Contracting Out Manufacturing in the Aerospace Industry

James Judd, a speaker at the marcus evans Aerospace & Defense Manufacturing Summit 2010, shares his thoughts on some of the difficulties facing senior manufacturing executives from the aerospace and defense industry across the United States and Canada.

Staying ahead of the competition means production optimization continues to be a top priority for the aerospace and defense manufacturing industry. But when 40 to 60 percent of production is outsourced, as James Judd, SVP, Technical Operations states is the case for Orbital Sciences Corporation, to secure the future, suppliers’ challenges must also be prioritized and addressed.  James Judd, a speaker at the marcus evans Aerospace & Defense Manufacturing Summit 2010, taking place in Florida, February 10-12, shares his strategies on managing relationships with contract manufacturers, production management and his outlook for the future of the aerospace and defense manufacturing industry.

What are some of the challenges experienced by senior manufacturing executives in the aerospace industry? What strategies would you recommend to overcome these issues?

James Judd: A large percentage of our work is subcontracted out to lower-tier suppliers. One of the biggest issues that we are facing right now is maintaining the rigor and quality of those suppliers and their processes associated with engineering, procurement, manufacturing and test of their products. We need to ensure that the end product is as specified and meets the technical, quality, cost and schedule requirements that are expected in the aerospace industry. To address these concerns, we actively engage in all levels of our supply chain, as well as with all levels of management within those supply chain companies, to ensure that due diligence is not eliminated or minimized in any of the processes associated with the engineering, procurement or build of the product. We enforce the utilization of risk management, which is typically identified within the suppliers’ ISO/AS9100 process to the lowest level, to eliminate risk throughout the entire process.

We also actively manage and work with suppliers, who may have financial issues, but are critical for our systems. We ensure they are financially stable and able to execute the contract. For example, we assess their financial state, including cash flow, overall revenue generation and forecast of future revenues. As a result, if we identify high risk suppliers early on, we can establish contractual terms that will assist them in their recovery while not compromising the integrity of products they supply to us and ensuring the technical, quality and delivery requirements are met.

In the aerospace industry there are many suppliers who have very unique products, or are one of the very few providers in the world and may be your sole provider of a particular part. Keeping those companies financially stable as well as reliable is critical for us. In the last three to four years, the quality and timeliness of products coming out of our supply base has declined. Therefore, we have implemented a rather rigorous program to manage these suppliers and mitigate downstream problems.

What strategies to optimize the production process would you recommend to aerospace and defense manufacturing executives?

James Judd: There are various types of programs out there, such as Six Sigma and Lean and what we have found works best for us, is taking the most applicable tools out of these programs and utilizing them on a value-added basis, from company to company, and product to product. We take a portion of the Six Sigma program that is critical to our suppliers’ business and apply it appropriately, to improve engineering, manufacturing and quality processes. This ensures they are not overwhelmed by the complete program. We work with our suppliers to understand their challenges and assist them in applying the right tools to solve those issues, without adding costs or resources that do not add value to their end product.

What are your projections for 2010? What developments do you expect or predict that could affect senior manufacturing executives in this industry?

James Judd: There are several key initiatives in the commercialization of space, both with crew and cargo transportation that will take center stage in the next couple of years. Orbital is certainly in the middle of this developing trend. In fact Orbital is one of only two companies that has a commercial contract with NASA to deliver cargo to the International Space Station. Through 2015, we will carry out eight cargo transportation missions for USD 1.9 billion. This is an area where NASA, through its significant history and accumulated knowledge, has mandated significant safety, quality and technology heritage, to its systems providers. As commercialization of those areas becomes more and more mainstream operations and the government focuses its resources in space on inter-planetary and exploration programs, there will be a significant initiative in maintaining the embedded safety, and quality of such programs that are carried out by commercial companies. So the question of how we maintain safety and quality while meeting the expectations of lower cost and faster cycle times becomes paramount. There is currently a great deal of activity in the industry and government associated with the addressing of these issues. But if the commercial sector is going to be successful in providing these crew and cargo services that formerly were carried out by the government, the prevailing wisdom in all quarters is that there needs to be a tight collaboration among all parties to ensure the very highest levels of reliability and safety at all levels of the supply chain.

What long-term strategies would you recommend to senior manufacturing executives within the industry?

James Judd: We have successfully focused on implementing manufacturing technology in a cost effective and reliable way that has increased throughput (or manufacturing capability) while reducing cycle time and associated costs and increasing safety. That has been a good recipe for our success. It goes back to being able to implement new technologies in a safe and reliable manner and maintaining or improving the process control of product
manufacturing, without adding cost or technical risk. There are a lot of innovative products and processes out there that replace many human processes, but the transition to that type of new technology needs to be very well understood prior to implementation, to ensure that there is no disruption in the actual safety, quality, performance or delivery of the product. We are moving towards the commercialization of human and cargo transportation, thus we need to ensure that the right processes are in place to maintain safety and reliability without adding costs that are currently associated to the system.

About the Aerospace & Defense Manufacturing Summit 2010

This unique forum will take place at the Doral Golf Resort & Spa, Miami, Florida, February 10-12, 2010. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The summit includes presentations on the F-35 Global Production System, combating counterfeit products, production optimization and the greening of aerospace and defense manufacturing.

For more information please send an email to info@marcusevanscy.com or visit the event website at http://www.aerospacedefensesummit.com/JamesJuddInterview

Please note that the summit is a closed business event and the number of participants strictly limited.