Stephen Cowan talks to Debbie Giggle about Bombardier Aerospace’s award-winning supply chain initiative
When representatives of Bombardier Aerospace took to the stage to accept the Logistics and Supply Chain Award at this year’s Manufacturer LIVE, they weren’t the only team in the company to have recently received an award. The Learjet team at the Northern Ireland operation had already been presented with the highest accolade from their international parent company – the Annual Accomplishment Award, given by Bombardier to the most outstanding initiative across the entire aerospace group – in this case, the successful implementation of lean manufacturing on the Learjet assembly line. When you consider the size of the Bombardier organisation, this is a significant achievement indeed.
Headquartered in Montreal, Bombardier inc operates plants in 21 countries in Europe, North America and Asia, and has around 56,000 employees – almost half of which work in the corporation’s aerospace division. Between 1986 and 1992, Bombardier acquired Canada’s Canadair and de Havilland, Short Brothers in Northern Ireland and Learjet in the United States.
Sharing 250 years of aviation history and expertise between them, these four companies were integrated to create Bombardier Aerospace, which has, in the intervening years, become a major force in world aerospace. Revenues for the last fiscal year totaled $8.2 billion from sales of its regional, business and amphibious aircraft and from services including fractional ownership programmes, technical support, aircraft maintenance and pilot training.
Bombardier’s operation in Belfast is a centre of excellence within the group for the design and manufacture of aircraft structures and nacelles in both metal and advanced composites. While the Learjet team was singled out for particular praise for the implementation of lean, this forms just part of a major transformation process embarked on by the Belfast company, aimed at improving its competitiveness. Included in these improvements are a number of initiatives to remove cost and improve efficiency within the company’s highly complex logistics and supply chain operations.
Stephen Cowan, director of supply chain, said: “We embarked, two years ago, on a business and cultural transformation journey. As a leadership team we identified that, if we want to be around for another hundred years, we need to transform to meet current and future demands.”
The Belfast operation will celebrate its centenary in November 2008 and continues to be a major driver of the region’s economy. It is the largest manufacturing company in Northern Ireland, and one of the biggest employers, with a workforce of around 5,000, and is responsible for approximately 10 per cent of Northern Ireland’s exports outside of the UK. It is also a major contributor to the local community, with salaries totaling around £160 million per year. It also allocates up to two per cent of profits to Northern Ireland-based charitable organisations.
Since 1989, the Belfast facility has been transformed through a capital investment programme of around £1.2 billion benefiting plant, machinery, facilities, product development and training. This has extended significantly the company’s capabilities and made a dramatic impact on year-end figures, but the initiatives put in place by the leadership team aim to take development of the site still further.
“Our customers are looking for us to deliver cost reductions, reduced inventory, improved time to market, and just-in-time delivery of our products, which must be right first time,” Cowan explained. “These are all key drivers for our continuous improvement strategy – or our ‘achieving excellence’ journey as we call it – but there are additional drivers that reflect our own wider vision for the company. We want to deliver an amazing customer experience and to create a safe and rewarding workplace for our employees. Our Belfast operation won Bombardier’s Health and Safety Award earlier this year for the second year in a row. But it doesn’t just mean attention to health and safety issues. We also want an environment where people feel ‘safe’ to generate new ideas and confident to communicate openly.
“There are also external pressures involved with being a global manufacturer that lie outside our control. There are few competitive advantages of manufacturing here in Northern Ireland; we have high energy and electricity costs; no direct shipping routes to North America; and we must take into account the US dollar foreign exchange rate. And of course, like other companies, there is the challenge of low cost competitors. The development of our strategy took all of these factors into consideration.”
The Belfast leadership team embarked on the transformation journey with assistance from external consultants, who conducted diagnostic exercises. Key priorities were determined as being: the need to change hearts and minds and bring about a fundamental cultural shift; the elimination of waste; and the need to focus on higher value-added activities which provide differentiation from the competition. Opportunities were also identified for leveraging leading edge technologies and capabilities developed within Bombardier, which have potential for wider exploitation.
Lean manufacturing tools and techniques are used to encourage employee involvement and drive results towards achieving excellence.
“We already had experience of solving problems using six sigma,” said Cowan, “but six sigma is rather like a scalpel, carrying out detailed work in a specific area. We decided that lean would be more like an axe that could cut its way through barriers and change things on a larger scale. And we knew that using lean would not work if it was viewed as something that was going to take jobs away. We needed to show employees that lean was a good thing.”
The company began by focusing on the management ‘layer’ of the organisation. Managers were given feedback from an employee survey, some of which identified the need for changes in approach among individual managers. Issues such as lack of engagement experienced by some members of the workforce needed to be tackled before progress could be made. A 360-degree appraisal process was developed to help managers focus on ways of enhancing their methods of interaction, and training was provided to equip managers with new tools to improve their effectiveness.
Methods of communication with the workforce were reviewed and changed, and key issues such as pension provision and contract renewal were settled between unions and management.
Significant continuous improvement effort is being directed externally, on logistics and supply chain issues. The site is a major customer for around 800 suppliers in the UK and Ireland with contracts worth around £100 million per year.
“Aerospace supply chains are complex in comparison with some other areas of manufacturing,” explained Cowan. “A typical product lifecycle may be around 25 years. The number of individual components involved in a single build is higher in comparison, and full traceability of every single item is crucial. In addition to being complex, the aerospace supply chain is vitally important to each link within it. Individual company performance is no longer a guarantee of success. To survive and grow in today’s global market, aerospace companies need to be able to respond within integrated and highly efficient supply chains.”
In the UK Bombardier has linked its initiatives in this area with the Society of British Aerospace Companies and the SC21 (21st Century Supply Chain) initiative, and is encouraging other companies to sign up for the good of the whole UK aerospace industry.
It has adopted a three-pronged attack for its strategy within SC21. Firstly, it is aiming to reduce audit duplication by developing a single supply chain accreditation. Secondly, it is determining a common development process, so that training and support are provided to create and sustain a skilled workforce. Thirdly, it aims to foster better relationships and communication between companies, and encourage more alliances through lifecycle solutions.
In bringing about practical improvements, Bombardier has found that the latest IT, and the tools and techniques of lean manufacturing, have assisted their efforts.
“We have a strong in-house IT department and pride ourselves on the information we are able to access from our ERP systems. New software tools are now assisting us with commodity sourcing – identifying where best to source individual items based on total acquisition costs. But although IT has been key, we must avoid it being on the critical path.”
A key change on the critical path was the bringing together of the procurement and logistics teams to form a unified supply chain team. There is also a new strategy for ‘managing’ suppliers.“In the past we tended to manage suppliers remotely, especially in low cost countries, and it wasn’t working well,” Cowan commented. “Now we are much closer to our suppliers, both geographically and in terms of the information we share with them.”
Some of Bombardier’s suppliers have literally moved onto the Belfast site alongside their customer. Bombardier has also extended its relationships in areas where components are brought in from low-cost economies. A team from Belfast, for example, is located at the factory of its supplier Shenyang Aircraft Corporation (SAC) in China, where some Q400 structures are manufactured.
“When you’re dealing with different cultures there are even greater risks that communication between parties will be misinterpreted if you’re managing the relationship from a distance,” Cowan advised.
Another structural change within the supply chain team was the dividing up of the sourcing and supply logistics agents along commodity lines, for example, one for raw materials, and one for sheet metals and so on. This enables each individual to deepen his or her knowledge of a specific commodity area.
An in-depth review also identified that logistics would be best handled by an external organisation and so a third party logistics company has been appointed.
As Cowan explains, future management of new product introductions will be carried out very differently: “The processes are evolving to embrace new technologies in composites, and when introducing new designs we are getting everything right at the start, with the use of lean tools to determine the best layouts, and the positioning of parts at the point of use.”
As part of its research and development programme involvement, the Belfast site is leading the Wing Structures package, and spearheading the Power Plant package in the national Integrated Wing and Environmentally Friendly Engine R&D programmes, in collaboration with academic and commercial partners.
In its own right it has invested more than £8 million in the development of resin transfer moulding (RTM) advanced composites technology. An RTM facility has been established in Belfast which is producing composite flaps, vanes and ailerons for the CRJ700 and 900 jets.
A patented resin transfer infusion technology, also developed at Belfast, has proved beneficial for the manufacture of fan cowl doors and is now being offered to customers.
The Belfast plant has significant involvement in the design and manufacture of all of Bombardier’s families of aircraft, including the forward and centre fuselage, nacelles and wing components of the 70-seat CRJ700 regional jet aircraft, and the complete fuselage of the Learjet 45XR and 40XR business jets. It is also a market leader in aircraft engine nacelles, with components produced at Belfast for engines in the Rolls-Royce RB211 range, which power, among others, the Boeing 747 and Airbus A330.
To ensure that it has the relevant skills available to stay ahead in this international market, the Belfast site invests heavily in training.
“There is no other aerospace manufacturer of our size on the island of Ireland,” explained Cowan. “So we have to continually train employees in the specialist skills we need and have invested something in the region of £123 million since 1989.”
It has forged close links with all levels of education within Northern Ireland. It sponsors a chair in aerospace engineering at Queen’s University of Belfast and has developed postgraduate and management development courses with the University of Ulster. It also works extensively with schools and educators and, in 1999, launched an interactive educational exhibit, ‘The Flight Experience’, located at the Ulster Folk and Transport Museum to inspire youngsters to consider the aerospace industry as a career choice. The apprenticeship scheme at the Belfast site is the largest in Northern Ireland, taking on around
40 new craft and technical apprentices a year.
It is perhaps no surprise then that its achievements in training have also been recognised. It has received 11 national training awards and 24 regional training awards, as well as achieving Investor in People accreditation. Looking to the future, the Belfast plant is just two years into its transformation journey and Cowan points out that there is still a lot of hard work to do. Receiving recognition along the way, in the form of the awards it has scooped during 2007, provides the Belfast team with a well-deserved pat on the back the progress it has already achieved.