Preview Case Aerostructures Hamble

MARKETS DO NOT STAND STILL. When customer needs and technology change, companies, big or small, must create new products and invest in new technology Co keep abreast of such changes in the marketplace,

Ac re i structures Hamble, a Hampshire (L'K}-based aircraft components manufacturer, is one company that has survived many changes in its industry. Through it-s emphasis upon customer-oriented innovation and lean management techniques to speed up product development, it has maintained outstanding performance in a highly competitive aircraft components industry.

The company started in 1936. making the Midge and Gnat aircraft. Hawker .Siddeley took it over in 1963. The aircraft-manufacturing side of Hawker Siddeley was nationalized as part of the British Aircraft Corporation, which was privatized in 1979. It became Aero structures Harable in 1989 when British Aerospace decided to make it more accountable as a profit centre. In 1990 Andy Rarr, chief executive, joined from Rover Group and led a £46.7 million management buyout.

With a small team of ten senior managers, including Mr Barr and an operations director, Mr Wyman, who had also come from Rover, new management techniques were introduced - notably Japanese techniques devised by car manufacturers.

In the 1930s, the slipway of Aero structures Ilamble was used to launch seaplanes. In the 1990s, it is being used to dispatch cargo doors of transport planes. Its transformation from aircraft to aircraft component manufacturer is not the surprising element in Aerost rue tu re's strategy, whieh reflects the many changes undergone by the British aerospace industry. What is noteworthy is the speed of execution of the order and its on-time delivery -something. Mr Wyman claims, that is totally alien to the aircraft industry.

The company stresses the need to introduce the 'right product' first time, like the Japanese car makers do. It is hard work, but all functions in the firm must be involved in innovation.

The company has invested heavily in new plant equipment, including riveting machinery, a large press, machine tools and a world-class aluminium finishing plant. It also sets tight parameters for component manufacture, using computer technology and techniques such as statistical process control, which ensure that a part will fit and comes out right first time.

In order to get things right first time, the firm approaches each new project, through a innltidisciplinary team with a manager who becomes the main contact with the customer. People are seconded from other parts of the firm. The manager sticks with the team from the initial bid through to completion of the project. While some of the team members might change, there is a consistent thread running right through the project, from initial conception to final delivery. The goal is to achieve a 'seamless' process as Mr Wyman suggests, whieh is in marked contrast with the old method of passing a project from one department to another.

Quality is given heavy emphasis, and quality control techniques, including suggestion schemes in which over 50 per cent of the staff have taken part, have borne fruitful results.

Other parts of its operations have been reworked or reorganized to allow the company to utilize just-in-time delivery of components to speeific parts of its factory. It has introduced 'kitting', through whieh parts are dispatched to a customer in a carefully laid out package. This simple innovation enables any part missing to be immediately visible and has revolutionized the trace-ability of orders and saved hours of dispute.

The company's reliance on its former owner, British Aerospace, which accounted for 93 per cent of its business in 1990, fell to 78 per cent in 1993 and is expected to fall further in the late 1990s. It has successfully secured new orders and acquired an impressive blue-chip customer base, including Boeing, McDonnell Douglas, Vought and Raytheon.

The company claims that its methods are new in the aircraft components industry. While the new techniques ensure that it creates new products which are a perfect fit with customer requirements, management are well aware that it gets tougher as they go on - customer and market needs are continually evolving, and products and methods must follow suit.1

QUESTIONS

1. How do firms identify and develop new-product opportunities?

2. What are the steps involved in developing and commercializing new products?

3. Is new-product development a risky business, and how might firms such as Ac restructures Hamble minimize these risks?

4. What role does marketing play in new-product development?

5. Why should the firm invest continually in new-product development?

6. As the new product ages, how should the firm adapt its marketing strategies in the face of changing tastes, technologies and competition?

Introduction

In the face of changing customer needs, technologies and competition, product innovation or the development of new products has become vital to a company's survival. Introducing new products, however, is not sufficient. The firm must also know how to manage the new product as it goes through its life cycle: that is, from its birth, through growth and maturity, to eventual demise as newer products come along that better serve consumer needs.

This product life cycle presents two principal challenges. First, because all products eventually decline, the firm must find new products to replace ageing ones (the problem of new-product development). Second, the firm must understand how its products age and adapt its marketing strategies as products pass through life-cycle stages (the problem of product life-cycle, strategies'). We therefore look initially at the problem of finding and developing new products, and then at the challenge of managing them successfully over their life cycles.

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