The "+Add" Model : a proposed strategic framework to create agile high performance aerospace and defense product support supply chains

Abstract

The U.S. Aerospace and Defense industry is a vital organ for national security and humanitarian disaster response as well as an economic powerhouse creating jobs and driving exports. News headlines often stop at the sale of complex, hi-tech and expensive defense systems short of capturing the critical aftersales support. However, it is the aftersales support that enables the mission to be accomplished. Without a well-functioning product support supply chain, even the most advanced fleet of fighter jets is rendered useless. This paper looks in-depth at such support supply chains within top industry companies. The investigation spans the current and desired states, and gaps the difference. It also establishes a visionary roadmap to get to the desired state and ensure optimum performance. The research proposes the "+Add Model", an easy to understand 5-level framework to achieve Global Optimization. The +Add Model acronyms stand for Aggregate Dynamic Derivatives, which are key elements in the framework. Aggregate refers to enabling a one integrated supply chain approach at the prime-integrator to benefit from economies of scale elements such as risk pooling and large discount buys. Dynamic refers to enabling a continuously improving supply chain through feedback loops making the supply chain agile. Derivatives refer to the realization that the supply chain is full of hidden derivatives (or levers). As in calculus, the derivative is a measure of how a function changes as its input changes. The +Add model identifies those main supply chain derivative functions and inputs, and then aims to fine-tune them to drive performance. By adopting the +Add Model a prime-integrator is able to improve demand forecast accuracy (Level-1), system planning lead times (Level-2) and increase collaboration with the supplier (Level-3). In turn, levels 1 through 3 enable significantly reduced supplier lead times (Level-4). Finally, as various programs apply the +Add Model approach, Aggregation (Level-5) provides additional benefits such as increased forecast accuracy, discount buys, and lower safety stock inventory through centralization. The +Add Model has a significant impact to the button line, analysis reveals substantial improvements to earnings, economic profit and cash flow while maximizing performance and reducing risk.