Woodward provides propulsion and motion control systems for aircraft and industrial applications. Their headquarters oversees industrial turbomachinery systems. Finished goods are piling up due to FOB origin contracts, preventing revenue recognition. Production is also slowed by inadequate supplier performance due to contractual agreements. The proposed solutions include updating sales contracts to charge for storage and switching to FOB destination terms. Supplier contracts would have more flexible terms and conditions and increased monitoring to improve performance. This allows for faster revenue recognition and production while better managing suppliers and costs.

1. IGCIndustrial Group Consulting
Ryan Nelson, Talon Matthews, Alexander Sarabia, Ethan Monroe-Peet, Anthony Gasbarro

3. Woodward at a glance
Woodwards Aerospace products and systems are primarily
used to provide propulsion,actuation and motion control in both
commercial and defense fixed-wing aircraft and rotorcraft, as
well as in other defense systems.AEROSPACE
WoodwardsIndustrialandEnergyproductsareusedworldwideinvarious
types of turbine and reciprocating engine-powered equipment,including
electric power generation and distribution systems, ships, locomotives,
compressors, pumps, and other mobile and industrial machines.
INDUSTRIAL
ENERGY
Fort Collins
Headquarters and Industrial Turbomachinery Systems (ITS)

4. Woodward at a glance
Who are the customers?
Airplane Manufacturers, Train Manufacturers, Government Contracts
Total Sales(2015) - $1,160,883,000
Commericial Sales
$810,170,000
Direct US Government Sales
$92,322,000
Indirect US Government Sales
$258,391,000

5. Current situation
(ITS) Supply Chain Map
Domestic
suppliers
International
suppliers
Manufacturing
facility
End CustomerPort
FOB Origin

6. Current situation
Finished goods piling up at loading dock
• FOB Origin finished goods have been piling up near the
loading dock.
• Woodward can’t recognize revenue until it leaves loading
dock in the customers hands.
Production is being held up due to inadequate supplier performance
• Production is being slowed down because of inadequate performance and Woodward is unable switch
suppliers due to their contractual agreements.

7. Our Solution
Inventory piling up due to FOB origin
• Update sales contracts that allowsWoodward to charge
buyers for prolonged holding periods.
- Woodward would charge 3% of the unit(s) price
every two weeks to cover holding costs.
• Change to FOB Destination, Freight Collect.
- “FOB Destination” refers to the legal fact the
seller retains title and control of the goods until they
are delivered. The seller selects the carrier and is
responsible for the risk of transportation and filing
claims in case of loss or damage. “Freight collect”
refers to the legal fact that the buyer is responsible
for the freight charges.
Supplier contracts hold up production
• Updating supplier contracts: more creative terms
and conditions, a shorter timeline, and higher quality
incentivised by Woodward.
• Higher frequency of supplier audits - Increased supplier
monitoring or an updated supplier grading system to
better help with managing suppliers.
Sales Contract Supplier Contract

8. BENEFITS
Updating Sales Contract
Because finish-goods are piling up at the loading dock
• Potentially recognize revenue faster.
• Instead of losing money on holding costs, could
make money by charging.
• Frees up warehouse space.
• Greateremployeesatisfactionbywatchingrushed
product being shipped out the door, instead of
sitting at the loading dock.
Updating Supplier Contract
Because current supplier contracts hold up production
• Keeps production line moving, more revenue.
• Better Auditing System could potentially derisk
yourself from slow suppliers.
• Better Supplier Relationship Management.