BUYER SUPPLIER

RELATIONSHIPAIRBUS

International School of Business & Media; KolkataAbhijit Samanta

.

Major Challenges for Aircraft Manufacturing Industry:High Cost of doing R&DHigh Risk Involved in doing R&D, US$10

billion.Complexity of Production Cycle.Application of extremely diverse technology.A large no. of enterprises must be involved.

SWOT Analysis of A380 ProjectStrength: Airbus A380 is a triple-decker aircraft with a

passenger sitting capacity of 550. The project will through a big competition to

Boeing B747 which is a 400 sitter aircraft. The success of the project will bring a

revolution to the entire airlines industry which in long run generate more order for A380.

SOWT Analysis contd…Weakness: Involvement of high cost. Complexity of the entire project is very high. Involves too many stakeholders. Every dimension of the project is very much

diversified form one another.

Opportunity: It is required to develop a very level of

integration among various stakeholders. Huge opportunity of outsourcing a lot of

critical task which will reduce the company’s effort, time and energy.

High opportunity of engaging technically sound and advanced systems to enhance effective operation.

SOWT Analysis contd…

Threats: Assembling various parts of the aircraft at

the assembly point in a timely manner. Establishing network in more than 30

countries covering almost the entire world. A very high concern with quality. Maintaining high level of negotiation with

various stakeholders. Structuring all the procurement departments

in most effective way.

SOWT Analysis contd…

General Overview of Aircraft Manufacturing

An aircraft has mainly five distinct area in its structure.

1. Airframe / Fuselage.2. Engine / Power Plant.3. Aircraft Radio and Navigation System.4. Aircraft Electrical System.5. Aircraft Instrumentation System.

Radio and Navigation

System

Aircraft Instrumentati

on System

Aircraft Electrical System

Engine

Airframe / Structure

Main Assembly

Point

Final Product = Aircraft

In each of the areas high level of integrity is required

Critical Points that has to be achieved by Airbus:1. An integrated network among 1500 contractors in

more than 30 countries all over the world has to be established.

2. All the suppliers must have the ability to deliver the demanded quality within specific time frame.

3. Bringing all inputs like components and services from the worldwide was the biggest logistics challenge for the company.

4. The production schedule must be designed most effectively keeping all the constraints in mind.

5. The most critical task was to integrate various procurement departments.

A high level of integration is required to be established among various procurement departments.

Airframe

Procurement Dept.

Capital Goods Procurement

Integrated

Centralized

control.

Services

procurement

General

Procurement

Equipment and

Propulsion

system.

Inte

gratio

n

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n

Integratio

n

Inte

gra

tion

Integration

Outsourcing Overview

0

5

10

15

20

25

30

23

2

5

2

5

25

2

6

2

7

No. of companies

No. of equipment de-tails

Buyer – Supplier Critical Points

AIRBUS SUPPLIERS

Information flow

Material flow

Tasks performed by AIRBUS:1. Performance

Control.2. Drive Correction.3. Improve Action.

Let to better relationship with

suppliers

‘AIRBUS SOURCING’ the online system:

Allowed buyers and suppliers to:1. Exchange requirements.2. Proposals.3. Technical innovations.

ConclusionThe success of the entire project lied in some critical

aspects like:1) Developing a very sound information system between

AIRBUS and its suppliers. 2) A very high level of integration among various

purchasing departments that allowed AIRBUS to do a better and effective negotiation.

3) To co-ordinate with various issues like Time, Quality and Cost.

4) Establishing the entire supply chain network in such a way so that smooth flow of materials occurs.

5) Continuous monitoring and evaluation of the entire system so that probability of failure becomes minimum.