Case Study: Aerospace Manufacturer Drives Change in Working Capital Free Cash Flow by $80M with LeanDNA
CASE STUDY | Aerospace Manufacturer
This international aerospace manufacturer with over $6 billion in annual even had challenges with shortages and on-time customer deliveries. Missed product delivery deadlines were slowing final deliveries of aircraft for the company’s customers, resulting in angry customers coming—and staying—on-site to micromanage production.
The company’s ERP systems just weren’t doing enough to help the supply chain team solve these shortage problems. Overwhelming amounts of ERP action messages were being created every day, with no prioritization around value or importance. Additionally, there was no way to collaborate with managers from other sites, or see the inventory available at other sites. All the manufacturer could do was reduce the volume of messages as much as possible by having team members work on the weekends.
In order to sort out inventory and shortage issues, the company implemented LeanDNA within one of its branches. In short order, LeanDNA was helping to prioritize the highest-value actions to get the manufacturer back on track. Critical shortages were addressed quickly, site-to-site visibility improved, and the company’s customers saw more orders delivered on time. As time progressed, the aerospace manufacturer was able to move from “fire-fighting” with shortages and inventory challenges into a more predictive and proactive system of inventory management.
“With LeanDNA, our analysts spend less time writing reports and more time analyzing data and driving results.”
– VP of Supply Chain, Global Aerospace Manufacturer
- An extremely high volume of ERP action messages bogged down the team, causing constant “firefighting” to sort through the excess issues
- No prioritization of ERP action messages or inventory tasks led to time wasted sorting through and executing low-value activities
- Buyers and managers regularly exceeded 40-hour workweeks, often coming in on weekends to catch up
- Shortages and missed on-time deliveries were causing significant problems for customers, resulting in customer representatives coming on-site
- Lack of visibility across multiple sites and ERPs caused excess inventory to sit at one site while another site was in shortage
- Reporting processes lacked standardization and accountability, making it hard for executives to get a comprehensive view of problems across all sites
Previous Efforts to Optimize Inventory
Before partnering with LeanDNA, the teams relied on ERP action messages for day-to-day direction. Volume, rather than value, dictated how buyer success was measured by leadership. There was no way to prioritize which tasks to complete, causing late deliveries to further increase. Additionally, each site had a different ERP system, so standard work or communication among sites was limited. Data from each of the different ERP sources was organized and presented in different ways, making it hard to share knowledge or combine reporting for a company-wide view.
Data analysis was run through a file-sharing platform. Spreadsheets were the main sources of data and had to be updated manually to track progress. Files were often unmanageably large, difficult to share, and required complex macros and sorting to analyze or update. And showing upset customers Excel sheets did not inspire confidence in the company’s ability to fix its issues.
The LeanDNA Difference | Improved cross-site and cross-ERP visibility, standardization, and reporting
- LeanDNA Inventory Actions prioritized the most valuable activities, resulting in less time digging through action messages and more time fixing costly and urgent issues.
- Reporting work processes were automated and standardized across the entire division’s sites and platforms.
- Tied buyer activities to customer satisfaction, providing the entire team with a clear sense of purpose and path to success.
- Excess and obsolete inventory at one site was visible to other sites, saving the company money. A planner at a single site was able to sell $500,000 of obsolete inventory to other sites, eliminating costly write-offs and resolving shortages at the same time.
- Executives have access to aggregate reporting across sites despite disparate ERPs, creating a single source of truth for results, goals, and best practices.
- New sites and ERP systems were able to quickly integrate into the LeanDNA platform, with minimal IT commitment, to reduce inventory and shortages faster.
Global Aerospace Manufacturer frees $80M working capital reduction attributed to inventory improvements through LeanDNA
Through its partnership with LeanDNA, the team members were able to start getting their heads above water, reducing inventory, and improving on-time delivery percentages. Within six months, the division alone reported an $80 million reduction in working capital that could be attributed directly to inventory reduction through the LeanDNA platform. In this fiscal year, the company is projecting an additional 16% reduction in inventory. The business was also able to improve customer satisfaction through better on-time delivery percentages. The branch sites using LeanDNA were able to achieve over 90% of deliveries on-time, whereas previous numbers were 70-80%.
LeanDNA has become a primary business system for buyers, managers, and executives. Buying teams are able to prioritize which critical actions will have the most impact, increasing time spent on satisfying proactive work and reducing the frequency of weekend workdays. Managers run meetings from the LeanDNA platform and drive their teams towards high-value activities, not just quantity. And executives are able to see progress with organized, visual data across multiple sites from the same platform.
The company initially launched LeanDNA at 4 sites within a single aircraft program. After the success driven by LeanDNA at those sites, the LeanDNA platform has since expanded to 19 additional sites across each of the manufacturer’s 3 branches. As LeanDNA continues to prove its value, the business plans to expand to additional sites and programs.
Find out what’s possible for your business
Set up 15 minutes with one of our inventory optimization experts.
Schedule a Demo
Get a copy of this case study as a printable PDF.