Supplying a relationship

Pratt & Whitney (P&W) is on track to double its engine output by 2020, a feat that requires the Connecticut-based aerospace giant to ship engine parts to assembly sites around the world.

The mammoth undertaking demands world-class supply chain and logistics expertise. That’s why P&W tapped its longtime logistics partner UPS to build and operate a central distribution center in Londondberry, New Hampshire.

Announced in spring 2014, the 600,000ft2 Northeast Logistics Center (NELC) will support Pratt & Whitney’s manufacturing and global engine assembly and test sites. UPS will operate the NELC and provide parts receipt, storage, inventory management, packing, and freight transportation. UPS also will build manufacturing and assembly kits.

The NELC, which is set to begin receiving parts in June 2015, will speed production of two of P&W’s fast growing product lines: the F135 engine for the F-35 Joint Strike Fighter and its new geared turbofan engine for the commercial jet market.

P&W’s accelerated production requires a change in its distribution cycle, says Earl Exum, director of global materials and logistics. The aerospace giant is investing $1 billion in global manufacturing to overhaul its manufacturing process for engines. Rather than suppliers delivering parts to P&W’s five engine centers, they will ship parts to the NELC, where workers will kit them and send them to P&W assembly sites.

“By centralizing all of our warehouses and distribution, we…can invest in technologies that would be unaffordable to invest [in] across five different facilities,” Exum says. “By having it all centralized in one location, you can leverage investment and get the benefit that supports all five production facilities.”
 

Bidding process

P&W has a relationship with UPS that dates back to 2004, and UPS already operates P&W facilities in Atlanta; Dallas; West Palm Beach, Florida; and Venlo, the Netherlands.

Despite its relationship with P&W, UPS still had to compete with other third-party logistic providers (3PLs) in a bidding process to prove it could build and operate a distribution center on the scale that P&W required.

After outlining its initial requirements, P&W received bids from several companies, including UPS. From there, P&W narrowed down its 3PL candidates, while fine-tuning its criteria, until only two companies remained.

“At the end of the day, we were looking for a leap in technology and efficiency from where we were,” Exum says.

UPS prides itself on its advanced technology and efficient processes, says Tom Upshaw, director of operations at Pratt & Whitney’s Georgia Distribution Center in Atlanta.

Upshaw says officials at UPS considered Pratt’s proposal from a variety of perspectives to determine whether it could optimize the facility.

“We wanted it to be a world-class, highly automated distribution center,” Upshaw says. “When we looked at the volumes and what’s going to be conducted out of that facility, we had an opportunity then to leverage some of the latest in automation and technology to make sure that we had a world-class solution that was most efficient.”

Upshaw says UPS also proposed “dedicated trucks doing dedicated runs to all the locations that will support Pratt & Whitney out of the Northeast Logistics Center.”

Exum says it was a very competitive bidding process, but P&W chose UPS because the logistics company’s ideas for location, transportation, technology, and efficiency met P&W’s expectations. Exum says P&W executives also were convinced that UPS could quickly deliver on its promises.

“We’re working on a very tight execution timeline,” Exum explains. “The NELC will go live in June. We finalized the selection of our partner at the beginning of [2014]. So we are effectively talking about a year and half from no building at all to a full-functioning operating infrastructure by the middle of 2015.”
 

Partnership

“Pratt’s been a great partner for us because we have both embraced the partnership mentality. We communicate openly with each other when there are opportunities to improve,” Upshaw says, adding that executives from each company hold joint quarterly business reviews.

“As part of that review, we look at other opportunities, things we can do from a business standpoint that’s win-win for both companies. We’re constantly looking at ways we can improve together, not only from a performance standpoint but from a business relationship standpoint.”

Exum agrees that communication is key. “Pratt & Whitney has people onsite at these locations to make sure we are constantly communicating,” he says. “UPS has systems that deliver us the metrics and the data that maintain our confidence that they continue to operate at the right level.”

Growing with P&W has helped UPS establish its expertise in the aerospace sector, and the relationship provides UPS with additional opportunities to drive synergy and efficiency across the engine-maker’s supply chain and customer base.

P&W benefits as well, Exum says, noting UPS’s dedication to P&W’s Supplier Gold standards, which align with P&W’s internal Achieving Competitive Excellence (ACE) operating system. Both programs emphasize world-calss performance in quality, on-time delivery, and customer satisfaction. UPS has achieved Supplier Gold – the highest level of performance – every year since 2009.

“They’ve clearly deamonstrated that they understand the system, that they can execute the system,” Exum says. “That’s a pretty impressive track record.”

That track record also could help UPS grow its aerospace logistics business. Upshaw say OEMs, such as airframe manufacturers, know what ACE means, and they know the level of performance it takes to achieve ACE and Supplier Gold.

“We certified in 2009 – the first year we certified we had to be at world-class levels of performance, and part of the ACE program is commitment to continuous improvement,” Upshaw says. “To continue to certify for ACE Gold, we have to improve year-over-year. So, not only did we certify at world-class performance in 2009, but every year since then, we’ve continued to improve upon that performance.”

UPS
www.ups.com

Pratt & Whitney
www.pw.utc.com

About the author: Danny English is a former associate editor of Aerospace Manufacturing and Design magazine.