Supply Chain Management Remains Aerospace Challenge
by Dale K. Gordon
The aerospace industry is in the process of shedding new light on the customer-supplier relationship, especially in the never ending quest to deliver defect free, safe and reliable product.
The recognized situation is that managing suppliers throughout the aerospace supply chain remains a major challenge for the industry. The chain is very long, and within the supply base, there are sources that serve multiple industries.
One aspect of the industry’s quest for quality was the wide adoption of the SAE AS9100—Aerospace—Quality Management Systems Requirements.1
Because the industry is so dependent upon this supply chain, it isn’t surprising AS9100 includes expectations beyond those of ISO for identifying and maintaining suppliers. Supplier approval is just one step in the process of managing suppliers.
Effectively communicating requirements is essential. AS9100 lists seven specific areas for consideration. They range from clarifying engineering requirements to managing test specimens and right of access to suppliers’ facilities.
The industry typically relies upon one of three methods for product acceptance. An organization might conduct a receiving inspection, perform the inspection at the supplier’s facility or formally delegate product acceptance to the supplier. AS9100 requires procedures for determining the method of supplier control and the processes used when employing these methods.
These requirements ensure the supplier delivers what was intended at each point within the supply chain. But the AS9100 requirements or the communication from the original equipment manufacturer (OEM) to the lowest level in the supply chain is not always complete.
Of course, this situation results in disruptions during inspections and tests or rejection of product. Notably, the problem manifests itself in many unforeseen ways, often as a latent defect causing a product recall or field service activity that requires a product retrofit.
Eliminate the Blame Game
So, who is to blame when a defect occurs? Is it the supplier who was contracted to produce a key component or supply materials, or is it the customer organization that created the specifications and produced the final product?
When quality problems arise, supply chains and profits are threatened, and, too often, finger pointing begins. As more companies outsource parts of production and develop closer partnerships with key suppliers, finding blame can topple the delicate balance in even the best customer-supplier relationship.
But what is becoming more evident in each case of a problem is that the cause may not be in the direct customer-supplier relationship but in the supplier-subtier supplier relationship.
The leaders of the International Aerospace Quality Group (IAQG), which represents the major aerospace OEMs globally, have recognized this problem and established a working group and process to try to improve the situation.
The IAQG recently updated its mission statement in part to say: “Implement initiatives that make significant improvements in quality and reductions in cost throughout the value stream by establishing and maintaining dynamic cooperation, based on trust, between international aerospace companies.”
Several strategy streams, one to improve supply chain control and eliminate nonconformance, were established.
Control of subtiers is a common source of nonconforming product and is viewed by IAQC as a major potential source of risk by civil and defense regulators and customers.
“Implementation of industrywide increase in control will offer major benefit. The issues are beyond the controls applied by [AS]9100,” says IAQC.
What is implied is that even though the requirements in AS9100 are clear, there is insufficient understanding or definition of industry expectations with respect to supply chain control.
A global IAQG subteam has identified a current and future state map of the processes in question. The current state map identifies what is already well known with respect to the aerospace supply chain:
- Increased value of purchased product for the major aerospace OEMs globally.
- Increased dependence on first tier suppliers for design, development and integration.
- Customer requirements not al-ways accurately flowed through the supply chain at all levels.
- Increased likelihood of using unapproved sources resulting from the constant search for lower cost providers.
- Frequently inadequate subtier supplier control further down the supply chain.
- Purchased services sometimes outside the scope of the core competence of the supplier as suppliers try to do more upselling by adding services.
- Inadequately applied inspection or verification techniques or knowledge.
- Insufficient resources applied to resolving supplier quality problems.
Given this seemingly obvious realization of many of the current state problems, the vision of a future state also was developed. It states:
- Purchasing activities at any level in the supply chain ultimately should be perceived as low risk to the industry so the supply chain is not a cause of disruptions or shipment of nonconforming product by suppliers.
- The diligent application of basic supplier control activities should be the industry norm.
- Preventive methods should be applied routinely and consistently to reduce nonconforming purchased product.
- Any problems with supplied product should be contained rapidly and resolved robustly.
To proceed from the current to the future state, the IAQG working group is developing strategies. Some may sound simplistic, but the level of detail involved and the fact that many supplier control activities are now poorly executed make these strategies viable.
The working group also is researching best practices in the methods of supplier control. Its improvement strategies include:
- Creating some basic industry standards and best practices for the flow of requirements down to all levels of the supply chain and the proper way for all organizations, regardless of size or complexity, to apply supplier control processes in their organizations.
- Ensuring new standards or guidance materials have a strong connection with the AS9100 quality management system requirements.
- Qualifying personnel performing supplier quality activities.
- Exploring the use of tools and ideas for the transparency of supplier control activities down through the subtiers in the supply chain.
- Creating guidelines that include supplier management tools and resources for situations such as solving supplied product problems, managing source and method change, making sourcing decisions based on quality and managing risk.
While there is certainly no lack of information on the customer-supplier relationship, the needs of the aerospace industry are probably more aligned with other regulated industries in which the supply chain can have significant effects on the end product. These industries include medical devices and nonaerospace transportation suppliers, such as railroads and motor vehicle manufacturers.
Eliminating Root Causes
In addition to best practice benchmarking of
supplier control methods, the task group is beginning to build
the guidelines and information needed to eliminate many of the
known root causes of supplier nonconformances (see Figure
The list of the causes was established through a form of fault tree analysis, and the task group focused on only those causes that were the result of poor supplier control, including:
- Inadequate flow down of requirements. There is a need to ensure complete agreement on requirements, but complexity of requirements, lack of customer definition or poor definition lead to lack of flow down to subsequent levels in the supply chain. Customer requirements are hard to find or identify because they may be buried in specifications or websites.
- Poor supplier selection or lack of capability at any level of the supply chain. The initial supplier selection process may not be robust or may be based only on price or minimal information (an ISO 9001 certificate, for example), which fails to determine capability. A supplier may be capable initially, but something may have changed and made it no longer capable.
- Oversight failures in detecting quality system implementation weakness or failing to motivate or develop suppliers at every tier throughout the value chain to become self-managed. We need to develop supplier capabilities and proper motivation to improve processes, detect weaknesses in suppliers before they cause a disruption in the supply chain and quickly react to and recover from supplier problems.
This work has enabled the IAQG task group to identify potential chapters of a supplier control handbook or the guidelines. Ten chapters outlined as part of a brainstorming exercise are:
- Supplier selection and capability assessment, covering the assessment of supplier capability and risk for engineering and design capability, manufacturing (by commodity), capacity management, workload transfer planning, financial health, software capability, in-service support, and use and management of electronic data and e-tools. The chapter also would cover defining approval conditions and total acquisition costs, including those for oversight.
- Requirements and flow down, covering technical data and design requirements, acceptance criteria, special process control, configuration control, conformity with first article inspection (FAI) requirements and communication methods and frequency.
- New product introduction, including first article inspection, preproduction process validation (product specific), key characteristic definition, review of quality and manufacturing planning, qualification data based on risk and preapproval of test methods where applicable.
- Process control and variation management, covering key characteristic monitoring and control, root cause analysis and problem solving, process capability and control, risk based qualification data, preapproval of applicable test methods, special process control, design for manufacturing and product specific product validation.
- 5Product verification and acceptance, including receiving inspection, verification at source using known risk information, criteria for supplier delegation, control of third-party inspectors for source inspection and a positive recall release process.
- Control of nonconforming product, covering material review authority levels, a cost recovery process, nonconformance management, communicating nonconformance through notification of escape/disclosure, controlling scrap materials and documenting nonconformance.
- Work transfer management (WTM), including WTM plan requirements for scheduling, safety stock plan, qualification planning (including FAIs), tooling plan, gage repeatability and reproducibility, facilities plan, training and knowledge management plan, technical data transfer, obtaining customer or regulatory approvals and international considerations such as language and culture.
- Change management, covering areas such as product, process, location and subtiers.
- Performance measures and supplier oversight, including oversight action and frequency based on risk, such as using performance measures or technology risk criteria to maintain approval, dealing with chronic nonperforming suppliers and performance monitoring and decision support.
- Project management.
AIQG believes this handbook will educate, communicate and enhance the ability of the supply chain to fully understand the industry expectations with respect to supplier control. It also expects improved interactions between the customer and all levels of the supply chain to lead to fewer nonconformances and better supplier relations.
The IAQG initiative to improve supply chain performance is part of the industry’s never ending quest for safe and reliable products.
1. SAE AS9100—Aerospace—Quality Management Systems Requirements, revision B, Society of Automotive Engineers International, 2003.
DALE K. GORDON is vice president of quality for MPC Products in Skokie, IL. He is an ASQ Fellow, past chair of the American Aerospace Quality Group and one of the writers of the AS9100 aerospace standard. Gordon earned a bachelor’s degree in industrial engineering from General Motors Institute (now Kettering University) in Flint, MI, and an MBA from Butler University in Indianapolis.