If you think about Henry Ford and the assembly line, one of the reasons Ford was the largest employer in Detroit was the Model T sold very well, but the Ford Corporation owned all the supply aspects to make the Model T. They own the iron ore mines, the ships to bring the ore to the steel mills, after the steel was made it came to Detroit to be made into the cars. The basic materials were all owned and put together on an assembly line which allowed Ford to have a low-price vehicle and keep it that way. The Model T was a profit center and the supply system was considered to be very good. Times change and different supply chain models exist today because owning all the supply system means the company needs to put it on their balance sheets as liabilities until the car is sold. What if the supplier kept the parts till Ford needed them, the suppliers would have to store the inventory. How much inventory to keep is a difficult question to determine and we moved to just in time deliveries to everything in between. There are software companies that specialize in supply management issues to manage on-time delivery rates.

In an article by Mike Stone and Allison Lampert of Reuters, Boeing agreed to acquire Spirit AeroSystems Holdings for $4.7 billion in an all stock deal.

The deal is subject to regulatory approvals because Spirit also supplies Airbus.

Back in 2005, Boeing spun off Spirit to be an independent company but still supplying Boeing and the company has remained a supplier. In recent months, Boeing has imbedded some of their people into the Spirit manufacturing process to improve quality.

Linking to dividend paying stocks, all models of operations are constantly in flux as companies decided whether to do it in house or use outside help. There are multiple advantages to both, but the market will dictate what they are favoring at the moment. At the moment, the trend is to do more inhouse, but trends change. For your investments, what do they do for their supply system? What percentage is on-time delivery rates?

There are more questions than answers, till the next time – to raising questions.