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GLOBAL SUPPLIER MANAGEMENT CHALLENGES IN THE AEROSPACE INDUSTRY

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GLOBAL SUPPLIER MANAGEMENT

CHALLENGES IN THE AEROSPACE INDUSTRY
Author: Bishnujee Singh
Research Scholar , PhD by Research in Management (2018-2021)
Student No. GG19020, LIUTEBM University, Lusaka, Republic of Zambia.
Research Supervisor : Dr. Priyanka Sharma

Abstract
The article exhibits the supply chain management in the aerospace industry that how the two most leading companies in the world maintain
their supply chain. It is also composed of the problems and challenges that the aerospace industry has to face to meet the standards and to
fulfill the requirement of the modern world. The latest models of Boeing and Airbus are mentioned in the report with the production time that
the company needs to research the manufacturing of a reliable and fuel-efficient model to meet the needs of the modern world. The aerospace
industry is trying very hard to ease the customers, and they eagerly want to change the image of travel in their minds.

Key words: Global, Supplier Management,Aerospace,Lynnwood

Introduction
Supply chain management is an important element of any field in any kind of sales. The production of aircraft is not separate from
it. Without a stable supply chain, a business cannot keep moving. Boeing and Airbus are major aircraft manufacturer in the world. Industry
appeal has increased aircraft requirements, so both Airbus and Boeing have strategies to boost production. The supply chain strategy represents
the capability of the organization that how can they handle the issue and maintain their production rate stable.

Fuel costs have increased in every industry, mainly in aviation. The increment in commuter journeys has led to the demand for more
fuel-efficient aircraft. It has encouraged airline companies to design a future strategy towards development and design. In Europe, the Ryan
air uses B737-800, the latest and adequate aircraft in the market. Their procedure is to keep planes straight from Boeing for five years before
transferring it and demanding the latest and efficient models. Ryan air's supply chain model is comprised of a 2001 business strategy. Most
of the airlines around the globe, from Asia to North America and Europe, are looking for more competent models and trying to order them
directly from producers. Customers of Boeing and Airbus, the world's two largest manufacturers, must follow their supplier changes to comply
with all orders collected from the airline and others.

Boeing
To travel long-distance Boeing is considered as the best commute due to its efficiency and durability. With Boeing 747, they desired to
re-create the meaning of travel. During this period, they brought in the B787 'Dreamliner.' The purpose of this plane is to give new aspects to
the value. The latest release of the B787 not only altered long-distance travel images but also changed how they came about. Boeing has
registered himself in the past few decades as the best aircraft manufacturers due to the safety and comfort level they are providing their
customers.

Value Chain Network

Airbus has a worldwide entrenched value chain study in the aviation field, which meets customer needs, and they were able to excel all
these years. The product network is a composition of:
 Developers
 Exporter
 Operators
 Transportation

Several supplier classifications were evolved in the production and manufacturing of the aircraft. The first company involved was original
equipment developers. Such companies are in the last stages of networking right before delivering to the consumer. This procedure comprises
of design, development, and mobilization of aircraft. OEMs are accountable for aircraft shipment, and therefore, all research and testing must
be carried out. After that tier 1 supplier arrives and they are responsible for the direct to the manufacturers. They are the collaborating affiliates
of OEMs. First-class providers are pledged for the combination of engines, toiletries, cabin interiors, and avionics. Rolls Royce engines are a
great example of this. Then tier 2 providers supply the products that tier 1 supplier needs. They can provide it by producing those parts locally
or by importing them from the other manufacturers. Tier 3 providers are local manufactures, and they provide some local productions to
aircraft developers.

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Outsourcing
Every time manufacturers outsource the noncrucial components, and the Airbus is also familiar with this. Airbus and Boeing are in direct
completion for many decades. They both fight with each other to keep their supply chain policy up to date and always try their best to have a
healthy completion to deliver the best aircraft in the world to their customers. Boeing outsources 90% of the Dreamliner project, which was
a 40% increase from their previous projects. With the help of outsourcing, they hope that the financial risk will not be any problem in the
manufacturing and designing of the aircraft (Nakamoto, 2008). After the initial steps taken by the Boeing, Airbus is eagerly desired to develop
new and improved market strategies. The outsourcing of such a big project is not an easy task, and it can also prove risky for the manufactures
and investors, but on the other hand, airlift has promised to secure market cost by outsourcing.

Supply chain structure

Boeing's Supply chain

By considering Boeing, we can analyze their supply chain strategy. Boeing supply chain strategy comprised of:

Just In Time Orders

Boeing resolved to manufacture the aircraft according to order. New products tend to take a little longer than expected. As an outcome,
lead times can range from one year to two years. At their 787 Dreamline, they decided to start selling in December and got their first order in
2004. Due to scheduling, their initial order will last approximately four to five years. Boeing has three assembly lines and a manufacturing
line when operating from the US. It will only encourage their second and third tiers to work efficiently with first-class suppliers, while Boeing
will only order aircraft. One way to achieve this is to work with each other practically.

Customer
Boeing received various orders, and they were never from any individual due to the high cost and maintenance of the aircraft. Many of
the orders arrive from the leasing companies affiliated with the airlines. It is very easy for a leasing company to order an aircraft of such a
huge price, and they are capable of maintaining it. Avalon and SMBC are the biggest aircraft leasing companies in the world and associate
many airlines and help them out to buy new aircraft from the Boeing. All the airlines are not capable of buying the latest models from the
manufactures or buy them on lease with the help of the associates, so they buy used aircraft at a cheap price and add them in their airline by
having them modified from the manufacturers.

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The above figure represents the manufacturing of different parts of the aircraft. The manufactures have to import them from the different
manufactures throughout the globe, and the transportation of such huge parts requires time.

Current Challenges Faced In Aerospace

Boeing and Airbus are both the leading companies of the time. And they both have the latest development strategies for aircraft. The latest
model of Airbus is A350 and B787 of Boeing. Both of them were successful in the market, and the company received many orders after the
launch of these two latest models. They both have almost 1600 aircraft operating around the world and serving the airlines. As the project and
production level is very high, so sometimes delays occurred due to the OEMs. One time manufacturers identified the fault in the engine or
any other part, so they demand more time frames from the customer to deliver the aircraft. A single fault in any part affects the delivery time,
and it is not good for the reputation and supply management of the company (Skift, 2018)
Airlines and aircraft manufactures are familiar with the delays due to the high maintenance of the system. When it is delayed, it occurs
due to a variety of reasons. Many of the delays were due to the variations in the designs and manufacturing of the aircraft. As the demand for
the flyers increases due to the emerging world, the manufacturers have to work hard to improve the standards and to increase the production
rate. Suppliers have to manage to outsource, and they are responsible for delivering the aircraft on time (Forbes, 2018).

Raw Material Sourcing

Aluminum, steel, carbon, plastic, rubber, leather, titanium, and some other precious metals and materials were used in the manufacturing
of an aircraft, and it is impossible to find all these raw materials in one single place. So the production rate and delivery time can be delayed
due to the importing of raw material. Manufacturers have to find the best suppliers around the globe so that they can easily order their raw
material without any concerns regarding the quality.

Supply Chain and Digitalisation

The aerospace supply chain often stretches the complete world and includes closer association than ever, tight due dates, and an intensely
high aspect of digitalization. A currently advertised article has disclosed another side of this. It represents that the continuing alterations of
digitalization across all parts of the supply chain are one of the aspects most crucial in meeting upcoming challenges.

Cyber Security
Companies like aircraft manufacturers and airlines need to develop strong cybersecurity protocols so that no one can breach their system.
Cybersecurity is nowadays an arising issue in all the fields as they, directly and indirectly, can damage the organization's reputation and the
travelers. As a crucial organization of the country, airline companies have to develop a strong relationship with the military and the politicians
so that they can handle any unwanted situation. Their relationship with such authorities helps them out to manage the security threat. Airline
companies are constantly working on the cybersecurity strategy to make it crack free so that no one can hack it. The projects are very
expensive, and even one aircraft can cause a lot of financial disturbance in an organization that's why cybersecurity has to be up to date.

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The China Risk
The Chinese have currently manufactured new wide-range and long-haul aircraft to compete with Boeing and Airbus. The aircraft named
CR929. A joint project with Russia and subsidized by the Chinese authorities is set to abduction the huge Asian market and destabilize the
aerospace organizations we know now.

Political/Brexit
Politics affects all the industries throughout the globe, as political change can cause an increase in the price of raw materials and
transportation. The aerospace industry is interlinked with politics as the change in politics can cause loss of jobs for many people. The airline
is an international industry as the aircraft has to travel around the globe, and the manufacturers are selling their aircraft to almost every airline
in the world so that the politics will have a great impact on the growth and stability of the company.

Engine Problems
Rolls-Royce, CFM International, and Pratt & Whitney are battling engine problems. For Boeing, it didn't affect them much, but Airbus
did. Airbus 100 A320NEOs are to be stored at Tarmac in Hamburg and Toulouse. (Skift, 2018). The shortage of material is not only the main
problems, but a shortage of trained and skilled workers is also an issue. The two manufacturers were expected to supply five aircraft per
month over the previous year. Both have serious problems in the supply chain, and they need to make it clear as soon as possible to boost
their production rates.

Conclusion
Aircraft manufactures have to start training the new employees so that they can become equivalent to the trained and skilled aircraft
handlers. Workforce shortage was a continuous issue in an aircraft industry as manufacturing is not an easy task and can only be carried out
under the supervision of the skilled workers. The manufacturers have to work on the needs and comfort level of the modern world so that they
can ease their customers. The aerospace industry has to resolve some issues to make the production faster. First of all, they have to start
producing parts in their localities so they can purchase them from there and it will be safe huge time and amount. The aerospace industries
have to improve their security systems so that the threat of cybersecurity can be eliminated. They have to focus on their production and design
and let china deliver his affiliates. The industries have to hire more skilled and trained staff from different countries so that they can reach
their production goal. The healthy competition must carry on so that all the companies can desire to deliver more and best.

Reference
Nakamoto, P. B. a. M., 2008. Boeing's subcontracting problems do Airbus a favor. [Online]
Available at: https://www.ft.com/content/a3ec38bc-0fbe-11dd-8871-0000779fd2ac

Skift, 2018. Boeing Gains an Edge as Airbus Struggles with Engine Issues. [Online]
Available at: https://skift.com/2018/04/28/boeing-gains-an-edge-as-airbus-struggles-with-engine-issues/

Forbes, 2018. Demand Tests Supply Chain At Airbus and Boeing, With Tariff Impact Uncertain. [Online]
Available at: https://www.forbes.com/sites/marisagarcia/2018/08/13/demand-tests-supply-chain-at-airbus-and-boeing-with-tariff-impact-
uncertain/

Dean group, 11th December 2017, FOUR CHALLENGES THAT ARE AFFECTING THE AEROSPACE INDUSTRY

Essays, UK. (November 2018). Supply Chain Management of Aerospace. Retrieved from https://www.ukessays.com/essays/aviation/supply-
chain-management-of-aerospace.php?vref=1

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