An overview of Gulfstream Aerospace Corp
In the jet aircraft manufacturing business, we cannot ignore the name of Gulfstream, as it is legendary in innovation. It employs over 9,700 people. The history of the company began when Grumman Aircraft Engineering Co was changed to Gulfstream Aerospace Corp. during the 1950s. Now its operation is extended to seven major locations offering a wide product line with a strong commitment to society.
Does Gulfstream use location to maximize the effectiveness and efficiency of its supply chain?
One of the distinctive factors which make Gulfstream different is its supply chain. The company has a strong relationship with its suppliers, involving them in the product design and development, sharing of revenue, etc. We can say that the location preference has helped the company to maximize the effectiveness and efficiency of its supply chain. One example is the choice of Gulfstream’s Savannah location. The selection of this location was based on the possibility of easy transportation of raw materials and other resources through air, sea, and rail. In the Savannah location, G500, G550, G350, G450, etc., are manufactured, and the raw materials required are outsourced from different countries. Tails, floors, and engines are imported from Holland and Germany through Atlanta International Airport, which is then taken in trucks to the plant. From the Port of Amsterdam through Holland canals, Fokker is shipped to the Port of Savannah. The rail logistics is also used, and we can see one rail shipment every week. The wing section of Vought aircraft is moved from Texas by rail to Savannah. Savannah location has helped the company in the production and delivery of services on time. Also, the selection of location helped in the economy of land, labor, capital, design, and production activities.
How would you describe the relationship between Gulfstream’s “just in time” manufacturing and its strategic approach to choosing locations?
“Just in time (JIT)” manufacturing is a strategy or technique used for ensuring adequate and timely production. JIT is defined as a “production process based on JIT inventory system which allows faster response to customer demands without large finished goods or goods-in-process inventories.” (Just in time manufacturing, 2009, Definition, para.1). The company Gulfstream follows the strategy of ‘just in time’ manufacturing as this strategy can offer many advantages to the company in the manufacturing process. Some of the main advantages are elimination or reduction of wastages, improvement in productivity, etc.
There is a close relationship between’ just in time production and selection of the location of production. If the location of production is at a remote place, a company cannot enjoy the advantage of ‘just in time manufacturing, in full. Gulfstream has a specially designed system of ‘just in time manufacturing in which the required inventories are put in a kit. There will always be three kits with the company, that is, one in the warehouse, one in transit, and the third one in site or place of manufacturing. The company designed a logistic system in such a way that when the kit at the manufacturing place gets used, the kit, which is in transit, will reach the manufacturing place. By this time, the kit, which was in the warehouse, will start its journey to the place of manufacturing, and at this time, a new kit will get inside the warehouse. For easy implementation of this system, location advantage is required. Gulfstream enjoys a location advantage at its Savannah location as it is in the central point of the East Coast with full-fledged facilities for all means of transportation. This is advantageous because importing from and exporting to all parts of the world would be convenient and easy.
Does Gulfstream’s manufacturing headquarters in Savannah optimize the “7 Keys to Location” defined in the Mentzer article?
Site location, indeed, has become a more critical decision for supply chain leaders as supply chains have stretched, companies have expanded, and transportation costs have soared. Today a poor location decision can have much greater and more immediate effects on operating efficiencies and cash flow.” (Mentzer, 2008, para.3). Mentzer has developed 7 Keys to a location like land, labor, capital, sources of supply, production, markets, and logistics. We can say Savannah satisfies the above seven keys to location and optimizes the production. Expansion of the company in Savannah is possible due to the large tract of waterfront land and low labor costs. Also, it is relatively less expensive to start or do business over here as the capital cost is low. Import and transportation of raw materials are possible as “Savannah is one of the southeast’s leading seaports and cargo hubs. Shipping activity is focused on the Port of Savannah, which is supported by two railroads and two interstate highways as well as Savannah International Airport.” (Savannah: Economy, 2009, Commercial shipping, para.1). Due to this, Savannah has adopted a ‘Just in Time’ manufacturing system, which helped the company in low inventory levels and smooth production cycle. The consumers targeted include both military and business houses. Savannah location has got ODA (Organization Designation Authorization) certification for the design and production, which shows the success of optimization of 7 keys to location, thus making Gulfstream Aerospace Corp. distinct.
References
- Just in tome manufacturing: Definition. (2009). Business Dictionary.com.
- Mentzer, J.T. (2008). 7 keys to facility location. Supply Chain: Management Reviews.
- Savannah: Economy: Commercial shipping (2009). City Data.com. Web.