When pandemic lockdowns began to spread across the world last year, iconic helicopter and VTOL aircraft maker Bell was mandated by the US government to continue operations, as an essential component of the country's military infrastructure. But its manufacturing and supply chain operations span the globe. Its major manufacturing plants in Mexico and Canada were still forced to close, while suppliers in Europe and Asia were all impacted in different ways. It was a textbook supply chain crisis that underlined the need for effective planning. As Michael Loeffler, VP Materials Management at Bell, puts it:
You can have the most differentiated products, and the most advanced business systems. But without a good plan — and more importantly, the ability to change that plan — none of it matters. How well you're able to answer these basic planning questions can make or break you, particularly in times like these.
The experience was a stark demonstration that Bell needed to put a more flexible supply chain planning system in place. Speaking in a session during last week's Kinaxis Big Ideas in Supply Chain event, Loeffler continues:
Here's where I admit, Bell's historically answered these questions with imperfect data, and a lot of brute force. How can an innovative company, building high-tech aircraft with advanced business systems and manufacturing tech, rely on a big spreadsheet to build the plan? It became plainly obvious that we needed to do this better, we needed to do it faster.
Trends pushing supply chain planning
While the pandemic added extra urgency, it had already become clear that there were several trends pushing supply chain planning up the agenda. Loeffler highlights three.
The first of these is the growing importance of aftermarket service — a trend towards continuous customer service that diginomica calls the XaaS Effect. It's no longer enough to simply ship products, which relies on a traditionally predictable and stable operating model. With increasing emphasis placed on supporting and sustaining fleets of aircraft throughout the product lifecycle, there are more variables to take into account, including the ability to anticipate and respond to demand. He explains:
A purely date-based, just-in-time, build-to-order model fundamentally doesn't work. We have to anticipate and be flexible. We have to make investments and take risks.
We've had to pivot from planning around certainties to making judgment calls based on probabilities. We've abandoned the quest for that single perfect, unchangeable plan, and put more effort into modelling scenarios and improving the planning process.
The second factor is the rising pace and scale of product design and development. Those designs must be translated into production plans more quickly than ever. It's crucial that product leaders have the right information about the cost and resource implications of their design decisions. He explains:
We must have the ability to quickly assess the economics of a design train ... We simply can't afford to make product design decisions without understanding the impacts on our manufacturing and supply chain systems.
The third factor is the ever-present threat of the unexpected, such as the pandemic. Businesses need to be able to map different scenarios and plan their response to different patterns of supply and demand. He sums up:
Rather than being lofty questions about vision, or future products or technologies, these are everyday mundane questions about the mechanics and economics of our business. And they're just as important. But these types of questions can be deceptively tough, simple questions, with complicated answers.
A single, shared data model
Bell's chosen platform for achieving this greater insight and flexibility has been Kinaxis RapidResponse, which went live last July to provide more robust scenario planning and a more rapid monthly cycle of Sales, Inventory and Operations Planning (SIOP). It's already been used to evaluate various significant changes to the aircraft manufacturing schedule as Bell responded to the pandemic. Here's Loeffler's verdict:
We used to do this in spreadsheets. Now, we essentially have a digital twin of our production and supply chain operations that we can use to model complex scenarios in near real-time using live ERP data. This sounds basic, but it represents a quantum leap in the speed, robustness and fidelity of our analyses. Put simply, it leads us to better decisions.
One of the most important aspects of the Kinaxis implementation is the creation of a single, shared data model that represents everything that's happening in the ERP system and elsewhere relating to demand and supply. Jason Howard, Senior Manager of Material Systems at Bell led the implementation. As he explains:
We came out of it with a common language and one unified data model. I can't stress enough how important that was to help us to communicate simply.
A major part of the implementation project was the preparation required to assemble the data elements needed for an accurate capacity model across the various work centers. This was the basis of the digital twin of the factory supply chain held in Kinaxis. Daily MRP data is then archived in the system. This shared view of the supply chain is made available across the organization. Howard says:
We wanted our entire SIOP process to be transparent to everyone. There's not a complicated part of the process that only certain analysts know, that's hidden away on their hard drive. None of that. The entire process is orchestrated in RapidResponse, and shared. Everyone can see it, everyone can analyze it, and we try to make it as simple as possible so that everyone can understand it.
This shared access to a common platform cuts across operational silos and accelerates effective decision making. He sums up:
By democratizing the whole process, we accelerate collaborative planning of collectively understood decisions.
In his opening keynote for the Big Ideas in Supply Chain event, Kinaxis CEO John Sicard identifies siloed planning and governance as a major weakness in supply chain management, leading to decisions being taken based on the goals of individual functions rather than the entire enterprise. Bell's story illustrates what can be achieved once planning is opened up across the organization in a way that provides transparency to all participants. The aircraft manufacturer is still early in its adoption journey, but it is already benefiting from the concurrent planning approach that Kinaxis espouses.
What stood out for me in the Bell story was Michael Loeffler's description of the growing requirement for what he calls aftermarket service. I've linked this to diginomica's philosophy of Everything-as-a-Service (XaaS) even though there's no suggestion that the US military has started consuming VTOL aircraft on subscription. Nevertheless, today's customers clearly expect manufacturers to collaborate with them to maximize the lifetime value and effectiveness of the products they buy, and that is fully in line with the continuous cycle of engage-monitor-improve that we identify at the heart of the XaaS model. This is why we emphasize the digitally connected nature of XaaS. Whatever the business model, customers expect manufacturers to use the digital tools available to them today to track the performance of their products and maximize the value they deliver. Tools like Kinaxis that help manufacturers anticipate demand and co-ordinate supply to meet those expectations are becoming another essential piece of the toolkit.
[Edited November 2nd to change S&OP to SIOP]
For more diginomica stories from Big Ideas in Supply Chain Summit 2021 visit our Big Ideas in Supply Chain event hub. The virtual event ran from June 1st-2nd and sessions are available to view on-demand until further notice. Click here to see all on-demand sessions.