Boeing is a world renowned US based company which started its operations in the year 1916. It primarily specializes in providing defense and aerospace facilities and it has a number of other business initiatives; which includes, operations and technology, Engineering, Boeing Capital, Boeing Commercial Airplanes, Boeing Space and Security and the Boeing Shared Service Group. The scope of business of Boeing is quite huge and they enjoy a global customer base. At present the company boasts a customer base which is spanned across 150 countries and it mainly consists of US and their supported allies across the world.
Maintaining a strong supply chain is crucial for any business and Boeing is no different. In order to streamline their operations and to ensure that the customers receive what products they have desired for or may require in the future. One of the most popular products of Boeing is the creation of commercial airplanes, creating military platforms, warfighter network related solutions and defense systems. In addition, they employ approximately 170,000 employees across 70 countries.
For the purpose of maintaining smooth supply chain operations; they use a special supply chain service which comes under aerospace support services. Their main job is to ensure the availability of the aircrafts as well as to reduce the costs associated with their maintenance.
Supply Chain Process of Boeing
In order to ensure the best possible use of their resources, Boeing has a special supply chain management process in use. They make sure that all the relevant information is shared in the most accurate and also in a timely manner to between Boeing as their customers. This has allowed them to make the most efficient use of resources and to provide the most effective service to the customers. Apart from this, they also provide full-time and real time integrated information systems, which is part of a comprehensive database capable of deriving reliable forecasting of the demand.
Boeing also uses reliability based logistics and need based asset management. Such practices help in improving the reliability of the yield forecast and also identifying the cost reduction of the products overall life cycle. This eventually allows the fleet manages to get more detailed information and make more well-informed decisions. This move has ultimately helped reduce the cost to a significant extent and made it more accessible and affordable to the general users due to the efficient inventory management systems.
In addition, they also use general commercial warehousing practices, innovatively sharing the assets and ensuring top-notch shipping service. Additionally, they also have strong relationship with the component manufacturers as well as the commercial airlines. This ensures that the right component is assigned to the right place every single time.
Airbus
Airbus is a European company based in France and founded in the year 1970. It specializes in providing aerospace related solutions to customers across the globe. The company is a major provider of jet liners and supplies nearly half of them in the whole world. They are also the first manufacturer of fly by wire airliner called Airbus A320 and the Airbus A380, which is the world’s largest airline. Airbus currently employs approximately 63,000 in 16 sites spanned across 4 European Countries. The main aim of Airbus was to directly compete with the other giant jet manufacturers such as Boeing, Lockheed, and McDonnell Douglas.
Apart from the commercial jetliners Airbus also produces special aircrafts for civilians. They also produce the world’s first twin-engine and 2 aisle aircraft, which is a shorter version of the A300. Additionally Airbus also focuses on Military products and has increased their focus on providing such services since the 1990s. For this purpose, they have also set up a separate subsidiary called Airbus Military SAS for the purpose of developing a turboprop powered transport aircraft entitled Airbus Military A400M. This aircraft is being made jointly by the countries Luxembourg, Germany, France, Belgium and America.
Supply Chain Process of Airbus
Supply Chain management is a crucial factor for Airbus where 70% of the work is given externally and is extremely important is supporting the overall activities of the business, ensuring sustained performance and for delivery savings. They also have a separate Airbus Procurement Organization, which is responsible for all the purchasing and the supply chain related activities and negotiating, procuring and managing all the equipment.
There are 3 tiers of people who are working towards accomplishing a successful process of supply chain management in Airbus and it includes Field Engineers of Supply Chain, Quality Managers of Supply Chain, and Buyers. Their primary responsibility involves identifying as well as qualifying the suppliers and also analyzing whether they will be able to deliver as per their requirement. In addition they also carry out management and performance audits for the purpose of finding out any scope of improvement. All the stakeholders involved also make sure whether all the materials are being delivered in a timely manner or not and ensuring that the appropriate materials are ordered and proper logistic solutions are given. They are also responsible for managing as well as negotiating the contracts. More specifically the buyers are responsible for overseeing all the buying related work which they have to undertake; such as, managing all of the suppliers in various stage of the procurement process as well as communicating with them on a regular basis. They are also responsible for ensuring the best possible contract conditions for all the parties involved in the buying process of Airbus and streamlining their supply chain for such purposes.
Problems Faced by their Supply Chains
Boeing and Airbus have a stiff competition between them and being in the aerospace industry both of them have similar supply chains in terms of the procurement and the development of the jets. Maintaining the supply chain is a tough task and Boeing faced the challenge during the manufacturing of 787 Dreamliner. Since then, they have started taking stress test of their suppliers in regular intervals to ensure that they are competitive enough to meet even the most rigorous needs as and when it arises. Boeing for instance has more than 1000 suppliers and they regularly send examiners to test and evaluate the performance of the suppliers. Some suppliers have also mentioned that Boeing sends in examiners almost every single day for the purpose of examination. This is a relatively time consuming process for Boeing and at the same time crucial for their survival and to ensure that they have the best equipments for their planes.
In some cases, Airbus has gained advantage of Boeing’s backlog, which caused delays. This prompted 2 companies; Virgin Atlantic Ltd and Qantas Airways to buy Airbus 330 jets instead of Boeing aircrafts. This represented a major blow to Boeing as they lost the deal to their closest and most bitter rival. Quality issues was another thing which was bothering them, however carrying out regular examination and ensuring that the quality is maintained at the suppliers end, helped resolve the issue to a certain extent. In the past they also had to shut down certain assembly lines due to insufficient supply of raw materials and the Boeing Executives learned the hard way.
Compared to Boeing, Airbus has always maintained a strict control over their supple chain, although 70% of it is outsourced they have closely examine all the processes that are taking place. As a result of such controls they have often managed to make their mark in instances where the others have failed. For instance, they were able to win 2 contracts from the arch rivals Boeing, who failed to provide the orders due to a lot of backlogs. Hence, Airbus has always been striving towards the right direction in terms of the supply chain as opposed to Boeing. Boeing’s condition has improved now due to stricter controls over the suppliers, who supply them with the raw materials required for manufacturing the commercial airplanes as well as other defense components. In addition, both the manufacturers have ensured that their suppliers use automated procedures to streamline their operations better with Airbus and Boeing respectively. In the future, the problems associated with such supply chains is likely to be reduced significantly due to the introduction of newer and better technology and also closer relationship between the suppliers as well as the companies.
References
- “Boeing Examines Supply Chain for Weak Links”. WSJ ASIA, n.d. Web. 28 Mar.2013.
- “Supply Chain Management”. Boeing, n.d. Web. 28 Mar. 2013.
- “Boeing Vs Airbus. CNN Money, n.d. 28 Mar.2013
- “Supply Chain Management”. Airbus, n.d. 28 Mar. 2013.
