Part grouping: angioplasty for the supply chain: a part grouping system, however, effectively leverages a supply chain by arranging the production of individual items into groups that are based on common manufacturing processes - Agile Combat Support

Air Force Journal of Logistics, Spring, 2003 by Michael C. Yusi

Part Grouping Concept Demonstration Results

A part grouping concept demonstration between DLA and Boeing provides an opportunity to study some results. (15) DLA entered into a part grouping supply chain arrangement in 1999 with Boeing to improve its support for spare parts that were low demand density with long PLT. Typically for DLA, these are aircraft weapon system parts. With this premise, Boeing initiated work on its end, focusing on three weapon systems used by the Air Force, Navy, and Marine Corps as a first phase test. These were the F-15 Eagle, F/A-18 Hornet, and AV-8B Harrier II. As part of this new part grouping partnership, DLA provided Boeing a large amount of indicative data on the spare parts coded to systems it managed. Boeing, in turn, studied its manufacturing processes strategically for these weapon systems based on parts families such as wire bundles, sheet metal, machined parts, and tubing. (16) The next steps, as described earlier, were the most demanding. The first cut for these three platforms totaled approximately 340,000 items. From this, Boeing assessed its own manufacturing and associated second- and third-tier vendor bases for common process capabilities. Then, it linked this to the parts data it possessed and data provided by DLA to focus down to a reasonable number for testing in a grouping system. By doing so, Boeing brought the group of items down considerably, to approximately 3,500 total. (17) Next, it calculated the probable demands of these individual items (based on historical demand requirements as provided by DLA indicative data) to optimize smoothing demand variability for the overall group being considered. It also needed to ensure production capacity for the group was executable from the participating vendor base. Concurrent with all this, Boeing needed to assess, interest, and work with its target vendor base to ensure the quality and feedback to give this innovative part grouping system a good opportunity to perform as envisioned. It found, for example, that it should allow its vendors to submit bids on portions of groupings that best fit their particular processing niche instead of attempting to get an all-inclusive grouping solution. Doing this, Boeing actually ensured a wider competitive base for vendors that could be expanded into a larger part grouping system in the future. (18) This also was a good method to mitigate associated risk for interested vendors because it provided a way to increase its cashflow without jeopardizing product quality or stretching beyond production capacities, as was mentioned earlier.

The first deliverable of this part grouping system between DLA and Boeing was provided in 2001 and showed positive results. For example, under the category of tubing manufacturing processes, a part group of 84 hydraulic tubes supporting the F-15, F/A-18, and AV-8B realized an overall reduction in PLT of 60 percent, from 345 to 141 days. Overall price reduction across the group was from 8 to 10 percent. Results of specific items within this group were even more impressive. For example, the hydraulic tube shown in Figure 3 and used on the three subject weapon systems had an original PLT of 508 days. Under the DLA and Boeing part grouping supply chain, PLT was reduced by 75 percent to 129 days. (19)