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By Bill Lewandowski, AIA Vice President, Supplier Management A perfect storm was brewing in 1996 that made the formation of AIA's Supplier Management Council — now celebrating its 10-year anniversary — both necessary and possible. The storm had been building since the end of the Cold War, with Defense Department budgets dropping exponentially and the industry facing the hard choice to either bring in work from its supply base or consolidate, find core competencies, and outsource everything else to their supply base. They chose the latter. This decision meant more work for suppliers who had to increase their capabilities to take on this new responsibility. "Lean" manufacturing was also being implemented in 1996 by the large aerospace and defense companies. One principle of this new concept was to "treat suppliers like family," which meant fewer suppliers and longer-term agreements. The previous paradigm had suppliers competing with each other at every opportunity. The shift caused many companies to drastically cut their supply bases and created fewer available suppliers. In this era of free-falling budgets, DoD tried to make every dollar of spending count, deciding to reform its acquisition policies and processes to take advantage of "commercial practices." DoD mil specs — the department's "how to" way of doing business — were cancelled as commercial, performance-based contracts were implemented. The previous military quality standard — MIL-Q-9858A — was cancelled, causing a management void in the supply base. Companies began to develop their own quality standards. Auditors from different companies or different divisions of the same company were constant visitors to suppliers. As a result, few products were getting out of the suppliers' facilities in time to meet schedules. These rising elements of the perfect storm needed an organization of suppliers to gather a non-attribution forum in which customers could address supplier issues and find solutions. In response, the concept for the Supplier Management Council (SMC) was approved by the AIA Board of Governors in November 1996 and chartered to begin in January 1997. Later, in May 1999, three resolutions passed by the AIA Board of Governors dealt with reducing the number and length of time for supplier quality management audits and surveys, maximizing the benefits of acquisition reform for the supply base, and ensuring the fairness and accuracy of supplier measurement systems. The underlying importance of these resolutions was a give-and-take of the cooperative processes used to reach agreement — one of the most important elements in our industry today. The SMC has thrived in the past decade and is proudly celebrating its 10th anniversary this year. SMC: 10 Years and Counting AIA's Supplier Management Council in 2007 is celebrating 10 years of leadership on behalf of America's aerospace suppliers. Formed with 20 pioneering members, a decade later the council is a mature body of strength and influence in the aerospace and defense industry, bolstered by a dynamic roster of 172 AIA associate members. Welcome to the newest associate members: Astronic Insights from the San Antonio SMC Meeting The Spring 2007 Supplier Management Council meeting in San Antonio was another step in the council's evolution into developing and addressing supplier issues, providing a fistful of opportunities for associate member companies to learn and network. The meeting agenda included an Executive Committee report from Ferco Tech Chairman Joe Murphy, a presentation about the value of trade missions by AIA Director of Supplier Management Varun Nikore, an examination of best practices for improving requirements flow from Renaissance Services President Bob Morris, and a depiction of the Washington, D.C., political scene by AIA President and CEO John Douglass. A valuable panel discussion examined trends in contracting, including presentations from Joseph Stein, director of fleet depot maintenance at Northrop Grumman Technical Services, and Susan Haeseler, director of the indefinite delivery/indefinite quantity contract (ID/IQ) vehicle office at Raytheon. They discussed the risks and rewards of performance-based logistics and ID/IQ contracts, pointing out that pending acquisition legislation in Congress, if enacted, could place constraints on ID/IQ contracting. Health care costs for employees, while a significant matter for all AIA member companies, are a major cost issue for suppliers. ESIS President Derek Baggerly led a panel that looked into the Lockheed Martin wellness program and Frontier Electronics' initiative to manage the insurance risk as well as a presentation about insurance underwriters' capabilities. On the international front, the agenda covered the Registration, Evaluation, Authorization of Chemicals (REACH) provisions that will be a barrier for companies partnering with or supplying products for companies in Europe. Paul Divis, senior vice president of Blenheim Capital Services, Hugh Quigley, president of DynaBil, and Aravind Melligeri, founder and president of QuEST, made a joint presentation titled "Understand-ing Offset Requirements and How a Supplier Can Take Advantage of These Requirements." DynaBil and QuEST have formed a joint venture in India with construction already underway in a 300-acre trade free zone to provide offset credits to large companies such as Boeing. SMC members also learned about onerous proposed acquisition legislation pending in Congress and received guidance for dealing with lead-free solder provisions now in effect. The meeting was wrapped up with a tour of Kelly Air Force Base's new maintenance and overhaul business and of Albany Engineered Composite's modern new facility, which provided SMC members a first-hand view of how "lean manufacturing" could be applied to the art of composites. 2007 Associate Member/SMC Events
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