Air Transport World

Shortening the chain. (sole-source contracting increasingly used by General Electric Aircraft Engines and Boeing)

The rising cost of commercial airframes and engines and competition for customers are forcing prime contractors to seek new ways of managing programs. in this drive to become more efficient, sole-source contracting is getting increased use.

Traditionally, says Ron Welsch, general manager of GE Aircraft Engines' new GE90 program, designers would release approved drawings to the engineering department, which would send drawings to potential suppliers, who would study them for months. Then, according to Welsch, they might send them back and say, "We can't do this." Or the price might be unacceptable. GE, which already might have released some tooling, would have to start again.

Of course, all wasteful practices don't occur solely between contractor and subcontractors. Like Boeing, Pratt & Whitney and other manufacturers, GE is trying to reduce the costly design and engineering changes that have been tolerated internally, too.

"Every piece of paper costs money, much less new tooling," declares Welsch. "Just issuing purchase orders is a horrible process." Problems with a fan-blade-bearing design cost $15-20 million. The magnetic gearbox plug for the L-1011 was redesigned three times and cost 10-15 million. Every 1 % improvement of productivity equals $150 million in sales, he says.

So GE, under pressure from customers and a headquarters that expects a hefty profit contribution, decided to change its project-management approach. But how? GE reasoned that it knows in advance what it needs to build an engine. The fact that it must order items such as forgings, castings, turbine blades and disks is no surprise. if the suppliers of these parts could be part of the design team, GE concluded, it could manufacture a product of higher quality using less production time and at reduced cost.

To bring suppliers in that early in a project, however, is not easy. They might be reluctant to invest the time and money-and chance alienation of other contractors-required to participate in a design team without some commitment, particularly for high-technology, high-value items. As a result, GE signed agreements in several key areas that will run for the life of the GE90. Certain companies, such as Wyman-Gordon and Parker-Hannifin, will be the only sources for their areas of expertise, in this case, forgings and controls and accessories, respectively.

"Clear standouts"

As of mid-January, GE had signed five of these agreements, called memoranda of understanding, with companies that Gail Jackson, manager of the GE90's domestic sourcing, refers to as "clear standouts. …

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