It has been a little over a year since the Supply Chain Council (SCC) announced that it would be merged into APICS. The SCC provided corporate and public sector members access to supply chain research and the well-recognized Supply Chain Operations Reference (SCOR) model methodology and benchmarks for evaluating supply chain metrics and performance. Upon its merger with APICS, the organization was renamed APICS Supply Chain Council (APICS SCC).
Today, APICS announced an important milestone related to this merger, namely three different engagement programs that should allow organizations to take advantage and leverage both APICS and APICS SCC benefits. As our readers may be aware, APICS has catered to individual supply chain and operational professionals in their needs for education, certification and career advancement. APICS SCC caters to corporations and service providers in their needs for research, supply chain frameworks and educational requirements.
The three programs announced today, in-capsule, consist of the following:
APICS SCC Affiliate – according to APICS this program offers tiered level benefits depending on an organization’s level of needed participation. Current affiliates are comprised of more than 400 globally based organizations that actively encourage individual APICS memberships for their employees. With today’s announcement, employees gain access to APICS SCC research projects while corporate affiliates are able to sit on the APICS Corporate Advisory Board. Affiliates have the opportunity to take advantage of group training programs or receive discounts to APICS SCC training including SCOR. Premier Corporate, Corporate and Public Sector affiliates gain access to SCORmark Benchmarking consisting of 20 years of accumulated SCOR data. A specific APICS web page describes the Affiliate Program.
APICS One- members are eligible to provide up to 500 employees with APICS enterprise memberships to support individual development needs and the organizational improvement opportunities supported through the APICS SCC premier corporate affiliate category.
APICS Sponsor- companies are provided with a license to utilize and incorporate APICS SCC frameworks and other APICS published material into products, services or marketing materials. The program is further described as offering opportunities for engagements with APICS SCC affiliates, access to benchmark reports, publications and research, as well as tailored marketing opportunities. There are three different tiers of available sponsor participation which are outlined at this APICS web page link.
In a previous Supply Chain Matters commentary we questioned what we felt was the slow progress of the overall merger and combined benefits for both APICS and APICS SCC. Today, the APICS web site has been completely revised and features a new design and feel. These newly designed program offerings should help organizations to be able to take advantage of the combined body of knowledge for both organizations, as well as the ability to provide needed education for different audiences.
This is an important milestone.
We encourage organizations that are engaged with either of these new programs, or are contemplating taking advantage of such programs to let us know your thoughts and impressions. You can email us at: info <at> supply-chain-matters <dot> com.
Supply Chain Matters calls special attention to readers who are involved in either commercial aerospace or engineer-to-order focused internal and supply chain environments. Today’s printed edition of The Wall Street Journal features a front-page article, Airbus-Boeing Speed Race Increasingly Takes Place on the Ground. (Paid subscription or metered view) By our lens, this article should be mandatory reading.
The article itself is well written and very insightful in pointing out how two rival commercial aerospace OEM’s are learning important lessons in consistent manufacturing and supply chain execution.
We cite two opening excerpts:
“After years of racing to develop and market new models, both have clear product lines for the next decade. Their order backlogs stretch as long.”
“Now, the world’s two biggest jet makers are squaring off on execution. Each aims to grab market share by building its planes faster and more efficiently than the other—a gambit both have struggled with in the past.”
Specific examples are provided on how Airbus and Boeing have addressed inter-organizational and supplier cooperation, more streamlined and focused processes, and a reoriented focus towards how aircraft will be built vs. what they would look like. It is a focus toward design for manufacturability as well as supply chain. In the specific example of the new Airbus A350 program, insights are brought forward in organizational design, workforce selection and manufacturing process design.
Included is a powerful quote from Boeing Chief Executive Jim McNerney:
“It is not just about building more airplanes but also building them more efficiently, with higher first-time quality, greater component reliability and improved employee safety.”
Well stated and an important reference for both internal and supplier based teams.
Supply chain fraud has become a significant challenge for industry supply chains. According to a study conducted by Deloitte Financial Advisory Services LLP, supply chain professionals still appear to be ill-equipped to tackle instances of fraud.
Supply Chain Matters recently had to opportunity to speak with Deloitte partner Larry Kivett about the background, results and implications of this recent study.
The Deloitte findings involving over 2000 professionals across varied industries highlighted key concerns related to supply chain fraud. The study reported that more than one-quarter of professionals (28.9 percent) indicate that their organizations experienced supply chain related fraud, waste or abuse during the past 12 months, yet nearly as many (26.8 percent) indicated no program currently in-place to detect or prevent such risks. These findings alone are significant, considering that many firms are not comfortable with admitting or acknowledging instances of fraud, and thus occurrences are probably far larger. As to sources of fraud incidents, respondents pointed to employees as the top identified source (22.9 percent) when compared to suppliers (17.4 percent) and other third parties, subcontractors or vendors (20.1 percent). The study authors noted that internal employees can leverage transactions involving vendors and/or third parties for fraud purposes, and when collusion is involved, detection and prevention is difficult.
Our conversation with Larry Kivett reinforced that while many firms recognize reputational, litigation and regulatory repercussions of fraud, internal budgetary constraints remain a significant challenge. The size of a company is a further variant. We touched upon the overall implications of more globally dispersed supply chains that add challenges in introducing different business practices further away from corporate based internal controls, compliance and oversight adding to instances of supply chain related fraud.
We explored the specific question of who owns or is directly accountable for fraud. Kivett indicated that fraud is indeed a shared responsibility that has to involve first-line people at the operational level. It is not just the responsibility of finance or audit control teams. He further acknowledged that there is no perfect system to prevent fraud. It requires constant diligence.
Other significant Deloitte findings were that nearly two-thirds (65.3 percent) of respondents reporting that their company conducts at least some due-diligence on third-parties. However, incidents of fraud continue. While the Deloitte study did not specifically address cyber theft and fraud focused from vendor, subcontractor or supplier access to a company’s operational systems, such as the data breach incident that impacted Target Stores last year, Kivett indicated that cyber theft has indeed become a significant topic in current boardroom discussions. That should be no surprise.
If readers are seeking more detail related to the Deloitte supply chain fraud survey, a February recorded webcast is available for replay. (Sign-up information required)
Supply chain fraud is indeed a growing problem that has many internal and external dimensions. A June 2014 study conducted by the Association of Certified Fraud Examiners (ACFE) quantified that as much as 5 percent of revenues are lost each year due to fraud, amounting to $3.7 trillion annually. Supply chain teams cannot afford to ignore this challenge.
APICS and American Society of Transportation and Logistics (AST&L) announced today that the boards of directors of both organizations have approved an agreement under which AST&L will merge with APICS upon ratification by an AST&L member vote. Following the close of the transaction, APICS intends to integrate AST&L within its existing operations.
Laurie Hein Denham, current AST&L president will join APICS as a senior director.
The announcement itself outlines three strategic rationales for this combination and essentially adds more logistics and transportation depth to the APICS body of knowledge. AST&L offered various certification programs including certification in transportation and logistics as well as distinguished logistics professional.
This announcement follows the April 2014 merger of the Supply Chain Council (SCC) with APICS. Thus far, the distinctiveness of SCC’s distinctive different corporate focused education and certification activities related to the SCOR Framework and high-level supply chain process and measurement metrics have, by our lens, been laggard since that merger. APICS has yet to sponsor a separate and distinctive conference related to Supply Chain Council’s unique body of knowledge and expertise. Similarly, local APICS chapters for the most part not adopted training and/or certification efforts related to SCOR. Current SCOR training is delivered by former SCOR certified instructors.
No doubt, with today’s announcement, APICS continues efforts to position itself as a prime supply chain certification and body of knowledge resource for global-wide supply chains. To sustain these efforts, APICS needs to keep pace with the clock speed of changes being placed on multiple industry supply chain teams today. Supply chain talent development and retention is constantly being identified as a significant challenge today and professional organizations, academic institutions and community colleges need to up their game in the offering of timely and pertinent training and professional development. Consolidation and/or mergers of professional organizations are a valid strategy if the sum of the parts is far more efficient, effective and timely to current needs.
Supply Chain Matters has in the past cited Andrew Liveris, Chairmen and CEO of Dow Chemical Company for his understanding and appreciation for the value and contribution of manufacturing and supply chain capability to business outcomes. Besides his current leadership of Dow, Mr. Liveris is an author and U.S. Presidential advisor on manufacturing competitiveness. In a September 2013 commentary, we highlighted his keynote delivered to the MIT Production in the Innovation Economy (PIE) Conference which unveiled results of MIT’s study on U.S. manufacturing competiveness.
Thus we were pleased to be alerted to a commentary appearing in the online version of Chief Executive Magazine where Mr. Liveris shares his winning formula for manufacturing success with other chief executives. His prime messages was for manufacturers to rethink the role in evolving global supply chains and actively address workforce training and development needs for today and the future.
One of the more powerful statements brought out in this interview article deserves highlighting:
“Entrepreneurial action and its ability to pivot, according to the world we face, is one of America’s greatest attributes. Manufacturers, for far too long, did not really display agility when global competition disrupted supply chains. We are in a different world. We’re traveling at the speed of flight. We are so connected to the information age without realizing that we’re still at the dawn of it. The smarter companies have figured out their place in the global supply chain and have adjusted their service and product models accordingly.”
Those statements are rather powerful when considering that they come from a CEO. They reflect the new awareness to supply chain’s contribution. Within his own industry, Mr. Liveris points out that of the top 20 global chemical manufacturers in 1990, 17 disappeared by 2010. Dow prevailed because of its ability to pivot to dramatic market changes.
A further pearl of wisdom:
“Manufacturing today means you’ve got to innovate faster than they commoditize you.”
On the all-important skills challenge:
“The biggest issue we have is training a new skilled workforce to deploy against that value add, and for me, that is the key topic in manufacturing today. We need technically trained people at the German skill level, in automation, robotics and fine-precision manufacturing. This is the world that we’re in today and we’ve got to adjust to it, and frankly that’s what I spend my time on.”
From our lens, there needs to be many more global manufacturing firm CEO’s possessing the wisdom of Andrew Liveris, one’s that understand that supply chains and manufacturing capabilities do matter.
In a previous Supply Chain Matters commentary focusing on aerospace focused supply chains, we brought forward how the voice of commercial aircraft customers is growing ever larger. Influential customers and industry observers are increasingly indicating that both Airbus and Boeing should be focusing more on delivery commitments on existing new aircraft rather than indicating intentions to develop even newer technology-laden aircraft models. Among strategic plans for both of these aerospace global leaders are efforts towards added investments in supply chain capabilities including long-term strategic supply or added production capacity.
A recent published report by Reuters featured on Yahoo Business provides the perspective of Boeing’s chief of airplane production programs on efforts underway to ramp-up production specifically that related to Boeing’s cash cow, the iconic 737 aircraft family. This specific single-aisle aircraft is especially important since it is today’s workhorse of the termed lower-cost, budget airlines such as Ryanair or Southwest Airlines, that are growing faster than long established carriers.
In the article, Pat Shanahan, Boeing’s Senior Vice President for Airplane Programs indicates that his company is not only well positioned to scale-up 737 production rates, but learning from past mistakes. He further points to needs for an integrated plan that includes not only internal manufacturing but the broader supply chain. An important quote: “When I think about the mistakes we made back then (referring to 1997), we didn’t have an integrated plan that included the supply chain.”
In 2014, Boeing increased 737 model production to the rate of 42 aircraft per month, which was up from the 38 per month level experienced in 2013. Current plans call for production of this popular single-aisle aircraft to ramp to a rate of 52 per month by 2018, along with a transition to a the newer 737 MAX model version. Besides the 737 family, Boeing has additional plans to ramp-up monthly production volumes of the 787 family from the current level of 10 per month. The Charleston South Carolina facility now serves as a second production facility for the 787.
Boeing is not alone in these efforts.
Airbus who produces the rival A320 aircraft currently matches the 737 output of 42 aircraft per month has ramp output to 46 per month this year, and 50 per month by 2017.
Within the article, Mr. Shanahan outlines a risk-based approach for evaluating the readiness of the integrated supply chain. Unfortunately, there are not a lot of specifics related to people, process and information technology enablement specifics being addressed, but that seems to be par for the course when two high-profile, highly competitive aerospace companies attempt to outpace themselves in product development and operational execution capabilities. In some cases, both of these producers share common suppliers of components and technologies.
From our Supply Chain Matters lens observing both of these aerospace giants for the past eight years, it is clear that efforts towards major global supplier-based product development, outsourcing and supply chain risk mitigation have brought painful, but important learning on the importance of total supply chain wide visibility and fulfillment synchronization. We recall the vivid images of multiple fabricated 737 fuselages sitting on the banks of a river after a rail derailment.
Both now take a far broader view of operational capabilities that umbrella both internal manufacturing and the global, end-to-end supply chain.
A recent commentary appearing on the investor site, The Motley Fool, Are Boeing and Airbus Building Too Many Jets, calls to question the delicate balance for investing in too much production capacity if a bust in airline demand occurs sometime in the next few years. This commentary cites Boeing’s 2014 Current Market Outlook projecting existing demand for over 25 thousand single-aisle aircraft over the next 20 years. That is obviously a lot of airplanes and accordingly works out to and annual sales and production rate of over 1200 aircraft per year for all manufacturers. Noted in the commentary is that within a few years, Airbus and Boeing will likely be producing close to or exceeding this average volume. Hence, there is fear by investors of potential overcapacity.
As noted in our prior commentary, senior management at both of these major aerospace firms cannot rest on the laurels and enviable position of having 8-10 years of product demand backlog. A very delicate balance involving even more product development, investing in supply chain and production capability and satisfying today’s Wall Street’s more short-term focused investor expectations, has such executives, and their supply chain and manufacturing teams, constantly challenged.
Customers require new aircraft orders be delivered on-time to meet business growth, efficiency and productivity needs while investors require higher investment returns and profitability. We all know that in a ten or even twenty year horizon, many business and market assumptions can change, sometimes dramatically. Who would have believed five years ago that the price of crude oil would drop below $50 per barrel?
It is a delicate balance and aerospace supply chain ecosystems and internal supply chain and product development teams sit in the middle of this dynamic.