Strategy for reducing the length and variability of aircraft lead time

Abstract

Helicopter manufacturers typically build each aircraft to order, and the lead time for make or buy parts and assemblies can be several months or more. The manufacturers generally have a backlog of orders at any given time, so customers in the helicopter market can expect to wait several months for delivery. However, due to the current economic conditions causing softened demand in the industry, some manufacturers have worked through most of their backlog and now have a finished goods inventory that allows for little or no wait for customer delivery, providing these companies a sales advantage. Between this effect of market conditions and recognition of the cost reduction benefits associated with shorter product lead times, successful helicopter companies with continued high demand and backlog, such as Sikorsky Aircraft Corporation, are seeking ways to deliver helicopters in a consistently shorter time frame. In the past, Sikorsky has approached the issue through speculative ordering and parts production prior to customer point of order. This approach has had limited success due to higher than forecasted variability in demand. In order to provide a more optimal means for speculative ordering and parts fabrication, the cause of demand variability was explored and implementation of a parts supermarket of critical, high lead time parts was considered. The solution proposed would be used as a pilot to ensure a consistent, shortened lead time for the main gearbox assembly. This methodology could then be applied to other sections of the helicopter. Analysis of the proposed supermarket reveals that by properly sizing the safety stock of 26 critical parts and using disciplined parts ordering, the objective lead time could be met. The calculated findings indicate large opportunities for cost savings in the implementation of this supermarket by offsetting original and spare parts demand to reduce variability, and by helping suppliers to establish reliable lead times through more consistent ordering patterns at Sikorsky.