Examining The Supply Chain And Policies Of Airbus In An Essay.

The supply chain is an essential component of any company that sells goods. When it comes to building planes, it's no different. The supply network of a corporation is critical to its success. Airbus is the world's largest aircraft maker, alongside Boeing (Pham, Darabi and Wilmot 2016). As a result of increased industry demand, Airbus aims to increase production. The question is whether the provider will be able to keep up. In this paper, the supply chain and policies of Airbus will be examined.

In a constantly changing global market, every company has been on a cost-cutting crusade to build the most cost-effective supply chain processes. Airbus chose other companies to design, develop, and manufacture the plane's primary subsystems. The goal was to improve the previous model's performance by adding greater passenger capacity and incorporating modern technologies such as a Rolls-Royce engine. In order to minimize the time it takes to develop new aircraft, Airbus devised a new supply chain strategy that raised the complexity of outsourced components (Pham, Darabi and Wilmot 2016). The Supply Chain was meant to keep manufacturing and assembly prices low by moving a major portion of the development financial risk to Airbus suppliers. Airbus outsourced forty per cent of work packages for the A380 and A330/40 projects. For the course of its activities, the company operated as a traditional producer of assembled components sourced from thousands of vendors. This is part of the Airbus Power 8 rationalization plan, which involves outsourcing job packages to suppliers, particularly those who have become risk-sharing partners.

Airbus' SWOT analysis is a framework for analyzing issues that affect the aerospace sector as a whole, as well as how they affect Airbus. The SWOT analysis depicts Airbus' internal and external qualities, such as strengths, weaknesses, opportunities, and threats.

Strengths

Portfolio: Airbus offers a diverse range of products. Its main business is manufacturing and designing military and civil aerospace goods, as well as offering manufacturing and design services. In the global airline business, the corporation has a substantial aircraft footprint. Production and assembly lines, on the other hand, are found in Germany, the United Kingdom, France, Hamburg, Spain, the United States, Canada, and China (Sarangi and Ajinkya 2017).

Market Share: Airbus is among the biggest aircraft manufacturers globally. The company serves America, Europe, the Middle East, Africa, Asia, and other parts of the globe. Airbus, and Boeing both aircraft manufacturing enterprises, are said to have a ninety-nine per cent market share in the aviation sector (Witt 2016).

Weaknesses

Availability of helicopters is limited: According to a number of specialists, the covid-19 pandemic will cut Airbus helicopter sales by 40% to 50% by 2020 (Melo 2021). The company's CEO, however, stressed in an interview that the competition is more significant than the covid-19 issue.

Charges for breach of contract: Airbus accepted to settle a $4 billion penalty to resolve allegations of bribery and corruption (Witt 2016). During a four-year period, the business bribed politicians and governmental officials in France, the United Kingdom, and the United States to buy its jets, according to the inquiry.

Market Share

Opportunities

Market leadership: Airbus has accessibility to the most cutting-edge innovation technology and professional experience available anywhere on the earth (Tuomisaari 2017). Regardless of the fact that the covid-19 pandemic had reduced the company's profitability in the military and space segment in 2020, the company has the potential to compete and become the market leader.

Aerial system: In terms of safety, humanitarian missions, sustainability efforts, and observation, the unmanned aerial system has become increasingly significant for civilian and military functions. Airbus has unveiled model planes, drones, helicopters and other aircraft. There is, however, the potential for growth. The company could invest more money to improve the reliability of UAS technology (Bauk et al. 2020).

Threats

Security: Several attempts to acquire personal data from Airbus involving business and trade strategies were unsuccessful in 2019. They pose a significant threat to the company's database (Witt 2016). The security system of the company was engaged during the attack, and it successfully resolved the problem.

Competitors: Airbus' main adversary is Boeing, which is accompanied by a plethora of other firms competing with the aerospace sector in fields like architecture, production, as well as other services (Melo 2021). The company's tremendous market domination is becoming increasingly difficult to maintain.

Airbus employs both direct and indirect purchasing tactics in its procurement activities. It manages its procurement process with three computerized systems. To enhance business performance, encourage open collaboration among its own and their suppliers, establish persistence into its procurement method, and adjust to its growing decentralization operational model, it utilizes at least 200 Multi-Functional Teams subdivided into Project Management Groups and then into Integrated Project Teams. Avionics, weight-lift concerns, landing and braking systems, aerodynamics, fuel management issues, and fuel efficiency and electrical power generation obstacles all plagued the A380-800 throughout development, which it overcame either in-house or with the support of its suppliers (Santonino III, Koursaris and Williams 2018). Establishing risk-sharing deals with its suppliers, performing periodic supplier compliance inspections and field visits, and requiring an open book policy from its suppliers were all used to manage risk. It categorizes its suppliers as bottleneck or critical, and its regular contract terms and conditions are sufficient but might be better.

Airbus Procurement is in charge of ensuring that goods and services purchased from third parties satisfy quality standards and are delivered on time and budget, as agreed with Airbus projects and operations. All Airbus companies and its supply chain are required to adhere to the same set of norms, rules, and protocols.

Airbus has limited visibility into transportation expenses, which are reflected in part prices because 80% of suppliers are responsible for their own transportation (Melo 2021). In other words, the frequency of delivery has little bearing on Airbus' overall transportation expenses. As a result, Airbus develops replenishment systems that are solely concerned with inventory costs and ignore transportation costs, resulting in frequent deliveries and low shipment volumes. Even if Airbus oversees transportation for the remaining 20% of suppliers through third-party carriers, replenishment strategies are designed in the same way, regardless of transportation costs.

SWOT Analysis

The material management centre, located about 12 kilometres from the site, is in charge of all component supply logistics for the new Airbus A380 and other existing aircraft programmes. A fully automated small-parts warehouse, a palette warehouse, and boom and block storage will be housed in the 20,000-square-meter warehouse, with commissioning handled using a man products method and telemetry monitoring in a paperless system (Mocenco 2015). The parts are delivered to the plant's operational location just in time. The warehouse management system is connected to the Airbus systems and receives master data, product received data, and planning and order data.

The environmental and social impact of a company's supply chain is inextricably intertwined. In order to establish a sustainable supply chain, Airbus seeks to incorporate high standards of accountability throughout all activities. At all stages of the manufacturing process, this includes aiming to manage natural and human resources effectively.

Airbus buys services, systems, components, and parts from indirect and direct vendors from over a hundred nations. This massive worldwide supplier network makes a substantial contribution to the creation of value, financial prosperity, and long-term sustainability of the communities in which it functions (Keivanpour, Kadi and Mascle 2015). As a result, their suppliers have a big impact on our environmental performance. Airbus wants its suppliers to achieve the same environmental and social responsibility criteria that they have set for themselves in order to reduce risk in their supply chain.

Conclusion

To summarise, the supply chain is a critical component of any business that sells things. It's no different when it comes to building planes. A company's supply network is important to its success.  Airbus intends to boost production as a result of rising industry demand.

References

Bauk, S., Kapidani, N., Sousa, L., Lukši?, Ž. and Spuža, A., 2020. Advantages and disadvantages of some unmanned aerial vehicles deployed in maritime surveillance. In Maritime Transport VIII: proceedings of the 8th International Conference on Maritime Transport: Technology, Innovation and Research: Maritime Transport'20 (p. 91). Universitat Politècnica de Catalunya. Departament de Ciència i Enginyeria Nàutiques.

Keivanpour, S., Kadi, D.A. and Mascle, C., 2015. End of life aircrafts recovery and green supply chain (a conceptual framework for addressing opportunities and challenges). Management Research Review.

Melo, D.A.P., 2021. Towards the conception of a Supply Chain efficient and sustainable in the Aeronautic industry-Airbus case study (Doctoral dissertation, Université Grenoble Alpes [2020-....]).

Mocenco, D., 2015. Supply chain features of the aerospace industry. particular case airbus and boeing. Scientific Bulletin-Economic Sciences, 14(2), pp.17-25.

Pham, T.S.H., Darabi, F. and Wilmot, N.V., 2020. International supply chain case study. In Supply Chain and Logistics Management: Concepts, Methodologies, Tools, and Applications (pp. 1183-1204). IGI Global.

Santonino III, M.D., Koursaris, C.M. and Williams, M.J., 2018. Modernizing the supply chain of Airbus by integrating RFID and blockchain processes. International Journal of Aviation, Aeronautics, and Aerospace, 5(4), p.4.

Sarangi, S. and Ajinkya, P.S., 2017. Comparison of supply networks of Boeing and Airbus.

Tuomisaari, A., 2017. E-Learning: Case Airbus Defence and Space Oy.

Witt, W., 2016. Supply Chain Quality Management within the Aeronautical Industry: Case Study at the Airbus Single Aisle Fuselage Assembly.