Inventory in the Aerospace Industry

The aerospace industry employs a wide range of operational management tools to enhance efficiency on material management. Just like any other industry, the aerospace industry is subject to management challenges. In an industry where each component of its operation is critical to time, there is need to identify an efficient management system. Ying-Chyi provides insights on approaches of identifying inventory problems within the aerospace industry. With respect to the relevant insights highlighted in this article, this paper will provide summary of the issues discussed. Foremost, it will provide a brief summary report will determine the undesirable effects of material management systems together with the underlying problems using the theory of constraints. Secondly, it will utilize the reality tree to point out necessities and objectives of material management within an organization. This will be achieved through highlighting the various strategies used by the company in attining these objectives. Additionally, this report will apply the UDEs and CRT to reconstruct the future reality tree (FRT) that will be used to devise means of eliminating challenges in the company. The consequence of the above will help in improving inventory management performance of the entire system.

Aircraft manufacturers require an elaborate inventory process to eliminate problems such as lack of materials, failing to meet client orders, competition, bloated costs, and time wastage. In line with this view, the theory of constraints presents a panacea of addressing the presented problems. With respect to gaining a better understanding on the relevance of the theory, studies have revealed that applying the theory of constraints is advantageous when compared to other techniques. TOC has also been employed in diverse fields to reduce inventory while increasing output.

The Theory of Constraints

Developed by Eliyahu, the theory of constraints is a new concept in management philosophy. The theory has majorly three components: a set of primary system-based premises, five steps of focusing procedure and a set of vigorous tools of logic that enable the focusing process. Essentially, the theory provides management system with a tool for identifying weak links (constraints) in research and production, thereby allowing managers to focus on the other issues that will improve the overall system performance. Consequently, the organization use such approaches to meet its customer’s needs in a complex and dynamic market.

The five-step focusing process firstly involves identifying the systemic constraint. The second process is exploiting the constraint by maximizing its efficiency. The third process involves synchronizing the constraint activity with all the other system activities. The fourth process includes raising the limitation in order to eliminate as a constraint. Lastly, step five revisits steps one to four to make sure that they buttress the current system design. The last step ensures the relevance of the current system and prevents the inertia. It is important to note that these processes have managerial implications. Accordingly, the theory of constraints has proved efficient in that systems produce greater output levels and reduced inventory.

As a thinking process, TOC presents three issues requiring answers: what must change, the goal of the change and how to implement this change. This report uses UDEs and CRTs to point out the fundamental problems, constructs FRTs to define objectives and prescribes practical solutions to these problems.

The Current state of the Company of Study

The study company utilizes real-time SAP software that provides a range of processes such as pricing, quoting shipment, order management among others. The Procurement Division of the case company in collaboration with the Material Division carries out the procurement process such as payments and delivery. After a period of six months, the study identified various problems encountered by the company. This section highlights the challenges faced by the company. The Material Division experienced challenges concerning increased costs, inventory backlogs and overstocked goods due to materials procured in excess, prolonged procurement process and inaccurate forecast of economic trends respectively. The purchase section faced problems such as extended time in inventory storage, weak negotiating power and delayed production with late delivery dates. Thirdly, the Production Division faced the challenges of failing to initiate the process of production and delayed production due to inaccurate market demand forecasts. Therefore, in line with the above presentation, this study employs TOC to suggest means of improving performance in the case company. The next section demonstrates the application of theory.

The logic tools of the thinking process: three-step analysis

Step one: this step identifies the core problems that caused underperformance in the company. After a number of interviews with managers, engineers and the various personnel of the case company, the study identified different UDEs. According to the study, the first UDE was that there was no efficient inventory management turnover. The second UDE was a delay in deliveries due to shortages in material. The third UED was reducing losses that resulted from changes in configuration.

Step two: this step makes a summary of the UDEs mentioned above and constructs a CRT for the company in the study. The first summary is concerned with Procurement and Material Divisions. The two UDEs identified in this step were an unstable in the chain of supply and a larger MOQ than the production requirements. The second summary of UDEs regards the existing conflicts between the guidelines of performance improvements in the Procurement and Material Divisions. Under this subcategory, the company works to eradicate the losses occasioned by configuration adjustments and to further increase commonality in inventory.

Step three: after construction of a CRT to determine the status of the case company, the next step is to develop an FRT eliminate the UDEs. An FRT also helps in determining whether the above measures generated additional UDEs. At this point, after the elimination of all the UDEs, the company may achieve the desired effect.

In conclusion, this summary report uses the theory of constraints in the aerospace industry to propose useful insights into the requirements for the successful implementation of the theory. TOC applies not only inventory management, but also in other operating systems in order to improve performance.

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