Term Paper on "Cessna's Logistics System"

Term Paper 4 pages (1033 words) Sources: 2 Style: MLA

[EXCERPT] . . . .

Cessna: Supply Chain Management

Using Six sigma tools and Baldrige quality standards and regular status feedback using MPD, GRIP, etc., has greatly improved supplier performance levels for Cessna and has contributed to better integration of the supplier chain management process. Today, Cessna stands out as an industry leader and a positive story of integrated supply chain management, which has translated to improved customer satisfaction and overall profitability of the enterprise.

Optimizing performance in all fronts is of utmost concern for businesses today operating under intense competition. The Airline industry in particular, is witnessing a bad phase with many big airlines going bankrupt. Cost cutting and performance tuning measures are indispensable for aviation industry for surviving and ridding through the rough times. The case of Cessna, a leading aircraft company, is a good example of how rationalizing supply chain management can result in considerable performance improvements and hence the profitability of the company. Starting in 1998, Cessna focused on improving its supply chain management system by introducing new standards and benchmarks and in some areas, a complete overhaul of its operational methods and procedures. These changes came in the form of 21 practices and tools for fine-tuning their logistics system. The results were encouraging as since 1998 the company has achieved a 86% improvement in terms of quality, 83% overall increase in business with a 52% reduction in inventory, and a 28% improvement in on time delivery and overall performance. [James P. Morgan] Let us briefly explore how these new tools have helped Cessna achieve a positive turnaround.<br />

At the heart of the supplier management system at Cessna is STARS, a supplier quality rating system that is used to rate suppliers based on their quality, cost, delivery, service and other factors. This data is then shared with the CEO of its suppliers and along with the Baldrige rating constitutes an effective base for implementing Cessna's supplier base rationalizing efforts. A new sorting process is then used wherein suppliers are rated on a scale of 1 to 3. Suppliers are categorized as "Growth suppliers," "Provisional Suppliers" and lastly "Phased - out Suppliers" according to their past performance and possibilities of future business with the company. Periodic briefing and training is provided for selected staff members and suppliers at Cessna's 'Transformation center', where the growth plans, the implementation process and their success rates are graphically demonstrated. As is well-known, the transition process is a very delicate and difficult one as it involves changes in the process, which the employees are so far accustomed to. To make this change management a smooth process, Cessna uses 'Transition resource kits', documents that clearly explain the process and remove any conflicting ideas about the new changes.

To facilitate its transition process and to speed up its procurement decisions, Cessna uses the electronic auctioning tool called SourceNet. By allowing only the 'Growth Suppliers' to bid on its online auctioning, the company aims to phase out its businesses from the "phased out" suppliers to "Growth Suppliers" in an efficient and timely manner. Using this electronic tool, the company provides its product requirements and specifications online… READ MORE

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