PRODUCT-BUSINESS PERSPECTIVE: When Supply Chain Becomes Product Strategy

Reuters recently reported that GE Aerospace plans to acquire Consolidated Precision Products for $11.75 billion, bringing an important source of highly engineered engine castings much closer to the business.

The obvious interpretation is supply-chain security.

I think there is a larger product-business lesson.

A product company can identify an attractive market, understand its customers, develop differentiated technology, and generate substantial demand—and still fail to capture the opportunity if a critical production capability cannot support it.

That is why manufacturing and supply chain cannot simply enter the conversation after product strategy has been established.

For engineered products, the ability to create value depends on the entire system:

• Strategy determines where to compete.

• Customers determine what matters.

• Engineering determines what is possible.

• Manufacturing determines what can be produced repeatedly.

• Supply chain determines whether it can be sustained.

• Economics determines whether the whole system is worth doing.

At some point, a recurring supply constraint stops being just an operations problem.

It becomes a product-business problem.

GE Aerospace’s decision is unusually large, but the management question applies at every scale:

What capability does your product strategy depend upon that your organization does not sufficiently control?

That question belongs in product strategy long before it becomes a crisis in operations.