Case Study — Applying the Frameworks

A case study for a company we ll refer to as Acme illustrates how to construct an activity system for innovative and functional products. The case was also described in a previous publication. Acme had long manufactured a widely used line of aircraft fasteners, a product field in which Acme was a pioneer and technical leader. Many of Acme s competitors were licensees of its technology. 

Acme s profit had languished in a cyclical downturn in the commercial aircraft market. A recent boom in business brought profitless prosperity. Boeing, a price-driven buyer, dominated this market. Many licensees enjoyed lower costs and greater market share, including sales to Boeing. 

Most producers and customers like Boeing believed fasteners to be functional products. This was partially due to the long life of the airframes that used fasteners and the difficulty of certifying any variation in the way the air- 

However, there was some innovation in the industry in both fastener design and Ihe tools for their installation. The purpose of this development was to reduce the total cost of installation. This total cost included not only the price of the fastener but also the labor associated with installing it. Surveyed aircraft companies reckoned this additional labor to be several times the cost of the fastener itself. 

The supply chain for fasteners was also in a state of flux. Many non-Boeing customers were also turning to distributors for fasteners — rather than buy fasteners directly from producers like Acme. This displaced manufacturers from dealing directly with the aircraft manufacturers that were the end-users of fasteners. For these users, buying from distributors brought lower inventory, just-in-time delivery to assembly lines, and reduced purchasing overhead. Customers also imposed strict service standards for replenishing stocks on distributors. 

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