Mastering the component engineering supply chain, Rolls-Royce is true luxury for customers

Many know the brand Rolls-Royce as a luxury automobile manufacturer. But it is, in fact, also a global leader in the aerospace and power systems industries. The company operates a robust supply chain management system for its Mechanical Systems and Component Engineering division, with a total spend exceeding GBP 4.7 billion. Its global purchasing division comprises more than 900 employees, overseeing trade relationships with 18,000 active suppliers across a wide range of products and parts.

Rolls-Royce gives extreme importance to the purchasing division and the role it plays in its external supply chain, considering the complex international operating environment that exists today. The purchasing team, spread over 10 countries across Europe, Asia and North America, ensures that they select and manage those suppliers that help them meet customers’ demands in terms of quality, cost, and delivery.  This is further driven by inventory management, working capital outlay, overheads (building, maintenance, running costs, and travel costs), qualified and trained supply chain professionals with a proven product and industry knowledge, contract negotiations (time and cost), security of intellectual property rights, and focused supplier management and relationship building skills for consistent achievement of predictable on-time performance.

The organisation focuses on the skill development aspect of its supply chain workforce and brings its principles into action with various training and development programs. In fact, many of those employed in the supply chain/purchasing roles hold the prestigious Chartered Institute of Purchasing and Supply (CIPS) accreditation. This commitment to continuous learning enhances the expertise of the purchasing team and contributes to their effectiveness in managing the supply chain.

Specifically, within the nuclear sector, Rolls-Royce has over 50 years of experience in establishing, developing, maintaining and managing supply chains to support nuclear component manufacture, and technology development. They are also engaged in specialist product design applications for the UK’s defence and turnkey infrastructure project programmes.

Leveraging existing resources, Rolls-Royce excels in various aspects of supply chain management in their Nuclear segment on the back of an optimised approach to supply chain designing, planning and control. They also extensively engage in supply development and maintenance, strategic sourcing and building a base of strong supply chain relationships. Apart from that, they also ensure impeccable quality management, total cost management, total life cycle management and purchase execution & logistics management. 

Rolls-Royce is able to deliver consistent performance in making sure that the products are high quality and reach their customers on time. The other benefits to customers include affordable unit cost supply and reduced total acquisition and risk costs.

The company has been leveraging cutting-edge tools, equipment, and software to support its supply chain management functions. They have been using an enterprise resource planning tool and regularly invest in modern IT solutions. Apart from that, there are several tech-based solutions that have been employed by the organisation to efficiently manage its supply chain operations. A few of them are: 

  1. Strategic Sourcing Toolset (ARIBA-Synthesis): An online system facilitating the creation of commodity and supplier strategies, contract management and negotiation, supplier performance management, and supply chain spend analysis.
  2. Raw Material Planning (INFOR): An integrated software package that provides visibility into the sub-tier supply chain, enabling demand signal visibility, risk analysis, demand simulation, and failure analysis.
  3. Global Supplier Portal: An accessible web-based portal that allows rapid information interactions and provides valuable supply chain quality and performance data.

Rolls-Royce’s commitment to efficient supply chain management, continuous training and development, and the adoption of advanced tools and software positions them as a reliable and effective partner in delivering high-quality products on time while minimizing costs and risks.

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