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2005 Update to the Business Case Analysis of the Parachute Industry

2005 Update to the Business Case Analysis of the Parachute Industry. Prepared by: Dr. Lisa Owens & Dr. Frances Kennedy Clemson University. Background. 2004 National Security Assessment of the U.S. Aerial Delivery Equipment Industry Prepared by the U.S. Department of Commerce 1996 – 2000

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2005 Update to the Business Case Analysis of the Parachute Industry

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  1. 2005 Update to the Business Case Analysis of the Parachute Industry Prepared by: Dr. Lisa Owens & Dr. Frances Kennedy Clemson University

  2. Background • 2004 National Security Assessment of the U.S. Aerial Delivery Equipment Industry • Prepared by the U.S. Department of Commerce • 1996 – 2000 • Scope: Industry-wide; Included Market and Supplier Environments

  3. Background • 2005 Update to the Business Case Analysis portion of the original study • Adds 2001 - 2005 • Current Report: 1996 – 2005 • Scope: 4 primary producers

  4. Methodology • Multi-stage process • Visited one manufacturer • Developed questionnaire and collected consistent data and information • Followed up with numerous conversations

  5. Business Case Analysis Results • Four general areas • Sales • Margin • Labor • Investment

  6. Total Sales Dollars1 2001: 58% TOTAL Decrease 1 Stated in Millions

  7. Sales Dollars by Category1 2001: 67% Defense Decrease 1 Stated in Millions

  8. Defense Sales as a Percent of Total Sales Growing Dependence 60-68%

  9. Average Margin High: 3.4% 35% to 500% Fluctuations Single Year Declines of 148%

  10. SIGNIFICANT Workforce Reductions Loss of Expertise Eroding Labor Market Labor Statistics

  11. Capital Investment1 1 Stated in Thousands

  12. TRIGGER UNPREDICTABLE DEMAND & LOW MARGINS CONSTRAINTS 1. Constrains technology investment 2. Locks in old costly processes RESULTS 1. Layoff experienced workers * Increases costs – inefficiencies, hiring, training *10-12 month learning curve 2. Long lead times * Slow delivery * Excess inventory costs * Ties up precious capital IMPLICATIONS 1. Higher costs . . . to producer . . . To customer 2. Slow delivery Implications

  13. Potential? • Example: 1 value stream in 1 facility • In 2 years: • Capacity (units) more than doubled • Capacity (square feet) reduced to 69% • Reduced Days Supply of Inventory (DSI) from 125 to 61 • Order to Invoice time fell from 21 to 5 days • One year improvement of 17% in sales per employee

  14. Problems? • Typical change management issues • Communications • Performance measurement • Managing expectations • Ensuring security • Other potential barriers • Technology constraints • Funding • Timing

  15. Research Potential – Supply Chain • Document problems, barriers, implementation and results • Ideal supply chain • Well-defined • Critical

  16. Research Implications • Customer • Results of the study impact other Defense supply chains • Supply Chain • Better communications and awareness • Identify potential barriers • Identification and development of the best metrics to track progress and impact of changes

  17. Baseline Research • During this slow period, we can • Baseline metrics • Identify potential barriers • Quantify holding capital • This initial phase could inform actual implementation

  18. Questions and Discussion? Dr. Lisa Owens (864) 656-4888 lisao@clemson.edu Dr. Frances Kennedy (864) 656-4712 fkenned@clemson.edu

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