Supply chain management challenges for aerospace control technologies leader

Abstract

The study reviews various organizational challenges faced and overcome by the Solid State Electronics Center, a division of Honeywell, in successfully managing and establishing a near optimal supply chain framework. Specifically, the company wanted to increase the quality of service, decrease lead-times, and improve communication with its critical supplier for assembly and test services, all the while dealing with this same supplier's year 2000 (Y2K) problem. This supplier, with a fictitious name ‘Alpha’, was chosen as Honeywell's assembly and test vendor because this supplier stated it could handle both processes. Unfortunately, Alpha has demonstrated difficulty assembling to Honeywell's schedule and separating good parts from bad ones with its testing. Alpha also informed Honeywell that not only its tester for Honeywell parts would not function after 31 December 1999 due to a Y2K problem and it would require the company to pay for a solution, but that it was also raising the price for testing. Honeywell decided to find a new vendor for the test services, and worked with Alpha to improve the remaining issues in the short-term. Long-term the company decided to rethink its all-in-one vendor theory, because its experience suggested that no one vendor provided all the services the company desired. Had Honeywell initially chosen the lowest-price vendor for each task individually it probably could have found a lower cost solution.