In a complex manufacturing facility, where the most stringent specification and safety compliance requirements exist, the entire supply chain must work like clockwork.
CargoSolutions, a division of Cargo Carriers, together with Aerosud Aviation and Opslogik, won Gold at the 28th Annual Logistics Achiever Awards held at Monte Casino, in Fourways, Johannesburg on 13th October 2016, for their work with Aerosud Aviation.
Aerosud Aviation, a proudly South African aerospace component manufacturer, has been servicing large international aircraft manufacturers for a number of years, building complex and often critical components for modern passenger aircraft.
In the aircraft component manufacturing industries, raw materials are sourced only from the most reputable and accredited suppliers. The challenge however, is that most of these suppliers are abroad, implying long lead times, and obviously expensive materials.
“Add thousands of expensive raw material items, long lead times, and sometimes even shelf life restrictions, and you face the inevitable challenges of overstocking on a portion of the items, whilst simultaneously experiencing out-of-stocks on other items”, states Head of CargoSolutions Dawid Janse van Rensburg.
Aerosud Aviation embarked on the implementation of the Theory of Constraints based production solution (DBR) a few years ago, but had never expanded the demand-driven replenishment principles in the procurement area. In 2014 Opslogik and CargoSolutions were contracted to assist in the implementation of this functionality. An interface between the ERP system of Aerosud (Syspro) and the TOC enabling Symphony software was developed, and the new business processes followed.
Reducing inventory levels whilst maintaining high levels of availability, in one strategy
The solution essentially consisted of a decoupling of the raw material warehouse, stock and time buffers were sized based on historical consumption, and the dynamic buffer management system was activated. Procurement from then on became purely a function of replenishing the stock buffers as it was issued to production, mitigating for long replenishment lead times with dynamically adjusted stock buffers.
Aerosud Aviation embraced the new procurement principles and the system with endless enthusiasm, and new business processes were refined and deployed.
From about 12 months after implementation, a substantial portion of the total raw material inventories was reduced, whilst maintaining the very high levels of availability and then the focus shifted to inventory reductions.
Over a two year period, this excellent example of pint-point accurate procurement, led to impressive downstream success. With very high availability of raw materials, production reached new levels of production success, becoming a world-class supplier to some of the most stringent build environments in the world.
Reduced inventory levels have obviously made an impact on the financial results through releasing substantial amounts of working capital, making for impressive financial results.
“This is indeed a logistics improvement project placing South African manufacturing companies at the forefront in the world in terms of procurement excellence”, says Janse van Rensburg.