New Module for Supply Chain Risk Management

Bank of America Merrill Lynch has announced a supply chain risk mitigation software module on an electronic platform. This is in keeping with the way things are going. Supply chain risk is the big topic of Q4 it seems, and likely a hot pain point in 2013. Even USA Today is telling the story, exposing the international and vigorously complex pharma supply chain.

Supply chain financial compliance tool. The new online supply chain finance module is available on Trade Pro. It’s called Trade Pro Supply Chain Finance. It offers buyers and suppliers around the world what BOA is calling “a powerful, collaborative tool and leading-edge technology to manage risk while freeing up working capital, streamlining business processes and reducing the costs associated with supply chain management.”

In other words, you log in and share information is a sort of material disclosure portal, or knowledge share central software platform.

BOA says the module is available in nine languages. The idea — a good one — is that the online software offers robust online reporting, allowing suppliers to create dynamic reports on a scheduled or ad hoc basis.

The expectation is that subsequent versions of this module will incorporate meatier collaboration and automation functionality. We’ll keep our eye out for any user notes we find.

The expectation is that subsequent versions of this module will incorporate meatier collaboration and automation functionality. We’ll keep our eye out for any user notes we find.

The Size of Boeing’s Supply

Good news: Boeing will continue assuring a worldwide supply of C-17 aircraft, the giant behemoth aircraft with payload potential of over 85 US tons (pictured below). All this is possible via a $2 billion follow-on contract from the U.S. Department of Defense.

Reuters published a small story yesterday about Boeing. The piece mentioned inherent “difficulties in managing 325 suppliers building parts for the 787 at 5,000 factories worldwide.” [Related article, see: 10 Best Practices in Managing Suppliers]

Boeing supply chain size. According to a Boeing internal document, Boeing had reduced its sprawling supply base to 6,450 suppliers in more than 100 countries (see gray box “Suppliers by the numbers”) in 2005. The supplied parts are (or were) organized as depicted in the image below, which is interesting even if it’s dated material: here’s how a product supply chain can be blocked out:


Take a look at the more specific 787 supply chain, sourced from the APICS blog and copyright of Boeing:

The 787 supply chain consists of 325 suppliers for one airplane. And the supplier relationship model is different.  The model takes Boeing’s well-touted supplier-partner roles a step closer to a true partnership.

“There will be only a few dozen large suppliers [on the 787 program] and they will carry a greater responsibility than on previous commercial new airplane projects,” Walt Gillette has said. Gillette of course is the esteemed former 787 program vice president of Engineering, Manufacturing and Partner Alignment.

Suppliers on the 787 program were not just consulted on how to improve current systems or components they provided, they were sharing risk by participating early in the design-build process.

This model seems to have worked and is fuel for thought for the rest of us.

Intel Inside: The Supply Side of CSR

At a Product Stewardship summit last week, Wood Turner from Stonyfield Farms sat on a panel.  He spoke about Stonyfield CSR tips and tricks.

Turner mentioned that his company links employee compensation with environmental reporting.

Turner said that linking salary with environmental performance engages all employees.  And that it makes sense for Stonyfield. After all, he said, Stonyfield is a company built on concepts of sustainability, responsibility and progressive environmental initiatives.

Well, it turns out that Intel— not set upon the greenest foundation of all time— has a similar compensation program. They also have a relatively sophisticated substance tracking system for raw materials.  Things like tungsten, tantalum and tin aren’t going to fly under the radar in their supply chain.

World’s largest semiconductor chip maker gets green
Intel’s summary of 2011 Corporate Responsibility published this week. In it, Intel says that since 2008 it has linked a portion of every employee’s variable compensation — from front-line employees to CEO — to the achievement of environmental sustainability metrics.

Intel, the world’s largest semiconductor chip maker, says it believes linking pay to green, as it were, helps the whole workforce focus on achieving environmental objectives.

Notably, Intel’s 2011 Corporate Responsibility report also links corporate responsibility performance and the creation of business value.

“At Intel, corporate responsibility is a crucial component to the overall growth of our business,” said Michael Jacobson, Intel’s director of corporate responsibility.

And, to our interest, the report also hones in on increased supplier assessments.

Intel inside: the supply side
In the lengthy Corporate Responsibility report, Intel says it is committed to operating with transparency.  This, it says, provides accountability and encourages two-way dialogue with employees and other stakeholders.

“Acting on stakeholder input,” says the company, “we also expanded our disclosure on our policies, approach, and management systems related to human rights in our operations, our supply chain, and the use of our products. Assessments and audits of suppliers help the company identify compliance gaps and develop system solutions and improvements.

Conflict minerals approach
In 2011, Intel says it completed or reviewed the results from 49 third-party audits of supplier facilities in nine countries, a five-fold increase over 2010. In 2011, they also continued to address concerns about minerals derived from unsavory mines, whose profits may be fueling human rights atrocities in the eastern region of the Democratic Republic of the Congo.

As of the end of 2011, we had mapped 92% of the tantalum, tin, tungsten, and gold supply lines supporting our core business, and had visited 48 smelters in nine countries.  Impressive?  Kind of.  If it’s not too greenwashed it’s really good work.

For the lurid details, see:

Outsourced Out of a Future?

Alert! Self-serving Content Ahead!

I suppose I’m supposed to be self-serving now and then. I mean, I don’t personally design and build things for a living. I do that for fun and dim hopes of robot world domination. These days, I tell people about things for a living so that makes it my job to be mostly self-serving (“self” being defined as “my company”). But self-serving isn’t always bad. I couldn’t get gas for my car here in Oregon without being self-serving. I could get hamburgers though, so I’ll have to conclude that it’s a 50-50 proposition.

We understand outsourcing here at Screaming Circuits. That’s what we do — take people’s outsourced prototype and short-run production assembly work. Being located in Canby, Oregon, USA, we see both sides of the outsourcing discussion. As I said, on the one hand, we do assembly for other people. On the other hand, being a North American manufacturing company, we’ve seen a lot of work go offshore.

Not that I’m against things not in the US. I firmly believe that most of this country’s success is due to the fact that we’re from here, there and all over the world. But, I do want to have a job and I want my friends and family to have a job. We have to be worth something in this country and the rampant pace of off-shoring sometimes makes me wonder if we’re just deluding ourselves in that regard.

The prompt for this post is this article in the Los Angeles Times about Boeing’s outsourcing in the 787 Dreamliner program. The quick summary of the article is to speculate that Boeing went way too far in their outsourcing and have put at risk not only the financial success of the program, but also the company’s future engineering prowess.

Now, here’s the self-serving part. The article outlines how they went wrong by over-outsourcing, but it also points to the value of specialty companies like Screaming Circuits:

That’s not to say that outsourcing never makes sense — it’s a good way to make use of the precision skills of specialty manufacturers, which would be costly to duplicate.

That’s us. We specialize in prototypes and small volumes. We specialize in new and difficult component package sizes. We see such a variety of different types of designs here in our shop that we get good at things like QFNs and micro BGAs sooner than anyone else. (Hyperbole, perhaps, but I do believe it none the less). We’ve built things that go under water, up into space and everywhere in between. We don’t specialize in one or a few specific vertical markets, like medical or consumer, we specialize in the prototype phase of the development program across virtually all market categories.

So, outsourcing: I’m in favor of intelligent outsourcing. My advice to you: Outsource where it make sense. Don’t outsource where it doesn’t. Look at the true cost of such decisions, not just the surface image. Keep some value add in your company and don’t just become a marketing shell.

Duane Benson
Time to make my oatmeal.