Review Report of Cessna Aircraft

This document has a review report of the case study about Supply Chain Management in Action.
Syed Asfar Ali Kazmi (4807) IQRA UNIVERSITY. Subject: Supply Chain Management.
Date : 21/2/2013

Submitted to: Mr. Anas Iftikhar

Review Report of Cessna Aircraft

Table of Contents:
CESSNA AIRCRAFT: ........................................................................................................................................ 2 Supply Chain Management in Action: ....................................................................................................... 2 Business process model: ........................................................................................................................... 2 Rationalization plans: ................................................................................................................................ 2 Full-time commodity teams: ..................................................................................................................... 2 STARS: ........................................................................................................................................................ 2 Sorting Process: ......................................................................................................................................... 3 Electronic reverse auctions: ...................................................................................................................... 3 Supplier advisory board: ........................................................................................................................... 3 Maturity path development process (MPD): ............................................................................................ 3 Alignment of measurement systems: ....................................................................................................... 3

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Review Report of Cessna Aircraft CESSNA AIRCRAFT:

The Cessna Aircraft Company is a general aviation aircraft manufacturing corporation headquartered in Wichita, Kansas, USA. Best known for small, piston-powered aircraft, Cessna also produces business jets. The company is a subsidiary of the U.S. conglomerate Textron.

Supply Chain Management in Action:

Initially Cessna was practicing the Vertically Integrated System till in year 1998. Michael R, Katzorke, The vice president of Cessna Aircraft initialize working on Supply Chain Management System to improving supplier performance and integrating key suppliers of Cessnas manufacturing and design processes. Mr. Katzorke and his colleagues developed the following strategies to adopt an effective supply chain management are as under:

Business process model:

Cessna Aircraft introduced a new business process model which was consisting of five core competencies. 1. 2. 3. 4. 5. Customer management Product development Order acquisition Oder fulfillment Post-delivery support

This model had provided them a significant step in driving supply chain management, due to inadequate number suppliers exists in their industry; Cessna was shared many of their suppliers with its competitors. This turmoil situation raised Cessna to formulate a strategy of integrate their supply chain better then rivals to get a competitive advantage.

Rationalization plans:
Cessna observed that if the buyers (firms) were allowed keep work with nonperforming suppliers, the problem would never be solved. So Cessna eliminated their nonperforming suppliers throughout assessed their name, faces, phase-out dates, and problem areas.

Full-time commodity teams:

Cessna created the full time, cross functional commodity teams as part of a major change in its supply organization. Each team had representatives from seven different functional areas: purchasing, manufacturing, engineering, product support, and delivering. The mandate of the commodity management team has annual strategic plans that were tied to the CEOs strategic objectives.

STARS:
Cessna introduced a suppliers tracking and rating system (STARS) for supporting its supply base rationalization efforts. It is a Suppliers performance scorecard that measures direct material suppliers on a 12-month rolling average in the areas of quality, reliability, schedule and cost. Suppliers with a rating scale of 1 to 5. (1 being good and 5 being unacceptable). A monthly report also shared with the CEO of each major supplier.

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Review Report of Cessna Aircraft

Sorting Process:
Cessna commodity team developed another rating system, based on same type scoring scale 1-5. Which was further divided in three categories. 1. Growth suppliers (Whose share of Cessna business will grow). 2. Provisional suppliers (The potential suppliers based on their past best performance). 3. Phase-out suppliers (Whose business with Cessna is about to end). This sorting process helps the Cessna to negotiate with suppliers in future according to their capabilities.

Electronic reverse auctions:

Cessna wanted to build strong relationship and accelerated purchases from their key suppliers. For this intent, they used an electronic reverse auction tool. Only growth suppliers are allowed to bid in Cessna auction and they also have opportunities to bid on business that, Cessna was formerly doing with phaseout suppliers.

Supplier advisory board:

The idea behind creation of this enabling tool is to improving communication between critical suppliers, Cessna's senior leadership team and customers. Cessna supplier advisory council has 10 board members, whose main goal was to give a bridge to Cessna strategies and to Suppliers solicit suggestions on how to improve it.

Maturity path development process (MPD):

After given the successful performance, Cessna had become an emperor and they also get a control on the suppliers. According to Katzorke Cessna make a very specific plan that his suppliers are willing to commit with them for this year. This plan based in terms of quality, cost, delivery, service, inventory and so on. Then Cessna and supplier enables to negotiate a commitment on what they feel realistically be accomplished.

Alignment of measurement systems:

Cessna wanted to do consistently work better with their key suppliers. For this intent they used Baldrige Quality Award criteria for assessing all its internal processes. Only growth suppliers and provisional suppliers that are doing well on their improvement efforts are invited to participate in the improvement plan of Cessna.

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