Hexcel manufactures very light, strong parts for aeroplanes and wind turbines. But managing the supply chain of 20,000 items is a real challenge. ARU placed a Knowledge Transfer graduate at the company to help them get to grips with it.
For a company's Supply Chain team, determining the most efficient supply strategy for its business' fast-growing line of products is always a conundrum. Which items should be ‘made to order’, which ‘assembled to order’, ‘made to forecast’ or ‘made to stock’…?These may not sound like particularly difficult decisions. After all, 'We get orders, we make products, we sell products, no different to thousands of other manufacturing companies,' says Kieron Bailey, Industrial Supply Chain Manager at Hexcel, based at Duxford near Cambridge.
But when you consider that Hexcel is a multinational company that manufactures around 20,000 parts in 19 plants across three continents with 6,000 staff, and is going through rapid expansion, with profit margins getting tighter, you realise the very real scale of the challenge.
Hexcel is three years into its sales and operations planning journey, a journey that business experts say can take up to ten years to reach full maturity. The benefits of achieving that state, as witnessed by many who have trodden this path, lead to a number of advantages, namely:
Hexcel’s customers build aeroplanes, wind turbines, high end motor vehicles, and more. These industries all need strong and lightweight products that Hexcel is one of only a handful of companies in the world to manufacture. Hexcel products range from cutting edge carbon fiber materials to light weight honeycomb ‘Core’ that make aircraft lighter and therefore more fuel-efficient. ‘Non Metallic Core’ is essentially special paper and glue formed into a honeycomb structure. In one direction it is so strong a square foot of it could take the weight of an elephant.
No company wants to tie up too much capital in inventory, but neither do they want to be too slow in serving their customers.
'Hexcel is constantly being challenged by the market environment to progress, grow and to bring our planning, inventory and production processes in line with high customer expectations, while delivering value to shareholders,' Kieron explains. No company wants to tie up too much working capital in inventory for too long, but neither do they want to potentially lose customers’ trust by being too slow in fulfilling orders. Getting the right balance is crucial – and each product is different.
The additional challenge for Hexcel is that its 19 plants over three continents around the world represent one huge internal supply chain that works to ‘different drum beats’ in supplying each other. This could create integration challenges and potential inefficiencies. For example, while Europe may place orders months in advance, other parts of the world may work to much shorter time scales. Hexcel may have multi-million pound long term contracts with aerospace customers, 'but we are aware we constantly need to innovate to maintain competitive advantage, and our supply chain must support that,' says Kieron.
Enter Ben Wilding. He is a 24-year-old graduate who has been employed on a 30-month contract by Hexcel thanks to an innovative set up coordinated by ARU. Called the Knowledge Transfer Partnership in conjunction with Innovate UK, it is a triangular relationship between 1) a university (ARU’s business school), 2) a company (Hexcel) and 3) a graduate associate (Ben).
Being a Knowledge Transfer Partnership Associate is not a well-known early career path, but I would highly recommend it.
Innovate UK funds 50% of the associate’s salary and 100% of their training. All parties benefit from the arrangement: the academics add to their practical industry experience, the company gets an enthusiastic and educated employee with specialist knowledge in the supply chain field, and a fresh way of looking at issues, the associate gets a high level strategic project to work on early in their career plus academic support.
Ben is mentored by ARU’s supply chain academic, Dr Helen Benton. Working towards the goal of creating stable yet flexible supply chain processes, they have defined one task of analysing the 20,000 products and categorising them to see, in each case, how accurate forecasts of demand have been, the depth of the supply chain (how many stages are involved) and recommend whether each should be ‘made to order’, ‘assembled to order’, ‘made to forecast’ or ‘made to stock’…
These findings are then communicated back to the manufacturing plant. The challenge is then to persuade the plant to adapt the supply strategies accordingly, for the greater good of the company as a whole. 'The greatest challenge is to get people in 19 plants worldwide to buy in to this analysis – to persuade them to accept that this UK-based team has a winning strategy that will benefit all,' says Helen.
The team has run a pilot and is now looking to roll this out across the company as a whole. The greater efficiency this aims to provide will not only help Hexcel reduce costs but will also lead to reliable yet flexible service to its customers. The ambitions of Helen and her team at ARU’s Faculty of Business and Law are also high: they are looking to set up a Centre of Excellence in supply chains.
It was Ben’s work in supply chain strategy that helped him get the post at Hexcel. LinkedIn was the conduit that led ARU to make their first contact with him.
Ben had gained an MPhil in Management at the Cambridge Judge Business School after working at PepsiCo. Before that he had taken a Chemical Engineering degree at Sheffield University. He had considered an academic career in engineering, but found that work in industry had greater appeal: 'If you design a machine and it goes wrong you just have to redesign it. It is much more interesting working with people,' he explains. 'People add chaos into the equation and are more of a challenge. Being a Knowledge Transfer Partnership Associate is not a well-known early career path, but I would highly recommend it.'
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