Supplier relationship management best practices applied to the manufacture of a helicopter airframe in China

Abstract

Sikorsky's recently begun program to manufacture the S-76 helicopter airframe at a supplier in China is examined as a case study of supplier relationship management. Best practices and key principles from the literature and other industry case studies are identified. Key concepts covered include: importance of product architecture and supplier strategic role on the appropriate type of supplier relationship to develop; the different stages of relationship management; the concept of making investments in a supplier relationship as a way of achieving desired relationship closeness; the importance of geography and culture on foreign supplier relationships. The best practices and principles are then used to analyze Sikorsky's performance in the China S- 76 airframe program to date. It is found that while Sikorsky is engaged in several key supplier relationship management activities, significant improvement could be made by more carefully considering how to overcome geographic and cultural distance and by making decisions about relationship investments in a more analytical way, with a focus on bottom-line financial impact. Finally, a generalized process for managing supplier relationships is developed. The six steps are: * Determine the appropriate relationship to develop with the supplier * Determine current supply chain proximity with the supplier * Determine stage of supplier relationship management and appropriate type of investments * Develop menu of relationship investment options * Determine the attractiveness of investment options * Select, prioritize and make investments.