Therefore, it is imperative for Gulfstream to ensure that every plane they intend to produce is produced. Failure to do so could mean that the company is not profitable that year. Repeated failures of this type could put Gulfstream out of business.
Additionally, Gulfstreams production schedule does not allow for simultaneous production. Therefore a delay in one aircraft equates to a delay in every subsequent aircraft. Thus, delays represent an opportunity cost because of lost capacity. Such delays also result is customer dissatisfaction, which Gulfstream would then have to address. Gulfstream is positioned as a high-end product, and that reputation demands that they deliver high-end results.
The result of all of this is that Gulfstream faces substantial costs in the event of any delay in their logistics network. After all, each aircraft costs millions of dollars, more than enough to pay for the costs of Gulfstreams supply chain management.
Moreover, Gulfstream also realizes benefits in terms of new product development. The companys product development function is closely tied with their suppliers. This enables them to develop better and more innovative aircraft at a lower cost. This would not be possible without the investment that Gulfstream has already made in developing such strong relationships throughout their supply chain.
3) Gulfstreams just-in-time approach is closely tied into their choice of locations. In the aircraft industry, parts are not commoditized. That is, one suppliers parts cannot be replaced with anothers. For Gulfstream, that means they must be in a position, both geographically and in terms of their supply chain management, to ensure that they have all of their supplies when they need them. Locating in Savannah gives them easy access to supplies from a multitude of channels – sea, air, rail and road. This location allows them to work with suppliers in Europe, the East Coast, the South and Mexico. This gives Gulfstream increased flexibility when it comes to choosing suppliers, since they have access to suppliers form so many regions.
Should any supplier be unable to execute the JIT system, Gulfstream will have other potential suppliers with whom they can forge a relationship.
By keeping their key suppliers nearby, they have been able to implement a JIT system. Part of the reason they are able to do this is because they have a six-day production cycle. Thus, they are able to keep the supply chain circulating. The longest shipment time, from Fokker via the Port of Savannah, has proven the most reliable. Were that not the case, JIT may not be possible. Given the reliability of their European shipments, Savannah works as a location because the distance between the assembly plant and their other suppliers is less than the length of a production cycle. The just-in-time system would not work, for example, on the West Coast, or in the Northeast, because they would be too far removed from their less reliable suppliers. In this way, the relationship between JIT and their location is very important. Their location allows for them to operate a JIT system with their established, preferred suppliers. Without this location, they may have needed to choose between implementing JIT and finding new suppliers, the latter of which could have compromised their product.
Thuermer, Karen E. (2004). Gulfstream relies on international supply chains to deliver world class aircraft. World Trade vol. 17 No 11, pp46-48.
No author. (2008). Supplier Home. Gulfstream. Retrieved November 17, 2008 at http://www.gulfstream.com/supplier/
No author. (2005). Flying High in the Deep South. Foreign Direct Investment. Retrieved November 17, 2008 at http://www.fdimagazine.com/news/fullstory.php/aid/1255/Flying_high_in_the_Deep_South.html
No author (Business Wire) (2002) Aerospace Products International Announces Multi-Year Logistics Services Agreement with Gulfstream Aerospace. Business Wire. Retrieved November 17, 2008 at http://findarticles.com/p/articles/mi_m0EIN/is_/ai_89490238.