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Asian Supplier Development Increases
EBITDA by $3.0 MM
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Aerospace Manufacturer
Asian Supply Base |
Launching a supply base in the Aerospace industry is complex enough, but moving it half way around the globe from its current location adds yet another dimension to the challenge. Our client, an assembly and component supplier to the commercial and defense Aerospace industry, had limited exposure to off-shore procurement. Our challenge was threefold: 1) to secure reliable Asian part sourcing, 2) to implement a stringent AS9100 quality program, and 3) to achieve a targeted savings of at least 15%.
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Strategic Sourcing
Quality System Implementation: AS9100 Quality & Costs
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The ProAction Group, led by its Singapore-based team, used a strategic approach in aligning the client's costs and quality needs with the philosophies of potential trading partners. Our first step in the sourcing initiative was to qualify potential suppliers based on AS9100 standards and a 98% first-pass-yield sourcing minimum. Finding the right trading partners was critical and not easily achieved through conventional sourcing tools. We used an extensive heuristic database of suppliers that met different qualifications. ProAction maintains this database, which represents years of fostering relationships with local governments, businesses, and professional networks in Asia.
ProAction found suppliers capable of making low-volume, high-mix parts within tight tolerances, but few met AS9100 Standards. The ProAction team used its experience in creating Asian partnerships to develop trust between each supplier and the buyer, ensuring long-term relationships.
Once we established trust between the partners, the hard work of transforming the quality systems to meet the stringent requirements of aerospace began. We overhauled the quality manuals, configuration controls, and traceability with four key suppliers. At the conclusion, our client audited the quality systems of the selected suppliers. Audits of the CNC supplier and investment casting supplier were completely clean.
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$ 3.0 MM EBITDA
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The lean quality transformation generated cost reductions in four key areas: CNC savings of 33%; investment castings savings of 34%; rubber molded savings of 44% and springs savings of 60%. Asian sourcing and the implementation of tighter quality systems saved our client more than $3 million on an annual basis.
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