Executive Briefings

The Value-Based Supply Chain

While discussing the specifics of the supply chain in the aerospace industry, Jun Tsuruta, director of supply chain at Lockheed Martin, Kelly Aviation Center, notes that managing risk and separating "suppliers" from "vendors" is crucial in any vertical.

A good definition of the supply chain is the culmination and synchronization of the internal and external sides with the objective of the organization, Tsuruta says. The internal encompasses the procurement of products, parts or services; the external, of course, refers to the supplier. You have to manage the latter carefully if you are to meet the company's goals. If either of those entities is "off," Tsuruta says, the supply chain is as well, and the enterprise's business won't be supported properly.

Tsuruta defines value in the supply chain this way: "You always have to have low cost, quick delivery and high quality. It's absolutely vital that you have those in order to get you where you need to go."

While all parts of the supply chain are equally important, in his view, planning is where it all starts. If that element is not right, the entire business will be affected, he says.

Supplier management is part of risk management, he says. The supplier has to be in sync with your overall operations and plan. The supplier is a player in either your overall success or failure. It's important then to separate the suppliers from what Tsuruta calls the vendors. By that definition, he says, a supplier is someone who can either help you or hurt you. Everybody else is just a vendor. They can't really affect your operations. The ones that can affect you can be critical. Looking at his own business, Tsuruta categorizes an engine manufacturer as the all-important supplier. "If it doesn't deliver in quality and the quantity you need, when you need it, you are absolutely going to be affected."

Such supplier have to be "managed within a heartbeat" or you will suffer downstream. "They must deliver to your time and expectations."

To view this video in its entirety, click here.

A good definition of the supply chain is the culmination and synchronization of the internal and external sides with the objective of the organization, Tsuruta says. The internal encompasses the procurement of products, parts or services; the external, of course, refers to the supplier. You have to manage the latter carefully if you are to meet the company's goals. If either of those entities is "off," Tsuruta says, the supply chain is as well, and the enterprise's business won't be supported properly.

Tsuruta defines value in the supply chain this way: "You always have to have low cost, quick delivery and high quality. It's absolutely vital that you have those in order to get you where you need to go."

While all parts of the supply chain are equally important, in his view, planning is where it all starts. If that element is not right, the entire business will be affected, he says.

Supplier management is part of risk management, he says. The supplier has to be in sync with your overall operations and plan. The supplier is a player in either your overall success or failure. It's important then to separate the suppliers from what Tsuruta calls the vendors. By that definition, he says, a supplier is someone who can either help you or hurt you. Everybody else is just a vendor. They can't really affect your operations. The ones that can affect you can be critical. Looking at his own business, Tsuruta categorizes an engine manufacturer as the all-important supplier. "If it doesn't deliver in quality and the quantity you need, when you need it, you are absolutely going to be affected."

Such supplier have to be "managed within a heartbeat" or you will suffer downstream. "They must deliver to your time and expectations."

To view this video in its entirety, click here.