Balancing Costs and Customer Service
As published on AIA SmartBlog on Leadership, October 2014.
Read the blog on the AIA site
Sam Symonds is president & CEO of Co-Operative Industries Aerospace & Defense (CIA&D), a role he’s held for the past 15 years. Sam began his career in aerospace 35 years ago and has worked for companies such as Simmonds Precision, Hercules Inc., BFGoodrich Aerospace, and Amphenol Aerospace. In this post sponsored by CIA&D, Sam talks about the challenges his company is facing and how he plans to manage them.
Question: What is the biggest challenge your company is facing this year? The next 10 years?
Answer: The biggest challenge facing Co-Operative Industries this year has been maintaining the balance of controlling cost while meeting and exceeding customer requirements. Many times new programs require a fine balancing act of managing the necessary material and human resources needed to meet Just-In-Time (JIT) expectations, while avoiding having to carry excess resources that drive up costs. Successfully managing resources enables us, and our customers, to remain competitive. The next 10 years will challenge us with more of the same as the aerospace and defense industry continues to become more competitive. Consolidation will present unique opportunities as well as challenges for those companies that wish to stay competitive, but independent.
Q: Where do you think the most significant growth will occur in the company in the next few years? How do you expect to manage that?
A: There are two significant growth opportunities for Co-Operative Industries in the coming years. In the commercial arena, the FAA, EASA & CAAC certified Repair Station has the potential to continue or exceed the annual 5% year-over-year growth that we have been experiencing. The military portion has several programs with substantial potential, one of which is the F-35, for which Co-Operative Industries makes electrical wiring harnesses. The planned growth is relatively easy to manage. In preparation, we continually train and cross-train our personnel, increasing staff as needed. When combined with managing available physical capacity we find ourselves well positioned. We enjoy a great deal of flexibility with the components of capacity planning, however an unplanned growth opportunity does present challenges for controlling costs. Manageable parts of growth include planning for floor space, adding a shift to the work schedule, and, in many cases inventory. Concerns center around increasing a well-trained work force in a short time period.
Q: How does the prospect of more aerospace industry consolidation affect your business?
A: Consolidation within the aerospace industry is a double-edged sword for small businesses, presenting both challenges and opportunities. Competitors acquired by larger organizations, while having to give up some autonomy, have the advantage of being infused with resources, which creates a competitive advantage in terms of capital investment. On the other hand, when those companies are absorbed by larger businesses, they lose their small business designation and often the ability to quickly respond to customers’ needs. Small businesses such as ours have the ability to react much faster to customer-initiated changes.
Q: If you had the power, what’s the one A&D industry issue you would resolve today, and how would you do it?
A: Cuts in R&D as a result of sequestration is an issue that I would like to resolve today to help protect the future. There are opportunities for industry growth through innovation that may not come to market. This not only will stifle our country’s position in the world, but also will continue to affect American jobs.
Q: What impact has the sequestration had on your organization and what affects do you see going forward?
A: As a service disabled veteran-owned small business and supplier to the primes, we experienced a significant reduction in our military sales. Fortunately our long-term planning helped offset the cutbacks, but we still felt the pain. As for the future, if Congress continues with the planned cuts I foresee continued business risk for our primes and the entire supply chain. However, in light of the current world events and geopolitical turmoil, I anticipate a change in spending allocations. With players like China, Russia, ISIS and North Korea building up their capabilities we are going to have to revisit investments in conventional and cyber warfare. It is imperative that we match our defense needs with the real threats that exist in the world today.
As a supplier of electrical cables and wiring harnesses, CIA&D supports a wide range of commercial aerospace programs. CIA&D is also rated as a Service Disabled Veteran Owned Small Business, and as such provides components to the defense industry primes. Product applications include the F-35 Lightning II, F-16 Falcon, F-15 Eagle, and a long roster of legacy programs.