By Scott Hamilton
Dec. 12, 2023, © Leeham News: The aerospace supply chain still hasn’t fully recovered the COVID-19 pandemic. All aerospace manufacturers are affected, as are the supplier to the suppliers.
At the annual Aviation Forum last week in Hamburg, Germany, Airbus said collaboration is one of the keys to recovery.
Jurgen Westermeier. Credit: Airbus.
Jürgen Westermeier, the chief procurement officer (CPO) at Airbus, said “unlocking the power of collaboration” means “great things happen when we work together.
“This has been illustrated in the past, when we had to face a situation of crisis together. In the past, in the face of a crisis, collaboration has been key,” Westermeier said.
There have been first-hand a series of successive crises which radically reshaped the aerospace sector. “Be it in an unprecedented global pandemic, geopolitical events, the likes the world hasn’t seen in a long time, and a climate emergency that no one can ignore anymore. Several suppliers entered the COVID period with weak financials.”
In addition, the CPO said, there has been high inflation, increasing energy prices, rising labor costs, and bank interests that are putting the ability of certain categories of suppliers at risk. “Airbus developed over the years several collaborative tools designed to better manage the crisis together. First, the Supplier Financial Watchtower,” Westermeier said. “This allows Airbus to monitor the financial health of its supply chain and identify potential issues. We are then able to deep dive into specific situations to understand the risk at stake, and if necessary, co-develop a mitigation plan with the supplier concerned. Not only does this approach ensure we can support our supplier in securing a planned ramp-up, but it also allows us to develop a sense of community.”
All in this together
“We are all on the same team,” Westermeier said. Airbus can also call upon another tool called the Joint Improvement Plan. This is a governance framework designed to mitigate the crisis and, in parallel, transform the ways of working together collaboratively with the supplier to avoid new crises arising in the future.
The CPO said that this methodology is key to building strong relationships with the suppliers and improve mutual trust for future collaboration. Another tool called CONBID enables Airbus to identify the needs of its supply chain for a specific material. “It is key to ensuring we can actively arbitrate the demand within our supply chain and redistribute when required.
“This is something we specially started last year when we realized there would be an issue with the availability of aerospace steel. So, in the present, as we adapt and above all prepare for the future together, collaboration is key. Collaboration is a key lever for increased productivity and enhanced efficiency.”
Boosting resilience
Westermeier said that as Airbus continues to face challenges, it is really critical that the OEM and supplier boost resilience together across the entire aerospace sector. “We have launched a number of collaborative initiatives really designed to increase the effectiveness through standardized approaches such as, and let me start with our initiative, ZERO-M (Zero Missing Parts). Traveled work from the production line to the ramp is the bane of any OEM’s existence. ZERO-M aims to reduce the impact of supply chain disruptions across all operational flows and with the final vision of reaching zero missing parts in the long run.
ZERO-M Together is designed to strengthen Airbus’ prevention system, reach higher levels of anticipation and standardize good practices across the industry, such as buffer management.
Another one, called AXcess, addresses how efficiency translates into competitiveness.
Reducing costs
Westermeier said that Airbus developed, tested and standardized a set of proven methodologies that aim at collaboratively taking costs out of the system.
“In light of the difficult economy context, it is quite clear that we all must presume every opportunity to reduce costs whilst ensuring the financial stability of our suppliers, our partners is maintained.
Boeing long ago implemented a supplier cost-cutting program called Partnering for Success. After seeing too many suppliers reporting profit margins larger than Boeing did, the company largely forced its suppliers to cut costs or they’d risk being dropped as a Boeing supplier. The program drew widespread angst, with some renaming the effort Partnering for Poverty or Preparing for Sacrifice.
In Boeing’s backyard in the greater Seattle area, some suppliers groused that they preferred working with Airbus. While Airbus also sought to cut costs, they said, at least the method wasn’t as adversarial.
Interestingly, on the sidelines of the Hamburg Aviation Forum, LNA heard similar complaints about Airbus being heavy handed and some preferred working with Boeing.
Airbus has other programs intended to boost collaboration.
For years, OEMs relied on just-in-time delivery of parts and components. With the supply chain still operating below peak efficiency, Airbus—and others—have added buffers to inventory. At Airbus, this buffer is about a four-month supply of parts.
Eco-Aviation
With a shift in emphasis toward eco-aviation, Airbus likewise is working with suppliers—collaborating, to use the buzz word—to make Airbus “greener.”
“We collaborate with our innovation ecosystem to imagine future concepts that will bring this vision to reality,” Westermeier said. For Airbus’ sustainability and innovation roadmaps, “perhaps our biggest challenge in preparing the future is the journey to become more sustainable.
“Sustainability is an industry-wide challenge, and we will only succeed through collaborative and aligned initiatives. It is a special time for the aviation industry, where we connect today and tomorrow. Today, we are part of creating an ecosystem for SAF, Sustainable Aviation Fuel, to decarbonize the current and the future fleet,” the CPO said.
SAF also addresses the current fleet. Airbus is also working on several research and technology projects that are aimed at making its aircraft more efficient and already preparing for the next generation of conventional aircraft he said.
Airbus Initiatives
“Airbus launched a number of collaborative initiatives, focusing in particular on data transparency and decarbonization. The Airbus Supplier Sustainability Council set up back in 2022, establishes a framework to collaboratively accelerate sustainability initiatives with the supply chain and fostering a new model of engagement with suppliers. These ambitious sustainability targets cannot be reached without a clear innovation roadmap.”
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