Getting ahead in sourcing through benchmarking and system dynamic analysis : an aerospace industry perspective

Abstract

Sourcing and purchasing have received renewed attention recently as many supply chains challenge themselves to meet cost reduction goals. These challenges are especially apparent in the high-mix, low volume, and often considered cyclical aerospace industry where customer purchase decision emphasis is shifting from technology-centric to cost-centric. This study identifies three sourcing frontiers by time, and develops a Benchmarking-Internal data analysis-System dynamics model (BIS model) to recommend sourcing strategies to aid Honeywell Aerospace in advancing to the highest sourcing frontier. The thesis details the BIS model as a framework and a set of methodologies to aid aerospace incumbents in understanding their competitiveness and in formulating a balance of short-term and long-term sourcing strategies. This model applies not only to the aerospace industry but also to other industries in identifying cost reduction strategies and in constructing a competitive sourcing foundation for the next generation sourcing frontier.

(cont.) This research was conducted jointly between the MIT Leaders for Manufacturing Program and Honeywell International within the Honeywell Aerospace Strategic Business Group and considered the historical evolvement of sourcing frontiers and key challenges of aerospace sourcing: airline deregulation, exponential increase in strategic sourcing, rise of precious metals prices, diverse products and supplier base, and stringent regulations.