Managing part-commodity price & supply volatility across the extended value chain.

Overview

Over the past decade the Commercial Aerospace Industry has endured extreme highs and lows. From the severe downturn post 911 crisis, to a significant resurgence of new orders and introductions of new airframe designs during the mid to late 2000’s timeframe, to today’s difficult global economic environment; through it all, Rolls-Royce has managed to steadily gain market share. Their new “Trent” series of engines utilize advanced design, materials, and manufacturing techniques to deliver a family of gas turbine engines with superior fuel efficiency and reliability. Rolls Royce’s three shaft engine design allows them to build engines optimized for both short and long-haul distances. These advances help position them to be selected and win an increasing share of orders to power the next generation airframe platforms from Boeing and Airbus. But success can be a double-edged sword when it comes to ensuring the timely delivery of finished products.

Recognizing the challenges.

Managing severe industry volatility has become a reality for Aerospace & Defense Manufacturers and their Supply Chain. Operating successfully in a highly complex and distributed global network of partners and suppliers, with extreme long lead time products and extreme variability of demand and supply has become increasingly more complicated. Rolls-Royce recognized strategic importance of extending their influence and control throughout their extended value chain. Manufacturing approximately 30 per cent by value of its gas turbine products, with the remainder of production provided by their external network of risk sharing partners-suppliers, they made a commitment to proactively coordinating key parts of their supply chain and turned to Newview’s Network Resource Management™ to help them address:

  • Limited visibility & control of strategic commodity input.
  • Fragmented spend across a highly distributed external (global) supply base.
  • Excessive part & material proliferation & complexity.
  • Variability of material input value in part cost model
  • Capacity constraints at key points in the value chain

    • Strategy & Objectives.

    • Transparency of the sub-tier raw material spend.
    • Develop an aggregate forecast of materials at a specification/form level & and ‘broadcast’ demand across the entire sub-tier network (“MRP for the extended enterprise”).
    • Reduce complexity by commonizing ‘like’ materials by dimension/grade & rationalize supply,
    • Leverage the total finished product material demand to ensure supply and gain commercial benefit
    • Model the elemental requirements in support of hedging strategies against price volatility and/or capacity constraints

      • The Solution: Network Resource Management™

    • Enabled Rolls-Royce to model the unique relationships between Engine Designs, Parts, and Production Materials.
    • Calculate raw material requirements based on finished goods production schedules as an input to: (a) Long term planning (b) Sourcing and negotiation strategies, (c) Financial hedging of elementals and adjacent materials dependencies.
    • ‘Broadcast’ Multi-Tier Demand Plan for recommended part and material needs across the entire network based on end-item production schedules
      “Commonize” production materials by dimension and chemistry and rationalize supply
    • Provide engineering with a suggested “Design to List” for the Trent 1000 program consistent with an efficient sourcing model and supply market conditions

      • Click here to request the full version of “Securing the Future at Rolls-Royce” via email.