First Application of a Developing Cooperation Readiness Assessment Methodology within the Aeronautical Value Creation Network Andrea Bifulco1, Roberto Santoro2, Francesco Costanzo3, Mauro Martinelli3 1CE Consulting, Via Terenzio 35, 00193, Roma - Italy,
[email protected], 2ESoCE-Net, Via Cortina d’Ampezzo 164, 00135, Roma – Italy,
[email protected], 3ALENIA Aeronautica, Viale dell’Aeronautica, 80038, Pomigliano d’Arco, Napoli – Italy,
[email protected],
[email protected] Abstract Current and envisaged business scenarios for New Product Development within the aeronautical sector are more and more cooperation-oriented, and Large Enterprises recognise the relevance of company cooperation readiness for all the industrial actors participating in the Value Creation Network. Improved industrial cooperation capability will result in a relevant business competitive advantage for the aeronautical extended enterprise. This paper addresses the ALENIA Aeronautica first application of a developing cooperation readiness assessment methodology, carried out in order to support its validation and compare it with the actual and emerging company approaches for the management of its supply base. The first results of the methodology application are presented along with the identified directions for the improvement of the Value Network Cooperation capabilities. Keywords Collaborative Enterprise, Virtual Enterprise, Readiness Assessment, Industrial Pilot Cases, Validation Scenario.
1 Introduction Current and envisaged business scenarios for the New Product Development are more and more cooperation-oriented and industrial companies recognise that Cooperation Readiness for the Collaborative/Virtual Enterprising is a relevant business competitive advantage. Within their first experiences in implementing the Collaborative Enterprise paradigm, a number of barriers and gaps still hamper the integration effort of participating companies. There is currently no mature methodology for assessing an organisation’s readiness in a standardised and holistic manner to enter into such an arrangement from the business, organisational, legal, technical, ICT and human points of view. This paper addresses the ALENIA Aeronautica first applications of a developing cooperation readiness assessment methodology, carried out in order to support its validation as well as to compare it with the actual and emerging company approaches for its Supply base management. The first results of the methodology application are presented along with the identified directions for the improvement of the Value Network Cooperation capabilities. The methodology referred to in this paper has been developed within an European research project aimed at defining cooperation readiness assessment methodology and tools, suitable for identifying companies who are actually capable of starting effective cooperative schemes before they enter Virtual Enterprises. The model for Virtual Enterprise (VE) cooperation readiness assessment investigates in a balanced way all the major aspects relevant to VE cooperation (business models, legal, human, organisation and processes, innovation/ technology and ICT issues) .
This model is being tested in a number of actual business cases, representing different typologies of Virtual Enterprises (peer-to-peer VE, enhanced value chain, project conduction VE etc.) as well as different industrial sectors (aerospace, automotive, food, construction and environment).
Legal Issues Legal Issues CO CO
Business Models and Business Models and Strategies Strategies
Organisation and Process Organisation and Process Models Models
CR4 CR4
CR5 CR5
Readiness and Interoperability for Readiness and Interoperability for Cooperation in New Product Cooperation in New Product Development in the Virtual Enterprise Development in the Virtual Enterprise
Information and Information and Communication Communication Technologies Technologies CR3 CR3
Human Issues Human Issues CR2 CR2
Innovation and Technology Innovation and Technology CR16 CR16
Figure1: Methodology Assessment Framework
2 Research approach and industrial validation The overall assessment process which is being tested in the different pilot cases is based on two different, incremental levels of assessment: − Internal readiness assessment, to enter a generic VE, belonging to the identified business models and industrial sectors; − Interoperability readiness assessment, to establish whether a given VE (and its specific team of partners) is actually in a position to inter-operate, at a minimal level; and to identify the inter-operability gaps between partners. The purpose of the assessment is to determine whether a company can be qualified to enter a particular VE model in a specific industrial sector. Alternatively, if the company is not ready to collaborate, the assessment model will provide guidelines and suggestion for change, thus helping that company to pass the readiness assessment evaluation. The initial assessment model is intended to be validated in a number of actual industrial pilot scenarios, which will provide an adequate test bed and validation for the developed assessment model. The business cases selected to perform piloting and testing activities on the assessment model ensure a optimal coverage of the business models and industrial sectors, which constitute the initial kernel of the assessment model. They also ensure that different national contexts (which may affect VE set-up and management because they may bring in different business cultures, organisation models and legislations) are considered in the model development activities. The following table reports the list of Pilot companies contributing at the methodology validation.
Pilot/ Company Name
VE/VO Typology
Sector
Country
BAE Systems
Project collaboration (Peer-to-Peer)
Aerospace
U.K.
CRF
Technical & Development Automotive Management (Peer-to-Peer)
Italy
Kurz, Cirp, Leo
Source Network (supply chain)
Automotive.
Germany
Alenia Aeronautica
Supply Chain
Aeronautics
Italy
Engineering Forum
Project Conduction (Peer-to-Peer)
Environment
UK
WEBA
Value Chain (Star)
Automotive
Austria
Grimaud
Supply Chain
Food
France
CTC/Airbus
Source Network (Star)
Aeronautics
Germany
Table 1: The readiness model validation and testing scenarios.
3 The ALENIA Aeronautica validation scenario Alenia Aeronautica, a Finmeccanica Group company, is the Italian Industrial leader in aeronautical productions and is one of the world’s most advanced companies with products that ranges from military defence and transport aircraft to commercial aircraft, aerostructures, advanced mission systems and aircraft maintenance and modification. Alenia Aeronautica Business line “Aerostructure and Commercial Aircraft” is currently working with Airbus F in the A380 Program as industrial risk partner ( tier-2 level ) and has involved for this program , in its supply chain, some “vertical” subcontractors (tier 3 level ), which have the full responsibility of the entire sub work package assigned to them, through the complete life cycle and along with the entire life of the program. This , in such a way, anticipates the collaboration process in an extended enterprise approach. The Pilot scenarios consists of already existing cooperation with two of the above mentioned “vertical” subcontractors for the development and production of the A380 fuselage unit Section 15 (see Figure 2)
Figure 2: Alenia A380 fuselage unit section
Pilot Scenario #1: ALENIA (2-tier level responsibility for the full section) cooperation with the subcontractor SICAMB – ILMAS Temporary consortium set for the supply of Upper Deck Floor Grid (middle) (3-tier level responsibility for the full subsystem) Pilot Scenario #2: ALENIA (2-tier level responsibility for the full section) cooperation with the subcontractor GEVEN responsible for the supply of Thermo – Acoustical insulation blankets (3tier level responsibility for the full subsystem).
4 The ALENIA Aeronautica procurement evolution path The current and foreseen business scenarios for the New Product Development in the aeronautical sector are more and more cooperation-oriented. Advanced supply chain management is a necessary element in delivering productivity gains. Traditional, often adversarial supplier-customer relationships are no longer appropriate in modern, global enterprises. This is especially so in collaborative, risk-sharing projects. The inability of many organisations, and indeed individuals, to respond to new, more complex value chains, has constrained the development of an organisational culture and processes necessary to get the best from supply chains through the establishment of Value Creation Networks. New company relationship schemes are emerging, in which the classical first-tier suppliers tends to become first-level partners in terms of: - collaborative relationship with peers (represented by the horizontal links in figure 3) - contribution at process and system design within a common framework established by the OEM (represented by the grey area in figure 3)
Figure 3: Classical and emerging business relationships for NPD in the aeronautical sector
Current approaches in managing the supply base make use of : − flowing-down of co-operative interaction mechanisms with OEM to lower tiers (tier cascading). This is characterised, among others, by Concurrent Engineering methodologies and tools over the extended enterprise, as well as Concurrent Product Definition approaches and Programme Management mechanism, as assigned by the main partner (the customer) as programme rules. − global cooperation processes over the whole supply base, for certain areas such as demand management, product change management, etc.. The latter point leads to envisage a tendency to enlarge the scope of the innovative cooperation schemes among lower tiers. This emerging approach could be characterised, among others, by the participation of the lower tier partners to define commons methodologies, ICT collaborative environment and on-line training, etc. over the whole partnership, for the development of a new programme. In line with the business scenario evolution, ALENIA Aeronautica has introduced in the year 2003 an innovative unit within the Procurement organisation, referred to as Sourcing Management, aimed at implementing value creation collaborative projects with its suppliers. The company aims at achieving a progressive “fertilization / fidelization” of its main Suppliers in the perspective of developing a more intensive collaboration process along the overall network.
Figure 4: Collaboration Alenia/Supplier – current actions
As indicated in Figure 5, three waves of pilot projects, some of them in collaboration with the suppliers, have been already launched: 1. To develop internal competences 2. To reduce total cost of ownership 3. To create an integrated network of strategic suppliers
SAP-Logistica • eSourcing
Collaborative Supply-Chain ( Portale Aziendale ) • eProcurement
• Consegna JIT direttam ente a bordo scalo • Assegnazione p/n esterni in KIT
• Aste On-Line
• Assegnazione sottogruppi all’esterno • Verticalizzazione dei Grezzi • Elim inazione Conto/Lavoro con ciclo ”m isto” • Verticalizzazione SF in Conto/Lavoro
Service Provider (minuteria metallica) • Estensione ad altre az. del gruppo FNM • Am pliamento classi da gestire • Materiali / Tecnologie alternative
• Mappa Tecnologie SubFornitori
• Global Service Manutenzione Infrastrutture
• Estensione condizioni ai fornitori • Vendor Rating
• Questionario • Convegno Fornitori Fornitori
• Cataloghi Elettronici
• eCollaboration
• Global Service Taratura Strumenti
• eDataE xchang e • Verticalizzazione Progettazione
• Mappa Competenze Off-Load Ingegneria
Supply Base Rationalization Develop Internal Competences
• Integrazione Ingegneria/Industrializzazione
Collaboration Projects with suppliers (Total Cost of Ownership reduction)
Integrated network of strategic suppliers
Figure 5: Supply Base Management – Road Map
5 Findings The first internal readiness assessment methodology baseline was tested in both the two identified pilot scenarios, by interviewing relevant ALENIA and third tier suppliers’ personnel. The proposed methodological approach has been well understood and deemed interesting by all
the interviewed persons. In particular, the balanced multi-perspective evaluation approach was well appreciated. Alenia Aeronautica as well as the suppliers responsiveness has been beyond the expectations (SME comment: it is also a way to ask oneself about important issues rarely tackled in everyday businesses) showing interest to follow on the piloting activities. From the first pilot activities several feedbacks to the assessment methodology were reported, addressing both: 1. The methodological approach (use of open questions for gathering information, assurance of relative importance balance among topic clusters for qualification) 2. Generic prerequisites for cooperation 3. Sector specific issues Among others, the following additional topics were evidenced as of critical importance for cooperation in the aeronautical value network: •
Risk/sharing mechanisms in cooperation as for the associated investment capability
•
business processes supporting Product evolution (modification)
•
E-procurement, SCM, CRM
•
Communication and training processes for the introduction of new processes and new supporting tools On the base of this first experience, a critical comparison of the internal readiness approach with the ALENIA current practices for assessing and improving the Supplier cooperation capabilities was carried out. Two areas of possible exploitation of the principles underpinning the tested readiness methodology were identified: 1. Design Assurance activities for Suppliers’ qualification, in order to include co-operation specific prerequisites into supplier qualification processes. The on-going activities yielded: - Cross correlation among readiness model and current practices for supplier prequalification for Design Assurance - Preliminary identification of areas of possible improvement 2. Sourcing Management/ Supply base evolution, in order to identify new possible directions for improving Supply base collaboration capabilities. Initial ideas for filling the gap with the envisaged full collaborative business scenario: - Improving the current approach to reach a balanced multi-perspective leveraging of all the six methodology framework areas - Consequently evaluate the possibility of extending the multi-perspective approach to the specific “collaborative” demand of new programmes within the aggregating tiers communities
6 Conclusions This paper addresses the ALENIA Aeronautica first application of a developing cooperation readiness assessment methodology, carried out in order to support its validation, as well as to compare it with the actual and emerging company approaches for its Supply base management. From industrial experience, the need for cooperative readiness assessment methodologies and relevant supporting tools is confirmed as a beneficial mean for the improvement of the aeronautical value chain collaborative business relationships.
The first ALENIA Aeronautica pilot activities have already provided several feedbacks, addressing the methodological approach, additional prerequisites for cooperation as well as sector specific issues. In addition to that, a critical comparison of the methodology internal readiness approach with the ALENIA current practices for assessing and improving the Supplier cooperation capabilities was carried out, resulting in the initial identification of potential areas of exploitation. The identified areas were the Suppliers’ qualification process, for an early inclusion of cooperation specific prerequisites, and the Supply base management in terms of improvement of collaboration capabilities of the qualified pool of Suppliers. Acknowledgements This work has been partly funded by the European Commission through the ARICON project, Contract G1RD-CT2001-00768 (www.aricon.org). The authors wish to acknowledge the Commission for their support. We also wish to acknowledge our gratitude and appreciation to SICAMB and GEVEN companies, which accepted on a volunteer basis to actively contribute to the Alenia Aeronautica ARICON industrial Pilot. References M.Conte, R. Santoro, J.Riedel, K. Pawar, “Evaluation of the ARICON cooperation readiness assessment approach in actual Industrial cases”, Proceedings of the IMS Industrial Forum, Cernobbio Italy , 17-19 May 2004, pp. 1252-1259 Santoro, R. and Conte, M. (2002). Evaluation of benefits and advantages of the Virtual Enterprise Approach. Adoption for Actual Business Cases, Proceedings of the 8th ICE Conference, Rome, Italy, pp. 19. F.Costanzo, A.Bifulco “Optimising Value Creation Networks” presented at VOSTER workshop within the ICE 2003 Conference, Seville 15th June 2004. F.Costanzo, A.Bifulco “ARICON methodology application in NPD within the aeronautical sector” presented at the ARICON workshop within the ICE 2003 Conference, Seville 16th June 2004. A.Bifulco, I.S. Fan, M. Pallot, K. Pawar, J. Riedel, R. Santoro, K.D. Thoben "A Roadmap Towards Collaborative Enterprise - CE Vision 2010", CE-NET Consortium, March 2004 BIDSAVER (2003). http://www.ceconsulting.it/ve/bidsaver.html . ENHANCE (2002). www.enhanceproject.com. VIVACE (2005) www.vivaceproject.com VIVE (2003). http://www.vive-ig.net/ve_default.htm. .
