Every kid knows how to make a paper airplane. But when it comes to making planes at Bombardier Aerospace, there’s no kidding around — the less paper it uses in making planes the better.
Getting paper out of its procurement, engineering and manufacturing processes is only one of the ways Bombardier is transforming itself. One of its strategies for gaining competitive advantage is through an optimum end-to-end supply chain solution focussed on the end customer, the aircraft buyer, an undertaking that is still in its early stages.
Though it may be a little early to break out the champagne, the company is off to a good start, having already earned a 2005 Canadian Information Productivity Award in the organizational transformation category for its BMIS (Bombardier Manufacturing Information System) supply-chain reengineering project.
Underpinning the BMIS project and providing the foundation for the company’s supply chain best practices is a major ERP implementation, which was rated by vendor SAP as one of the most complex and technically challenging in North America.
Leading that project was Verner Baird, Vice President of ERP and PLM.
“Our first implementation was wall-to-wall at our Mirabel facility, and it went in without disrupting the production schedule. In fact, as we implemented SAP the Mirabel plant increased their production rate.”
One of the big lessons learned on the project was the importance of going ‘vanilla’ on the implementation. Bombardier started off somewhat customizing the ERP software because it believed this would provide them with competitive advantage in certain areas. Now it is finding that going vanilla has compelling advantages.
“The technology is evolving quickly, and if you can stay vanilla you can take the upgrades and remain at the leading edge. We call it a fast-follower strategy,” observed Baird. “And as we adopt best practices and embedded processes in the technologies, we’re finding that our costs to implement and our speed to implementation can improve“
Though the technology was a challenge, the organizational change accompanying the ensuing reengineering of processes was the biggest hurdle and, when all is said and done, will represent significant support post-implementation”. Due to this challenge, Bombardier Aerospace was forced to re-invent its ERP change management approach. In fact, Gartner has been so impressed with Bombardier’s approach that they hold the company up as an example of best practices in this area.
Focussing on the customer
Before exploring how Bombardier is tackling some very difficult change-management issues, we’ll look at how its view of its business is changing and how this is impacting internal processes.
At the beginning of Bombardier’s supply-chain transition, many of its internal processes had been in place for over a decade. The focus is increasingly on approaches that will enable the firm to view its business processes with the end customer — the aircraft buyer — in mind, rather than as an extended series of internal client-supplier relationships.
“The company is oriented towards a strong customer focus, and I see that as being critical to the supply chain,” said Baird. “Sometimes you may tend to either internalize your supply chain or focus at the bottom end, to the vendor base. Our processes need to flow from the customer to the vendors and back towards our customer.”
Bombardier is organised around business units, and those business units are directed towards the customer base. As a result, the company is taking an ever closer look at key performance indicators that point towards the customer.
Taking out the paper
Going lean and paperless may seem like an easy enough target to set your sights on, but for a company that is subject to many regulatory requirements calling for signatures on paper, it’s a task more akin to Robin Hood splitting the arrow. Going to electronic approvals and taking paperwork out of the system means going right back to the source of the regulations and sometimes getting help from the appropriate authorities.
“People still have a tendency to want to press a print button. But every time they do that, immediately the data can be out of date,” said Baird. “So we’re finding that we have much more up to date revisions of documents by not printing paper, and that’s a message that we’re continually trying to sell to the business.”
Gradually the message is getting through, he added, as people are now getting used to things like virtual drawings and data, instead of paper-based deliverables.
Bombardier’s vendor portal
With its back-office ERP implementation in place and its core backbone moving to a more integrated supply chain model, Bombardier is putting itself in a position where it can layer on advanced tools that will provide further process improvements.
“Implementing SAP was the first part of a journey, enabling us to evolve to more strategic tools and more specific value-based opportunities,” said Baird. “We’re finding valuable tools in the marketplace, and the challenge is to get our organization lined up to be able to use them in the most effective manner possible.”
One such tool now being implemented is a vendor portal that allows Bombardier to exchange electronic data with its major suppliers and work with them in a more real-time paperless manner. Further developments will drive the evolution from exchange of data to both internal and external integration. The portal has the potential to remove paper purchase-orders from the process and eliminate the need for other paper-based activities, such as faxing.
A lot of what Bombardier does is product-centric. Traditionally, sourcing was focused on product, part and aircraft program. Now the company has put strategies in place that go across programs and products, moving towards commodity sourcing.
At a macro level, the more Bombardier buys in volume (for example, aircraft hardware) the more it can leverage price. The same applies for a great many bulk items. “Crossing the traditional boundaries when sourcing things such as hardware and electrical systems means that you get commodity-based leverage. And that is a strategy that our supply chain group is organizing around,” said Baird. “And it’s not just our purchasing people that we want to be involved. It includes all of our functions from engineering through to sales — so again, it’s an end-to-end, process-based approach.”
Bombardier is organised into Business units along product lines but also with functions such as Engineering and Manufacturing. The lines of sight cut many ways across the organization, and so a multi-matrix approach is required to managing data.
“The SAP Business Warehouse allows us to slice and dice information and get multiple views,” said Baird. “We can extract data and view it in more non-traditional ways. And over time, as we get more of our aircraft programs on the system, we’ll become more and more integrated. So there’s still a lot of value that we can take from this.”