A CEO's Perspective on Supply Chain Management

There are few individuals better suited to provide the CEO’s perspective on Supply Chain Management than Dawne S. Hickton, the former CEO of RTI International Metals and a director of the Federal Reserve Bank of Cleveland.  Trained as a lawyer and with prior business experience with US Steel, Hickton joined RTI and was instrumental in multiple acquisitions and subsequent growth that led to CNN recognizing RTI as one of the 100 fastest-growing US companies.  Before its acquisition by Alcoa, RTI was a major producer of specialty metals. 

In April 2016, Hickton presented on the topic of the CEO’s perspective of supply chain management as part of the Pitt Business Center for Supply Chain Management’s Breakfast Speaker Series.

In her talk, Hickton described how and why the aircraft industry is growing, and how modern aircraft use composites for strength, weight and manufacturing considerations.  More composites imply increased usage of titanium (a specialty metal processed by RTI) and aluminum alloys. 

Hickton also traced the supply chain of aircraft components, such as seat tracks or jet engine parts.  Not surprisingly, the supply chain is global.  Russia is a major supplier of titanium, which is melted in Ohio, forged in Virginia, extruded in Texas, hot-formed in St Louis or in the UK, machined in Montreal, and used in the Boeing factories in Seattle, Wash.or Charleston, S.C.  The supply chain for Airbus, another RTI customer, is similar, although Airbus aircraft are assembled in China, in addition to Toulouse, France, Hamburg, Germany, and Mobile, Ala.  Interestingly, some intermediate processes may also be alternatively done in China.  

The geographical span of the supply chain increases its complexity—adding some unique characteristics besides the typical currency exchange risk management.  For example, Hickman described how the Russian occupation of eastern Ukraine in 2014, and the subsequent economic sanctions by Western countries, led to a disruption in titanium supply.  In order to mitigate such risks in the future, Airbus decided to have three suppliers rather than two. 

RTI’s acquisition by Alcoa has led to further improvements in the supply chain process.  Prior to this development, Alcoa would carry out some of the process steps and RTI would do the remaining steps.  This back and forth between Alcoa and RTI led to inefficiencies, which have been eliminated following the acquisition. 

An interactive Q&A session followed Hickton’s talk, and the questions covered a wide breadth of topics reflecting the CEO perspective. 

Arjang A. Assad, Henry E. Haller Jr. Dean of Pitt Business, thanked Hickton for sharing her valuable insights and presented her with a certificate of appreciation.   Center Director Prakash Mirchandani had opened the session with a quick update about the Center—including news about undergraduate and graduate students winning in inter-school case competitions.