Cessna: Supply Chain Management Using Term Paper

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Thanks to this new online bidding system, procurement decisions that took months earlier can now be arrived at within an hour. For its procurement process, the company uses an electronic tool called Ariba, which not only replaces the paper work but also eliminates the chances of misuse of purchase cards and other frauds. This automated ordering process reduced the use of purchasing cards from around $18 million in 2001 to less than $2 million in 2003. [Susan Avery] These savings in spendings on indirect materials and services is just one area of the supply chain where automation and optimization have proved effective.

The center point of Cessna's new initiatives aimed at rationalizing the Supplier chain management system, is the MPD process. The Maturity Path Development Process (MPD) is a process where Cessna officials sit together with their Suppliers on a regular basis and review the expectations and the quality and performance status met by them. Plans are drawn to highlight areas that need improvement and suppliers are expected to fulfill these requirements. In short, every month the suppliers are given a status briefing that explains how they fair with respect to the Baldrige benchmarks and the goals they have to meet in the short and long run. Within one year, it is expected that suppliers reach the 'growth supplier status' or be phased out. As Mr. Katzorke, vice president of supply management at Cessna Aircraft in Wichita, says, the MPD process essentially says to the supplier,

Here, Mr. Supplier, this is where you stand in terms of quality, cost, delivery, service, inventory, etc., and here's where you stand on all the Baldrige benchmarks.

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Based on that we want to make a very specific plan that you're willing to commit to for this year." [James P. Morgan] by means of these tools, Cessna has achieved a transparent, effective and strategic communication channel with its suppliers, which is very critical for supply chain optimization.

Conclusion

Cessna has achieved a dramatic transformation in its supply chain system and the results have proven to be positive. Using tools such as MPD, GRIP, etc., has greatly improved supplier performance levels for Cessna and has contributed to streamlining of the supplier chain management process. It is clear that the main goal of achieving seamless integration of the supply chain process has necessitated a whole new approach in the working of the supply chain department. By using the Baldrige benchmarking system as a standard both for itself and for its suppliers and by using the six-sigma tools, Cessna has succeeded in creating a positive transformation of its supply chain process and achieved better integration and consequent performance improvements. Today, Cessna stands out as an industry leader and a positive story of integrated supply chain management, which has translated to improved customer satisfaction and overall profitability of the enterprise......

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