Pandemic lessons: Ontic seems to strengthen the supply chain

While many manufacturers have struggled with logistics around their supply chains throughout the pandemic, UK-based heritage parts manufacturer Ontic benefited from reliance on a predominantly local supply base. However, Ontic had also learned lessons from its reliance on a small supplier base, some of which were single sources for materials, according to CEO Gareth Hall.

Ontic – which manufactures and / or supports more than 7,000 aircraft parts ranging from King Sikorsky and Bell 206 to Gulfstream IV and Boeing 777 and engines such as the Pratt & Whitney Canada JT15D – has faced a number of uncertainties. when the pandemic spread. globally

Her first focus was managing the employment base: ensuring that those who could work from home do so, improving cleaning instructions (Hall called those who help with that effort the “pandemic heroes” of the pandemic) and using of practices such as bubble clusters to limit the spread of the virus.

Ontic decided it was essentially a business, but it closed for a day “really just to evaluate what we needed to do and to give meaning to the instruction because it was coming out. “It was less than clear at the time,” Hall said.

However, his focus quickly shifted to maintaining the supplier base, he noted. “Once we understand that we can stay open and keep our people safe, our next concern is definitely the supply chain.”

With advancements in logistics, many manufacturers have turned to a global supply and delivery base on time to keep costs down. But Ontic, which has operations in the UK, California, New York and North Carolina, has relied heavily on a regional and national supplier. “There’s a lot of debate about the supply chain,” Hall said. “Having a localized supply chain was counter-intuitive pre-pandemic because people wanted to use low-cost regions as a solution. “But because our business model was essentially low volume, high mix, high complexity, our supply chain is localized almost without exception.”

This turned out to be a “big initial bonus for us” because Ontic did not have to navigate across cross-border restrictions. Ontic executives were able to visit most of its suppliers early and “really understand” how the pandemic was affecting them.

“I would not say we were not affected,” Hall added, but the main concerns of obtaining the materials and ingredients needed for its manufacturing operations were allayed. However, the greatest risk revolved around the impact of the pandemic on smaller stores and the potential for closure from either the virus or financial constraints.

Concerned about his suppliers suffering from cash flow issues, Ontic approached his smaller suppliers and offered them a down payment to help them move into the initial part of the pandemic. “It was a really interesting answer, not one you would expect,” Hall said. Roughly two-thirds turned down the offer, saying they did not need a down payment at the moment, but that Ontic should use that cash to support others who needed it.

“I think this is probably a different behavior than you would normally see,” Hall said, but he added that the response “probably determined the mood at the time.”

Ontic ended up making some significant investments with certain suppliers, relying on trust and goodwill, but was “far from the right thing to do,” he said, adding that he has paid dividends both in terms of maintaining supply and helping businesses survive.

Ontic lost a machinery store that was permanently closed, Hall said, adding, “They had been in business for a long time.”

But overall the company was able to minimize that impact. Having said that, Hall also noted that the experience sparked an appreciation of how to approach its supply base. Ontic considered the purchase of some of the smaller operations, at risk, but concluded that this was not necessarily a solution. As the main business for small suppliers, Ontic usually got really good service from them, he noted. “The bad thing was that during these circumstances, they became high risk because they lacked flexibility,” he said. “It made us go back and re-evaluate which suppliers we have that could represent a single point of failure.”

Ontic is now looking at opportunities for multiple suppliers to create surplus and risk balance.

Hall was encouraged that taking some proactive steps to protect its supply chain would help the company emerge in a strong position.

While Ontic relies on a supply base, it is also a supplier of parts that OEM no longer supports. But Hall said the company has not encountered issues faced by some large component suppliers. Since Ontic mainly produces relatively small sets of relatively small parts, finding shipping options was a little easier.

In terms of business demand, Ontic did not see “much degradation” in its business aviation work, with most of the decline coming from its business including aircraft. However, military demand increased, Hall said, and Ontic found that by training his technicians, he was able to shift work where demand was.

Ontic also saw customers increase orders as they moved through pandemics and priorities changed. That made some challenges to make sure it could meet the displaced demand, Hall said. In addition, OEMs have begun to “rethink their strategies” towards their product portfolios. This has sparked numerous conversations about transferring part of that work to Ontic, he said.

What may be of more value to them to keep pre-pandemic at home may be different post-pandemic, Hall said. “There are a number of organizations that are going through that review,” he said. Due to our unique position in the market and the relationship we have with OEM, we are in a good position to participate in those conversations and then offer a solution. “