your dependencies

•Capitalize on OPW (Other Peoples Work)

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 13

Logistics Officers Association2016

Strategic DevelopmentOperational Strategy

• What• When• Where• Why

Behavioral Strategy

• What behaviors and skills are needed to support the strategy?• How do we measure it?

• What artifacts or evidence indicate the expectations are occurring?• Are the management tools and techniques reinforcing the behavior needed?• What will be rewarded and punished?

• Is my succession planning consistent with the changes desired?

Jim Brunke Brunke & Associates, LLC National and International Aerospace Consulting10/7/16 14

Logistics Officers Association2016

Questions?