L. A. SECTION ENTERPRISE CHAPTER

Ken Dozier, Executive Director of the Western Application Center (WESRAC) at the University of Southern California (USC) Viterbi School of Engineering made the case for more widespread use of computer power to manage supply chains in the aerospace industry, and for the advantages of collaboration between academe and industry in the process of bringing this about. WESRAC is involved in several government programs designed to ensure U. S. competitiveness in world trade, technology transfer, and economic development.

At the October 17, 2006 meeting of the AIAA Los Angeles Section Enterprise Chapter, Dozier focused on the WIRED (Workforce Innovation in Regional Economic Development) Project sponsored by the U.S. Department of Labor, which addresses the need for innovation to stimulate economy growth, and the need for company cultures to adapt to external changes resulting from expanding technology and increasing globalization. With the more rapid introduction of new products and shortened products life cycles, companies cannot simply rely on past experience to prosper, but need to expand their knowledge to help predict trends and chart a course for a successful future.

WESRAC uses four parameters to rate global competitiveness: economic performance, government efficiency, business efficiency, and infrastructure. Overall the U.S. is rated as #1 and China Hong Kong as #2, although Hong Kong is rated slightly better in government efficiency and business efficiency. According to WESRAC, there are six dimensions to global commerce, the Six D’s: Disaggregation, Decentralization, Disintermediation, Demassification, Denationalization, and Despacialization. All of these suggest the increasingly physically dispersed operations characteristic of globalization.

To compete globally, the mind-set of "make and sell" must morph into an increased awareness of changing market conditions and rapid response. Awareness comes from keen observation and connectivity which enables the sharing of increasing amounts of data among many nodes. For example, the bandwidth required to handle large amounts of high-definition television (HDTV) is about six orders of magnitude greater than that for voice communications (see slide in Archive of Speaker Presentations at AIAA Enterprise Chapter Meetings on the home page). Dozier is concerned that the U.S., which initially led the world in broadband development, is falling behind. Fiber is the key material to expand bandwidth, and cities in Europe like Amsterdam, Paris, and Vienna appear to be adopting Fiber-To-The-User (FTTU) more rapidly than cities in the U. S.

Rapid response is facilitated not only by large bandwidth but also by grids of supercomputers located at each of the nodes, processing and exchanging data according to a well-organized policy. It is important to understand the data well enough to perform dynamic simulations to predict product/system performance. Of primary importance to large aerospace contractors, e.g. manufacturers of engines and commercial airliners, is the supply chain to bring together the large number of parts that must be assembled. . The dynamic simulation of the supply chain uses methods of information feedback pioneered by Jay Forrester at MIT. Dozier showed the classic example of "The Beer Game", which involves a supply chain consisting of four participants: a brewery, wholesaler, distributor, and a retailer. Variables include current inventory, quantity of orders, timing of orders, backlogs, production rate, quantity of deliveries, and timing of deliveries. The simulation needed to analyze the response of such a four-member supply chain must deal with a 29^th order differential equation. The example shows the disruption to the system if the retailer increases his order from four cases of beer per week to eight cases per week. When information is not shared among the members of the supply chain, major disruptive variations in inventory, orders, and costs, for all members of the chain, occur at least three times as often as they do when information is shared.

Aerospace contractor supply chains involve many more participants than the example cited. Politics, technology, and the financial risks result in far-flung sources of supply and add more variables to the system. The potential disruptions are quite serious. Subcontractors and suppliers need to perform computer modeling and simulation to speed development and reduce costs to remain competitive. To minimize supply disruptions, knowledge must be shared among all members of the chain. To make that knowledge sharing effective, major aerospace contractors are utilizing WESRAC, working closely with suppliers and grading suppliers as to their ability to use simulation tools.

On the industry-wide/national economy level, the benefits of knowledge shared on a timely basis have been demonstrably huge! Shared knowledge lessens the severity of recessions and mutes the business cycle. Between 1950 and 2000, the inventory-to-sales ratio in the economy was reduced by about 33% (Paine Webber Report April 2000) due to quicker access to data and knowledge-sharing to reduce the probability of building excessive inventory in a good year to be followed by severe cutbacks in a downturn. In the same report, we find that prior to 1983 there was a recession roughly every five years, and we’ve had only two mild recessions since. This experience should serve to inspire the aerospace industry to smooth out our own business cycles with effective supply chains.

Guido Frassinelli

7/10/07