Aerospace distributor sorts supply chain

With the help of Windows-based ERP, Access databases and some bespoke web-based supply chain software, Wesco Aircraft reckons it’s reduced inventories by 70% and increased on-time delivery performance from 85% to 98.4%. And it says that’s about to go further. Wesco is a Huddersfield-based aerospace fastener stockist, distributor and service provider, but the lessons here for manufacturing SMEs and suppliers, wrestling with costs and profitability, are excellent. The firm employs around 80 people in the UK and turns over £13 million. Six years ago it was just 15 turning over £2.5m, and that growth has come from service. Matt Greaves, operations director, says that moving to third party stock management and providing vendor managed inventory (VMI) for companies like BAE Systems and GKN Westland has transformed it. And its success has come not just from service-focus, nor only from responding to the industry’s move to just in time (JIT) initiatives. It’s also come from acting as a conduit to pass benefits to customers and back down the manufacturing and factoring supply chain. The aerospace sector is far from alone in going for cost-cutting through JIT and lean manufacturing. Direct line-side feed (DLF) has become the norm for high volume, low cost materials, with the familiar mix of minimum stock levels, bins and visual, manual and automatic triggers to get the correct materials to production line operators only when they’re needed. Usage, not engineering MRP But there’s more to it. As Greaves says, “Aircraft are complex, low volume, high variety devices. So they have an engineering BoM (bill of materials), but the manufacturing BoM, well, it’s a grey area.” In fact, users tended to procure against the engineering BoM, so they didn’t always get it right. “They were writing off 15—20% of what they bought,” he says. They needed was to move to forecast usage, with ‘automatic’ call-off and delivery. But to achieve that cheaply, and without significant stock holding on the supplier side, required a system to manage some 50,000 SKUs across multiple sites. Accordingly, since Wesco was already a basic K3 (formerly Kewill) Micross for Windows (MFW) business IT user, it turned to the firm for an upgrade to the latest ERP along with custom software to manage stock replenishment triggered by users’ remote line-side bar code scanners. (Although actually, much is still manual, with Wesco or customer staff providing faxbans, emails and calls.) “Now we front load [on demand] but then customers only call off what they want,” says Greaves. So although there’s still complexity in the variety, numbers, destinations and timing, “we can just look at usage, so we don’t need the BoMs.” And the transaction history is held within MFW, which constantly interrogates Wesco’s main Access parts and BoMs database for reconciliation, and is available to all internal users. Beyond that, “We’ve developed a web-based supply chain system that allows customers and suppliers to look at exact stock positions,” says Greaves. “They get to know requirements straight away… It gives true visibility across the supply chain – and provides paperless invoicing because delivery notes and other documents are all scanned into the system.” That was developed in the Cold Fusion web environment and runs with Crystal reports, covering stock, usage per part, materials delivered, customer records and so on, with managers able to drill down and see part numbers, status, actions, etc. “We started supplying fasteners under DLF but this has expanded to bearings, fittings, electrical equipment and items bought-out-to-drawing,” says Greaves. “Across the business we’re now supporting 45,000 line-side bins ... and around 40,000 transactions a month.” Total cost of Wesco’s system was around £60,000 all up. Greaves says it’s been brilliant, and he believes that similar can be achieved in other sectors where stock (right or wrong) is held by various parties due to variability of production and demand and second guessing. “If we can guarantee consistency of delivery we could get three months [safety stock] down to one… There’s big money in this for manufacturers and suppliers.”