Cross functional collaboration has always been a central idea in supply chain management. Today, I will highlight a form of supply chain collaboration that is new to me: supply chain facility design and construction.
When it comes to product development, globalization has led companies to engage in co-development projects with key suppliers. Perhaps the most famous example is Boeing’s 787 Dreamliner passenger jet. Here is a passage from the book “Wikinomics” that illustrates this point:
Deepening supplier involvement has significantly boosted the efficiency of the design process. Bair [Mike Bair who leads the 787 program for Boeing] explains that when Boeing sent the specifications to the electronics supplier for the 777 [the predecessor to the 787] the document was twenty-five hundred pages long. “There wasn’t a lot left to their imagination,” he said. “We told them exactly what we wanted in excruciating detail.” The equivalent specification for the 787 is a mere twenty pages.
“We’ve realized that it’s more effective when the people who are building the parts also do the engineering,” says Bair. “They know better than us how their factories run, and to think that we can design a part that not only serves our needs but is also the most cost efficient for them to produce would be pure guesswork on our part.”
Boeing uses a Product Lifecycle Management (PLM) solution from Dassault Systemes as its worldwide collaborative platform for product engineering across its core supply base. This allows for faster product development cycles because companies can work on their portion of the product at the same time instead of having to do sequential design and testing.
In some ways the 787 is not the best example of collaboration since its launch has been delayed seven times based on the failure of key partners and Boeing has had to negotiate late delivery penalties. The problem occurred on the “build” side of the “design/build” equation. The 787 is made of composite materials that key partners had no experience manufacturing. So, while deeper collaboration remains a clear trend, Boeing’s experience with the 787 also shows the risks of going too far too fast.
When most people think of R&D, they think of product design. There are other industries, however, where designing the manufacturing facility is tantamount to designing the product. You don’t design oil, for example, you design the oil refinery to process the oil. Oil & Gas, Chemicals, and Utilities are all examples of industries where facility design trumps product design. The collaborative platform tools used in those industries are Process Engineering Tools.
ARC recently completed a study on this market and one of the authors, Tom Fiske, spoke at our recent company meeting about a growing type of collaboration occurring in this area. “Now instead of designing a facility and then building it, companies get the design to a certain level of completion and then start building.” As the design proceeds further, more work on the building can be done. This more collaborative process, rather than the traditional sequential one, can shave months off the opening of a large, complex facility.
Cross-functional and cross-enterprise collaboration will remain at the core of supply chain management, and these concepts increasingly encompass a broader value network than what we have traditionally called “the supply chain.” And with the Internet, mobility, and advanced enterprise cloud applications continuing to march forward, we will continue to see new forms of collaboration.