Supply Chain Risk Strategy Of Rolls Royce Aerospace Management Essay

The objective of this research is to understand and critically evaluate the existing supply chain risk strategy of Rolls Royce Aerospace Company. Analyse and evaluate whether an alternative or best method of practice of supply chain risk management can be implemented for Rolls Royce Aerospace Company. This chapter reveals the nature and scope of research, its methodology selection, the limitations of this research, the data collection method, whether the data collection is quantitative or qualitative, and last its ethical considerations with respect to this research study and Rolls Royce confidential data.

The research questions are: critically evaluate the supply chain risk management strategy of Rolls Royce, analyse various factors influencing the supply chain risk management, analysing the best practices of supply chain risk management and comparing with existing risk strategy of Rolls Royce. The research is based on the critical analysis of the existing supply chain risk strategy of Rolls Royce Aerospace. Analysing and comparing the existing supply chain risk strategy with other best methods of practice by various companies handling supply chain risk management. Here is a brief overview of Rolls Royce profile.

Overview of Rolls Royce:

Rolls Royce is a world’s leading provider in power systems and services for civil and defence aerospace, marine and energy and has established a strong market position globally (Rolls Royce, 2010). This research is focussed on Rolls Royce aerospace division’s supply chain risk management. Rolls Royce Aerospace division basically deals in manufacturing engines for aircrafts in both the sectors of civil and defence aerospace, the supply chain of Rolls Royce is complex and managing is a difficult task. Over last decade Rolls Royce has been focussing on its supply chain and their relationships with suppliers to stand out in the competitive market (Tiwari, 2005). Rolls Royce today has a huge customer base of more than 600 airliners, 4000 corporate and utility jets, helicopter operators and 160 armed forces (Rolls Royce, 2010).

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Rolls Royce market outlook forecast demands for 141,000 engines worth more than $820 Billion. Rolls Royce sees opportunity for growth in commercial aerospace sector with continuous need for air transportation by various business sectors and individuals (Rolls Royce, 2009). Rolls Royce manufactures aircraft engines and this segment of the industry is divided into three components, turbofan, turbo shaft and turboprop. Turbofan commands the majority of the total engine demand. Turbofan is used in the manufacture of commercial and military aircrafts. Turboprops are used for corporate jets, regional airliners and for military purposes, the last component turbo shafts are used for helicopters, vertical takeoff jets, landing aircrafts (Tiwari, 2005). These components are used for both civil and defence aerospace sectors. Civil aircrafts such as Trent series, especially large aero engines have a great demand in new generation wide bodied aircrafts (Rolls Royce, 2009). Defence aerospace hold a commanding position with aircrafts such as STOVL, Combat, Light Attack, Maritime Reconnaissance, F-35 joint strike fighter aircrafts and Euro Fighter Typhoon (Hughes, 2003).

Managing uncertainty in civil and defence aerospace supply chain industry has become a challenging task for Rolls Royce. Operating successful supply chain with a complex and extended chain of partners and suppliers, those with longer lead time products and extreme variability of supply and demand has become complicated and difficult to manage. Rolls Royce understands the importance of extended supply chain, the supply chains which are extended with lots of partners, suppliers, sub suppliers, manufacturers are termed as extended supply chains and also known as value chains. Rolls Royce manufactures 30 percent of gas turbines and the remaining products are manufactured by their external network of risk sharing partners and suppliers. Rolls Royce and their external supplier and partner made a commitment to manage and coordinate supply chain and their key components in the link. Newview, a company providing solutions for supply chain developed a new system known as network resource management (Newview, 2010). “Network resource management (NRM) provides the ability for companies to programmatically reconnect their finished goods demand to the parts, materials, capacities and operations that represent significant risks and cost driver. Provides a secure means of multi-enterprise collaboration between stakeholders” (Newview, 2010).

Nature and scope of research:

The research process consists of exploring the existing case studies of the supply chain risk management of Rolls Royce. Rolls Royce supply chain risk strategy known as Earlier Supplier Involvement (ESI), involves the suppliers, sub suppliers and partners in every stage starting design process, improving the design till the completion of product development (Zsidisin & Smith, 2005). According to Zsidisin & Smith (2005), adoption of the method of early supplier involvement has benefitted many supply chains. However there are several drawbacks and negative aspects towards this approach, this method cannot be defined as a good risk management, there are issues with the supply chain disruption, however early supplier involvement does not reduce risk in supply chain disruptions. In an extended supply chains of Rolls Royce there are issues of ownership and trust, more over Rolls Royce is only focussed on early supplier involvement. This research critically evaluates the existing supply chain risk strategy of Rolls Royce. Analyse and compare with other risk strategies, best methods of practice implemented in other companies. This research process is known as interpretive approach, interpreting existing knowledge, critically evaluating with an understanding of social realities of the research study (Thietart et al 2001). According to Thietart et al (2001), researchers are inspired from the three major research paradigms which represent the epistemological streams of organizational science. Paradigm term can be defined as a scientific practice of people’s perceptions towards philosophies and assumptions about the world and nature of knowledge (Hussey & Hussey, 1997). Organizational science is the assumptions of people given when exploring, discovering nature of organizations with paradigm objectives (Gioia & Pitre, 1990). The three research paradigms are known as positivist, interpretivist and constructivist. Positivists are always dominant and their nature of reality is made up of determinist hypothesis, they only deal with facts and figures (Thietart et al, 2001). The positivist analyse facts, figures and causes of social phenomena, based on laws the phenomena is explained, predicted and controlled, logical reasoning is applied to the research. Positivist sees reality a concrete structure and perceives reality as concrete process (Hussey & Hussey, 1997). “There has always been a conflict between positivist and interpretivist which defends the particularity of human science in general and organizational science in particular” (Thietart et al 2001:14). According to Alvesson & Deetz (2000), positivists are described as methodological determinist and functionalist practicing the laws of theory and applying variable analytic traditions in research. Interpretivist sees reality as social construction (Hussey & Hussey, 1997). Reality is mental and perceived which is known as phenomenological hypothesis, their goal is to understand knowledge social reality rather than discovering and underlying laws, they develop an understanding of social reality experienced by the subject of the research study (Thietart et al, 2001). In interpretive approach the researchers perception on organization is a social site where special type of communities share important characteristics with other different communities and more over they are focussed on social perspectives rather than economic perspectives of the organizations (Alvesson & Deetz, 2000). The phenomenological hypothesis or paradigm is known as understanding the human behaviour from participant’s perspective of reference. Phenomenon is basically defined as a fact or an occurrence of act, or the act which is perceived (Hussey & Hussey, 1990). The constructivist creates the knowledge and reality in minds, they don’t perceive on real world, the observation is dependent on the observer with respect to data, the laws of nature as well as external objects (Thietart et al, 2001). Positivists on the other hand are ontology independent. This means their reality is singular and objective, knowledge has its own essence and moreover researcher is independent of the research. Ontological assumption means whether an individual decides and considers world as an object and external to the researcher (Hussey & Hussey, 1990). Interpretivists are phenomenologist, their nature of reality is phenomenology interactive, and knowledge is validated through experience (Thietart et al, 2001). Phenomenologist’s are the ones who try to bridge the gap between the research and researcher, they are more involved interaction with research, interpretivist reality is subjective and multiple, interpretivist understanding nature is by developing theories (Hussey & Hussey, 1997). Interpretive researchers usually debate on their assumptions and theories whereas positivists lack theory driven research (Alvesson & Deetz, 2000). Interpretive research is based on people’s perception that socially and symbolically constructs and sustains their own realities of organization (Gioia & Pitre, 1990).

This research is clearly based on interpretive approach, a detailed analysis and evaluation of multiple case studies of the supply chain risk strategy of Rolls Royce which is also known as grounded theory (Thietart et al, 2001). Grounded theory is also an interpretive method which share similar philosophy of phenomenology. It describes the individuals under study. It is defined as a systematic approach which develops an inductive grounded theory about the phenomenon. The research findings derive the theoretical formulation and reality is based on investigation rather than comprising of numbers and vague themes. The generated theory is based on observations. The intention is to recommend ideas, policies with theories which can likely be used when studying and evaluating similar situations (Hussey & Hussey, 1997).

Data collection:

The data collected is multiple case studies of the supply chain risk of Rolls Royce, an existing research is done on supply chain risk strategy of Rolls Royce. Company’s annual reports, published news articles, conference boards and success stories with respect to supply chain risk management. This research analysis is based on qualitative approach thereby critically evaluating the existing supply chain risk implementation. Qualitative analysis can be defined as a subjective approach towards examining and reflecting on various perceptions, to develop an understanding of social and human actions (Hussey & Hussey, 1997). Examining the perspective of others rather than prioritizing the concerns of researcher and interpreting observations from subject’s perception (Bryman, 1989).

The actual research is doing a detailed analysis on multiple case studies of Rolls Royce supply chain risk management with other data such as company’s annual reports, news articles. Critically analysis and evaluating implementation of Rolls Royce supply chain risk, analysing and finding the major drawbacks in this risk management approach, comparing with other best practices of supply chain risk in industry. Moreover this research is based on interpretive approach. Rolls Royce is only focussed on their best practice known as early supplier involvement in supply chain to avoid risk, this involves the suppliers and partners during the product design, in order to reduce the duration of the design process and improve the design outcome (Zsidisin and Smith, 2005). There are drawbacks and limitations to this risk strategy and there are other major factors effecting and influencing the supply chain risk like social, political, environmental and most important issues of ownership in organizations with respect to suppliers and sub suppliers as well as the ones who outsource, lack of ownership in supply chain is very serious as it could create problems in supply chains due to their longer and complex structure, this lack of ownership is one of the major drawback with Rolls Royce supply chain. Research would be carried out on these drawbacks and analyse how to neutralise threats and control these factors which result in supply chain disruption. According to this research study there are other best methods of risk strategy in supply chain as stated above in methodology. One among them is the Ericson’s supply chain risk approach, this approach describes how the sub supplier’s fire accident had a huge impact on Ericson’s supply chain and on its over all business, the organization implemented new strategy, the risk management process includes as usual identification of risk, assessing risk, mitigation of risk and added steps known as risk monitoring, concurrently to this process the company also initiated two other processes known as incident handling and contingency planning. Insurance companies had a positive attitude towards this improved risk management strategy (Norrman &Jansson, 2004).

Limitations of research:

The research is conducted based on the multiple case studies. Rolls Royce data is confidential and some are highly classified with respect to defence aerospace. The data collected is through sources available in internet, the case studies of supply chain risk management pertaining to Rolls Royce, the company’s annual reports, their published news articles. The research done here is an interpretive approach as stated earlier, initially the research was design to conduct in a positivist approach, but the primary data of Rolls Royce was not available for a research student, since the data is confidential data as stated. The research had to be modified due to non availability of primary data and hence opted to interpretive approach, more over as a research student analysing primary data of Rolls Royce would have been a quantitative approach and it is a difficult task to analyse and evaluate the data of Rolls Royce especially that of supply chain which is extensive. This is one of the major limitations to the research. The secondary data is accessible and much of the data is available which includes case studies, company’s reports. Supply chain is complex, difficult and most demanded in today’s industries, this research study is carried out in order to understand the requirements and the need for supply chain risk management among industries, Rolls Royce is one of the good cases to analyse supply chain risk management and gain an insight on the theoretical foundations risk management, this research enables to understand the practicality of supply chain risk management in industries. Since interpretive approach is used in this research, much of the secondary data is available to support the validity of the argument. This research can only critically evaluate but cannot suggest or implement a new strategy. Hence the research restricts itself. When contacted with Rolls Royce officials regarding data and information they denied stating its highly confidential and cannot be outsourced even for university or student purposes, when requested for interviews or formal discussion that could have devised a questionnaire they again denied stating top seniors officials are extremely busy and high influential to research and middle management are not allowed to give such interviews. Due to constrained resources, the nature of actual supply chain risk of Rolls Royce cannot be derived.

Ethical considerations:

Supply chain risk management is complex and difficult to understand. As a research student providing a valid argument pertaining to research with a chosen interpretive approach is difficult. Doing research in supply chain risk from industry perspective is a difficult task; there are time constraints, resource constraints to gain a deeper understanding to supply chain risk. The risks are highly unpredictable and the research cannot determine the evaluation of risk strategy to perfection nor implement a new risk strategy, because risk in supply chains are always unlikely and always new issues rise when existing ones are reduced or controlled. As a researcher understanding the philosophy of supply chain risk is essential and time constraint is a key priority. Reflecting one’s own view based on various perceptions of others is a difficult task.