Name: SATUITO, SIBUL, SONGCUYA,

Case Study No. 1: SCM KEY PLAYERS

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Date: 23 SEPT 2023 Page 1 of 13
Instructor: ENGR. MICKAELLA MARIE B. MOLLENO
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Title: Case Study: Supply Chain Management in Aviation - Rolls-Royce Holdings

Case Study Objectives:

• To gain insights into the supply chain management practices of ABC Aviation Corporation.
• To identify and analyze the key players within the aviation supply chain.
• To examine the critical roles played by these key players in enhancing supply chain
efficiency.
• To explore challenges and opportunities in the aviation supply chain.

Introduction:

This case study delves into the intricacies of supply chain management within the aviation
industry, focusing on Rolls-Royce Holdings, a prominent player in the sector. We will explore the
key players in the aviation supply chain and dissect their pivotal roles in ensuring efficient
operations and customer satisfaction.

Case Study Overview:

In the automotive and aviation industries, Rolls-Royce is well known for its opulent and
expertly crafted engines. Rolls-Royce has continuously set the standard for exceptional quality,
creativity, and unmatched craftsmanship since its founding in 1904.

Rolls-Royce exhibits a persistent dedication to excellence that crosses generations in

everything from the sophisticated designs of their vehicles to the cutting-edge technology that
powers their aircraft engines. Every journey becomes the pinnacle of luxury thanks to their
unwavering commitment to providing the highest levels of comfort and performance in both the
automotive and aviation industries.

This case study explores the organization's significant contribution to the aviation sector.
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Case Study Format:

I. Executive Summary:

Rolls-Royce's supply chain management abilities routinely satisfy a wide range of

customers with on-time and high-quality products. Affordable unit cost supply against a backdrop
of decreased total acquisition and risk costs is one benefit to customers.

In addition to employing 18,000 active suppliers internationally, Rolls-Royce has

950 purchasing staff working across a wide range of parts and products. This supports a
varied corporate purchasing portfolio that includes direct completed goods for both MRP
and project-based activities, as well as technological development components for
manufacturing. In a complicated global world, purchasing is at the center of managing
the external supply chain since it selects and manages suppliers while also satisfying the
strategic needs of our clients in terms of quality, pricing, and delivery. More than ten
nations in Europe, Asia, and North America are home to purchasing staff for Rolls-Royce.

Half of the year 2023 key Findings of Rolls-Royce:

Rolls-Royce has embedded an executive enterprise resource planning tool and

continually invests in modern IT solutions in support of supply chain management
functions. We employ web enabled sourcing software through our preferred service
provider ‘EXOSTAR’ including the use for e-auctions and electronic request for
quotes/proposal. Examples of tools adopted and implemented by Rolls-Royce include:

1. Facilitating the creation of commodity and supplier strategies, contract creation and
negotiation (clause libraries), supplier performance management and supply chain
spend analysis.

2. Software package which maps the sub tier supply chain providing demand signal
visibility, risk and utilization analysis, demand simulation and key points of failure
analysis.

3. Information interactions and provide valuable Supply Chain quality and performance
data.

Rolls-Royce supply chain management skills consistently deliver both on-time and
high-quality products to a diverse Customer base. Customer benefits include affordable
unit cost supply against a background of reduced total acquisition and risk costs.
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II. Company Background:

Rolls-Royce Holdings PLC is a leading British multinational energy, defense and aviation
company with a rich history dating back to its founding in 1884. Rolls-Royce, headquartered in
London, UK -Uni, famous worldwide. world thanks to its innovative designs and highly qualified
engineering. The company is well known for its cutting-edge aviation technology, which has
significantly influenced the growth of the aviation sector.

The aviation division of Rolls-Royce is a leader in aviation innovation and a significant force
in the global aviation market. Numerous engines and associated services are included in their
portfolio of aviation products:

1. Civil Aviation Engines: Rolls-Royce is a leading manufacturer of aircraft engines for civil
aviation. Their Trent family of engines is widely used on commercial aircraft, including long-
haul and wide-body jets. The Trent engines are known for their fuel efficiency, reliability, and
advanced technology. For example, the Trent 1000 powers Boeing's 787 Dreamliner, while
the Trent XWB is utilized on the Airbus A350.

2. Business Aviation Engines: Corporate and business jets use engines from Rolls-Royce.
These engines deliver exceptional performance, quiet operation, and high levels of comfort
because they are specifically created to meet the needs of the private aviation sector. Rolls-
Royce's Pearl engine series is an example of their offerings in this segment.

3. Military Aviation Engines: The company manufactures engines for military applications,
powering various combat and transport aircraft. Military engines made by Rolls-Royce, like
the Adour and AE 2100, are renowned for their strength, effectiveness, and flexibility in
meeting the unique requirements of military aviation.

4. Helicopter Engines: Commercial, military, and search and rescue helicopters, as well as
other rotorcraft, use the helicopter engines made by Rolls-Royce. Their engines offer reliability
and power for a variety of helicopter missions.

5. Advanced Aviation Technologies: electric and hybrid-electric propulsion systems, are

actively being developed by Rolls-Royce. By lowering emissions and enhancing sustainability,
these initiatives seek to influence aviation's future.

The aviation division of Rolls-Royce has a sizable global footprint, ensuring that its goods
and services are accessible to clients and partners everywhere:

1. Global Manufacturing: Rolls-Royce has manufacturing facilities in a number of nations,

including Singapore, Germany, the United States, the United Kingdom, and Singapore which
results to the company satisfying the needs of international customers due to its extensive
global manufacturing network.

2. Customer Base: Major airlines, private jet operators, defense agencies, and helicopter
producers all over the world use Rolls-Royce aviation products. From commercial aviation to
military and industrial applications, they serve a diverse range of clients.
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3. Service Network: The company offers maintenance, repair, and overhaul (MRO) services
through a vast global service network. This network supports clients wherever they operate
and ensures the ongoing performance and dependability of Rolls-Royce engines.

4. Research and Development: In order to advance aviation technology and maintain its
position as the industry leader, Rolls-Royce collaborates with research organizations,
universities, and aviation businesses all over the world.

III. Supply Chain Overview:

Rolls-Royce orchestrates the assembly of aircraft engines, starting with the raw
materials and moving through these complex stages. The engine is ultimately delivered to
the final client, typically the aircraft manufacturer who placed the order, after being
assembled.

1. Planning

The first and most crucial step in the supply chain process is planning. The demand
for Rolls-Royce's engines and other products is forecasted using a variety of techniques.
Forecast demand must be taken into account when designing the supply chain.

2. Sourcing

Rolls-Royce then contacts a variety of suppliers for the raw materials and components
that are needed in assembling the aircraft engines. The raw materials and components that
are ordered will then be delivered to a specific Rolls-Royce site depending on where it is
needed and for what it is needed.

3. Making

Rolls-Royce gathers the components and assembles its aircraft engines on different
sites around the world. The engine assembly process starts and it is closely monitored up
until the product is finished. Rolls-Royce has a strict process that needs to be done in
assembling the aircraft engine. After being put together, the engine is examined and certified
to make sure it satisfies all performance and safety requirements.

4. Delivering

The assembled aircraft engines will be transported to aircraft producers worldwide,

including Airbus, Boeing, and other producers. These businesses put together complete
aircraft using components made by their suppliers. Rolls-Royce is one of the suppliers of
Airbus and Boeing due to Rolls-Royce manufacture of aircraft engines. To ensure that engines
are properly integrated into the aircraft, Rolls-Royce collaborates closely with aircraft
manufacturers.
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5. Returning

Rolls-Royce offers maintenance, repair, and overhaul (MRO) services as well as the
provision of replacement parts to its clients whenever problems with the aircraft engines
arise.

IV. SCM Key Players and Their Roles:

• Producers (Manufacturers)

Rolls-Royce PLC, major British manufacturer of aircraft engines, was separated from
its car-making operations and nationalized following bankruptcy in 1971. It returned to the
private sector in 1987. Headquarters are in London. The Rolls-Royce PLC’s aviation segment
produces an extensive line of civilian and military aircraft engines, both alone and in joint
ventures with companies in Europe, the United States, and Japan. Major products include
the Trent and RB211 turbofan families used on Boeing, Airbus, and Tupolev aircraft and the
EJ200 turbofan developed for the Eurofighter Typhoon.

• Distributors

Boeing Distribution Inc. (Legacy Aviall) is a key part of the FIRST Network and is
the global-authorized distributor for Rolls-Royce M250/RR300 engines, parts, modules and
tooling.

• Retailers

Rolls-Royce Holdings PLC is a British multinational aviation and defense company

incorporated in February 2011. The company owns Rolls-Royce, a business established in
1904 which today designs, manufactures and distributes power systems for aviation and
other industries.

• Customers

Rolls-Royce products and services support key customers across the United States
including the U.S. Department of Defense, Boeing, Lockheed Martin, Northrop
Grumman, Bell, Robinson Helicopter, Gulfstream, and major commercial airline
providers such as American Airlines, United, and Delta.

V. Supply Chain Challenges:

Rolls-Royce, like many companies in the aviation industry, has faced several supply
chain challenges over the years. These challenges have included:

1. Global Supply Chain Complexity: Rolls-Royce operates a highly complex global

supply chain with components sourced from numerous countries. Managing the logistics
and ensuring a seamless flow of parts and materials can be challenging, especially during
times of geopolitical instability or trade disruptions.
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2. Long Lead Times: Aviation engines are complex, precision-engineered products with
long lead times for manufacturing. Accurate demand forecasting is crucial to avoid
overstocking or shortages, which can be costly and disrupt production schedules.

3. Supplier Reliability: Rolls-Royce is susceptible to disruption if any of these suppliers

experience issues with quality control, funding, or approval, or if production is delayed.

4. Technology and Innovation: Rolls-Royce must continually innovate its products, which
can introduce supply chain challenges related to the sourcing of new, advanced materials
and components so they can keep up with the rapid pace of technological change in
aviation.

5. Regulatory Compliance: Compliance with aviation safety standards is crucial because

the aviation industry is heavily regulated. The supply chain becomes more complicated
because all suppliers must comply with these strict requirements.

6. Cost Pressures: Rolls-Royce, like other aviation companies, faces constant pressure to
reduce costs. Cost-cutting measures may result from this, which could have an impact on
the supply chain, supplier relationships, and product quality.

7. Environmental and Sustainability Concerns: Changes to the supply chain, such as

the sourcing of sustainable materials, may be necessary to meet these requirements since
there is a rising demand for operations that are environmentally friendly and sustainable.

8. Geopolitical Factors: The availability of essential materials and components can be

impacted by political unrest, trade disputes, and shifts in global relations.

9. Pandemic-Related Disruptions: The COVID-19 pandemic, for example, disrupted the

aviation industry significantly. Reduced demand for air travel led to production cuts and
affected Rolls-Royce's supply chain as it had to adjust to the changing market conditions.

10. Transportation Challenges: Shipping and transporting large, heavy aviation

components can be logistically challenging. Delays or damage during transit can disrupt
production schedules.

Rolls-Royce needs to keep up a solid supply chain management strategy that

incorporates risk reduction, supplier diversification, technology adoption, and continuous
improvement initiatives. In order to guarantee the dependability and safety of their products,
the aviation industry also needs to work closely with suppliers and be committed to quality
control.
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VI. SCM Best Practices:

As a top aviation and engineering firm, Rolls-Royce uses a variety of supply chain
management best practices to streamline its processes and guarantee timely product
deliveries. superior products. Among these ideal practices are:

1. Supplier Relationship Management (SRM): The development of long-lasting,

cooperative relationships with its suppliers is highly valued by Rolls-Royce. This involves
open communication, sharing of strategic objectives, and jointly identifying opportunities
for cost savings and process improvements.

2. Supplier Diversification: To mitigate risks associated with supply chain disruptions,

Rolls-Royce diversifies its supplier base. This approach reduces dependency on a single
source for critical components, allowing for greater flexibility in procurement.

3. Demand Forecasting and Planning: Rolls-Royce uses advanced demand forecasting

models to predict future demand for its products accurately. This helps in optimizing
inventory levels, production schedules, and resource allocation.

4. Lean Manufacturing Principles: Rolls-Royce embraces lean manufacturing principles

to eliminate waste and increase efficiency throughout the supply chain. Continuous
improvement initiatives focus on reducing lead times and improving overall process
efficiency.

5. Quality Control and Assurance: Maintaining high product quality is paramount in the
aviation industry In order to ensure that suppliers follow quality standards and
certifications, Rolls-Royce implements strict quality control and assurance measures.

6. Technology Adoption: To increase visibility and traceability throughout the supply

chain, the company is investing in cutting-edge technologies like advanced analytics, and
artificial intelligence. Real-time tracking of inventory, shipments, and supplier
performance is made possible by these technologies.

7. Sustainability Initiatives: Rolls-Royce understands the value of sustainability and

integrates eco-friendly practices into its supply chain. This may include sourcing
sustainable materials, reducing emissions in transportation, and minimizing waste.

8. Risk Management: Rolls-Royce carries out thorough risk analyses to find any potential
supply chain threats. Following that, strategies are created to lessen these risks, whether
they are caused by geopolitical factors, natural disasters, or other disruptions.

9. Supplier Development Programs: To assist them in enhancing their capacities, quality

standards, and production procedures, the company collaborates with important
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suppliers. This increases the overall resilience of the supply chain and benefits suppliers
as well.

10. Continuous Improvement Culture: Within its supply chain teams, Rolls-Royce fosters
a culture of constant innovation and improvement. Employees are encouraged to identify
and implement process enhancements that drive efficiency and reduce costs.

11. Global Network Optimization: The company continuously assesses its global network
of suppliers, warehouses, and distribution centers to ensure optimal geographic
positioning and minimize lead times.

12. Regulatory Compliance: Rolls-Royce makes sure that all of its suppliers adhere to the
necessary standards by keeping up with the changing laws and compliance requirements
in the aviation sector.

Rolls-Royce keeps a robust and adaptable supply chain that can respond to shifting
market conditions, reduce risk, and provide high-quality products for clients in the aviation
manufacturing and engineering industries by maintaining this practice.

VII. Supply Chain Performance Metrics:

Like many airlines, Rolls-Royce assesses the effectiveness and efficiency of its
aviation supply chain using a set of performance metrics. These metrics help a business
track its performance, make wise decisions, and promote continuous improvement by
offering insight into various supply chain elements. Rolls-Royce uses a number of KPIs to
gauge the effectiveness of the aviation supply chain, including:

1. On-Time Delivery (OTD): This metric calculates the proportion of orders or

components that are delivered on time or earlier than the specified delivery date. It is
critical in the aviation industry, where production schedules and maintenance
operations depend on timely deliveries.

2. Lead Time: Lead time measures the time it takes from the initiation of an order to
its delivery. In order to guarantee that essential components are available when
required and lower the possibility of production delays, Rolls-Royce works to reduce
lead times.
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3. Supplier Performance Metrics: Rolls-Royce evaluates the performance of its

suppliers based on a number of factors, including quality, on-time delivery, and
responsiveness to problems.. These metrics help identify top-performing suppliers and
areas that may require improvement.

4. Inventory Turnover Rate: This metric calculates how often inventory is sold and
replaced within a given period. A higher turnover rate indicates efficient inventory
management and cost control.

5. Inventory Levels: Rolls-Royce monitors inventory levels to ensure that they are
optimized to meet demand while minimizing carrying costs. Excessive inventory can
tie up capital, while insufficient inventory can lead to production disruptions.

6. Cost Metrics: Rolls-Royce tracks various cost-related metrics, including the cost of
goods sold (COGS), transportation costs, and procurement costs. Managing and
reducing these costs is crucial to improving profitability.

7. Quality Metrics: Rolls-Royce closely monitors the quality of components and

materials supplied by its partners. Metrics such as the number of defects, rework rates,
and warranty claims are used to assess and improve product quality.

8. Supplier Scorecards: Supplier scorecards provide a holistic view of supplier

performance, combining multiple metrics into a single rating. These scorecards help
Rolls-Royce identify areas of excellence and areas that need attention.

9. Capacity Utilization: In order to ensure effective resource use, Rolls-Royce

evaluates the utilization of both its own production facilities and those of its suppliers.
Optimizing capacity can lead to cost savings and faster production.

10. Transportation Efficiency: Metrics related to transportation, such as transportation

costs per unit and transit times, help Rolls-Royce assess the efficiency of its logistics
and distribution network.

11. Sustainability Metrics: As sustainability gains importance, Rolls-Royce may monitor

figures for its supply chain's carbon emissions, energy usage, and sustainable sourcing
methods.

12. Risk Assessment: Rolls-Royce assesses possible risks, such as operational, financial,
and geopolitical risks, in its supply chain.

These performance indicators give Rolls-Royce important information about the

condition and effectiveness of its aviation supply chain. Companies can find areas for
improvement, improve cooperation with suppliers, cut costs, and guarantee reliable
product delivery by continuously monitoring and analyzing these metrics. high-quality
goods for its customers in the aviation industry.
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VIII. Recommendations:

To further improve Rolls-Royce's supply chain efficiency, the company can consider
implementing the following recommendations and strategies:

1. Enhanced Supplier Collaboration:

• Foster even closer relationships with key suppliers to encourage collaboration in

product development, cost reduction, and innovation.

• Explore strategic partnerships and long-term agreements with suppliers to ensure

a stable and reliable supply of critical components.

2. Digitalization and Advanced Analytics:

• Invest in advanced analytics and data-driven decision-making tools to gain better

visibility into supply chain performance and forecast demand accurately.

• Implement real-time monitoring and IoT solutions to track inventory, production,

and transportation processes.

3. Supply Chain Transparency:

• Improve transparency by sharing supply chain information with key suppliers and
customers, allowing for better coordination and responsiveness.

• Leverage blockchain technology for enhanced traceability and transparency in the

supply chain, particularly for tracking the origin of materials.

4. Inventory Optimization:

• Implement advanced inventory optimization techniques, such as demand-driven

planning, to reduce excess inventory while maintaining high service levels.

• Explore vendor-managed inventory (VMI) programs with key suppliers to shift

inventory management responsibilities and reduce carrying costs.

5. Lean Principles:

• Continue applying lean manufacturing principles to eliminate waste and streamline

processes throughout the supply chain.

• Implement just-in-time (JIT) inventory management to reduce excess inventory

and minimize lead times.

6. Demand Forecasting:

• Enhance demand forecasting accuracy by leveraging AI and machine learning

models to analyze historical data and market trends.
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• Collaborate closely with customers to gather real-time demand information and

improve forecast accuracy.

7. Risk Management:

• Develop a comprehensive risk management strategy that includes scenario

planning for potential disruptions and supply chain resilience.

• Diversify sourcing for critical components to mitigate geopolitical and supply chain
risks.

8. Green and Sustainable Practices:

• Integrate sustainable practices into the supply chain, including sourcing eco-
friendly materials, reducing carbon emissions in transportation, and minimizing
waste.

• Consider the use of alternative fuels and energy-efficient transportation options to

reduce the environmental impact of logistics.

9. Continuous Improvement Culture:

• Foster a culture of continuous improvement within the supply chain teams,

encouraging employees to identify and implement process enhancements.

• Implement a system for tracking and measuring the impact of improvement

initiatives.

10. Advanced Manufacturing Technologies:

• Explore advanced manufacturing technologies such as 3D printing and additive

manufacturing to reduce lead times and increase flexibility in production.

• Invest in automation and robotics to improve efficiency in manufacturing and

assembly processes.

11. Supplier Development Programs:

• Expand supplier development programs to help suppliers enhance their

capabilities, quality standards, and production processes.

• Provide training and resources to suppliers to improve their own supply chain
practices.

12. Performance Benchmarking:

• Continuously benchmark supply chain performance against industry leaders and

best practices to identify areas for improvement.
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• Use key performance indicators (KPIs) to measure progress and drive ongoing
optimization efforts.

Rolls-Royce can improve the effectiveness of its supply chain, lower costs, increase
customer satisfaction, and keep its position as a market leader in the engineering and
aviation industries by putting these suggestions and strategies into practice.

IX. Conclusion:

In conclusion, this case study has had a thorough analysis of supply chain
management on Rolls-Royce Holdings. This analysis makes clear Rolls-Royce's dedication
to excellence and determination to provide high-quality products to a diverse customer
base.

With its long and illustrious history, Rolls-Royce has contributed significantly to the growth
of the aviation sector by offering a variety of engines and services to clients all over the
world. The organization's dedication to sustainability and innovation showcases a cutting-
edge perspective on aviation technology.

The supply chain overview has shed light on the intricate processes involved in
bringing aviation engines from raw materials to final products. The emphasis on planning,
sourcing, production, delivery, and returns draws attention to how difficult it is to manage
international supply chains in the aviation industry.

Manufacturers, distributors, retailers, and customers have been identified as

important supply chain participants, highlighting the aviation industry's culture of
cooperation. For its supply chain to be successful, Rolls-Royce's cooperation and
relationships with these stakeholders are crucial.

The difficulties facing the aviation supply chain, including global complexity,
lengthy delivery times, and regulatory compliance, highlight the demand for a strong and
flexible supply chain strategy. Rolls-Royce has met these difficulties head-on and is
working to improve its supply chain management.

Rolls-Royce can measure the effectiveness of its supply chain and promote
continuous improvement by using performance metrics like on-time delivery and
inventory turnover. In order to guarantee customer satisfaction and operational
effectiveness, these measures are crucial.

In the end, the suggestions made here seek to further improve the effectiveness
and robustness of Rolls-Royce's supply chain. Key tactics for future business success
include embracing digitalization, enhancing supplier relationships, and embracing
sustainability.
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In summary, Rolls-Royce's supply chain management shows a dedication to

aviation excellence. Rolls-Royce maintains its position as a pioneer in supply chain
management and aviation technology by constantly enhancing its operations and
embracing innovation.

X. References:

About. (n.d.). https://www.rolls-royce.com/about.aspx#/

Our strategy. (n.d.). https://www.rolls-royce.com/about/our-strategy.aspx

Board. (n.d.). https://www.rolls-royce.com/about/leadership/board.aspx

Our businesses. (n.d.). https://www.rolls-royce.com/about/our-businesses.aspx

2023 half year results. (n.d.). https://www.rolls-royce.com/investors/2023-half-year-results.aspx