Economic Principles of Supply Chain at Pratt and Whitney Corporation
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Economic Principles of Supply Chain at Pratt and Whitney Corporation
The main aim of writing this paper is to explain the economic principles of the supply chain at Pratt and Whitney Corporation. Pratt and Whitney Corporation is a division of Raytheon Technologies. This company plays a big role in making and repairing jet engines mainly for commercial and military use. Having worked in the field of the supply chain for over sixteen years and twelve years in the Corporation of Pratt and Whitney hence having been their employee since the year 2004. Therefore, this familiarized me with supply and demand issues for the product at the company. This paper will detail the supply and demand of materials used in the overhaul and repair of their jet engines and attainable solutions that could be put into practice to enhance a better supply of materials to meet engine builds.
Analysis
How people face trade-offs is the first economic principle to discuss in this paper. A trade-off can be also referred to as an opportunity cost. An opportunity cost therefore can be defined as a profit from something which has to be given up to gain and accomplish something else. The engineers can face trade-offs in different ways such as; Life Limited Components Replacement. Establishing Life Limited Components with shorter life span seems to be a better way of saving expenditure during the maintenance but if the component has a short period left to get you to the next major inspection, it could probably lead to another extra expenditure (AVBuyer, 2020). A light shop visit would include oil change, wire/hose replacement, top off fluids, and engine diagnostics test. Paying to take the engine off-wing and transported for this maintenance would be the opportunity cost as opposed to not maintaining the engine and suffering an inflight shutdown.
Engine performance issues could also be considered. Trend monitoring gives valuable insight to the whole condition of the engine. Checking this trend information can show changes in performance that could show potential issues. However, many changes are subtle, as a result of the expected degradation of the hot part of an engine over a period of time, some changes could indicate a serious problem. Do not wait until later. Looking into the condition at an early stage could lead to securing hot parts from further damage. Not addressing problems with the combustion chamber, the nozzle of the turbine or the blades for example over time could lead to an expensive, unscheduled visit to the shop or much expensive than the average cost at the next scheduled visiting of the shop. Preservation of the engine could also be looked into although it is a crucial lesson to learn considering saving on maintenance expenses.
The second economic principle is how people make decisions. Cost and benefit incentive for employees is always being considered. The aerospace industry goes through tremendous highs and lows economically and workers need to perform, be motivated, and work as a team to make a good product and be successful (McQuerrey, 2020). Retirement benefits can influence workers to save for the future the incentives can be monetary or not. Extra time off or flexibility is important (FTE, 2020). These are some benefits that can be offered to workers to influence them to accept a job at Pratt & Whitney and for retaining good workers. These are rewards for good workers. Pratt & Whitney can also create incentives for their suppliers. They can partner with certain suppliers that are necessary for providing materials that are needed to build jet engines (Zuehlke, 2019).
Lastly, the third economic principle is the way Individuals interact with each other. Pratt and Whitney therefore can develop a good supplier partnership that will play a big role to ensure economic impact (Supply Chain Game Changer, n.d.). A supplier partnership should be a commitment to work together to the mutual benefit of both parties (Jusko, 2011).
Synthesis Cutting costs and lowering inventory but managing to still have material on hand is an everyday challenge. The raw material needs to be processed to ensure it will not rust, bend, or break within a flight. Pratt & Whitney should act on opportunities to partner with raw material suppliers. They can create long term agreements (LTAs) with machine shops that list price, lead times, and quality guidelines to guarantee to send work to these suppliers and in return having material available as needed.
Basically, there are two types of shop visits a jet engine will come in for: the first is low maintenance, which would be comparable to a tune-up for your car’s engine. The hoses and electrical systems are checked, the fluids/oil are replaced, and the engine goes through a diagnostic check to make sure the engine is in top performance. The second type of visit is high maintenance, which is when there is an issue and the engine needs to be repaired or replaced. There is an opportunity cost of having an AOG (aircraft on ground), as opposed to a plane flying using a good engine.
The cost and benefit incentive for employees. Employees are a company’s biggest asset. In order to hire and retain good employees, a company must pay a fair wage and offer training, and incentives. Employees that are treated better, will perform better and will produce better quality products.
Before a company making decisions especially in very strategic engagements, the company should take note of various essential attributes such as sharing planning and management system. For the relationship to be mutually productive and valuable, there must be a multi-faceted commitment between the companies to establish the required foundations. Strategic partners may be the fewest in number but are the most critical to the purchasing organization’s success. Ideally, this prospect is for both parties.
In order to get higher productivity in a company, several measures must be put in place. Setting a motivational tool is one of the greatest achievement Pratt and Whitney Corporation can take. Incentive programs motivate employees to push themselves and challenge themselves to attain higher productivity levels. In the end, this translates into increased earnings for your business. When benefit programs are in place, staff recognize and encourage considerable work on their behalf. Therefore, this can result in an increase in the amount of time and effort staff is interested in a corporation
Promoting teamwork can also be encouraged in a corporation when the staff work in a collaborative manner the product will be higher therefore, Pratt and Whitney corporation should promote teamwork.
Conclusion
To wrap it up, the economic principles of supply chain at Pratt and Whitney corporation are explained in the detailed form above. The economic principles include; how people make decisions in a corporation. This is very essential especially in a corporation since proper and adequate decisions would be chosen hence improving the well-being of the company. How people face trade-offs is also one of the discussed economic principles of the supply chain. To forego the cost for better value is very profitable to a corporation.
How people interact in a corporation was the last discussed economic principles of supply chain at Pratt and Whitney Corporation. Good interaction among the staff corporation is very valuable and productive in a corporation
. References:
AVBuyer, 2020, Five Jet Engine Tips to Lower Maintenance Costs. Retrieved from:
https://www.avbuyer.com/articles/engines-biz-av/five-jet-engine-tips-to-lower-maintenance-costs-107118
Jusko, 2011, How to Build a Better Supplier Partnership. Retrieved from:
https://www.industryweek.com/the-economy/article/21934785/how-to-build-a-better-supplier-partnership
McQuerrey, 2020, Importance of Incentive Plans. Retrieved from:
https://smallbusiness.chron.com/importance-incentive-plans-75495.html
Supply Chain Game Changer, n.d. 7 Essential Attributes of Strategic Supplier Partnerships! Retrieved from: https://supplychaingamechanger.com/7-essential-attributes-of-strategic-supplier-partnerships/