Understanding customer value and proactively working with the customer to deliver that value is a critical element of any productivity improvement. Too often organisations focus improvement efforts internally, limiting their impact and potentially focusing on the wrong things.
Taking a truly end to end supply chain perspective requires organisations not only to embed a deep understanding of customer value in all their people but also to ensure this understanding is deployed to their suppliers. In todays’ ever increasing competitive environment no single organisation can effectively compete- instead whole supply chains need to find ways to collaborate to meet ever increasing customer requirements at ever lower costs.
This is a challenge in any sector but particular so in the defence environment where historical contractual cost plus relationships have often stifled continuous improvement efforts. This is now changing rapidly and the end to end supply chains have to adopt new approaches to meet these new challenges.
In a recent interview Professor Peter Hines said “We have demonstrated in other sectors that most of the competitive advantage in a complex supply chain is not from the prime manufacturer but from the participants in the supply chain working well together creating competitive advantage at each level, this is through both process and product innovation. Engaging with the whole end to end supply chain can simultaneously enhance customer value and improve productivity.”
One example of the power of this approach comes from Airbus. With more than 1700 staff at 19 sites across Australia and New Zealand in addition to many other activities they maintain the Royal Australian Air Force’s AP-3C Orion reconnaissance aircraft, C-130J Hercules and C-27J transport aircraft. An In depth focus on customer value and the end to end supply chain have delivered multi-million dollar cost benefits with service levels that have delighted the customer.
AIRCDRE W. McDonald, Commander Air Mobility Group, Royal Australian Air Force commented:
“I’m currently living an availability dream for C-130Js & that’s because of the teamwork & relationship we have with Airbus. I know I can go in directly and touch the provider if I’m either satisfied or dissatisfied and I get an immediate response to it. So, to me, whilst there is a contract in writing, there is also a contracting relationship and that’s what I value out of your organisation, you recognise that there is a contract, but you will go beyond that and value the relationship you have with defence. And I’m not just saying that, I mean It”.