Supply Chain Management At Airbus - Implementing RFID Technology
Airbus was the world's leading aircraft manufacturer in 2009 going by the number of aircraft delivered during the year. The company had been using RFID in its operations since 1997 but on a lower scale and targeted at improving its internal processes. In mid-2000s, Airbus started using RFID technology more widely, starting with its spare parts supply chain. After sucessful pilot tests, Airbus came out with the ambitious plan of adopting a holistic approach by implementing RFID at its suppliers' facilities, in its own operations, and at its customers' operations in 2008. The plan was to achieve higher efficiencies in its operations and also to reduce costs. The mission is to take this enhanced attribute and turn it into a competitive addvantage not just in one business area, but across the scope of operations.
Airbus was formally established in 1970. The Airbus A300 was commercially launched in October 1972, with a seating capacity between 250 to 350. It was the first twin-engine, twin-aisle wide-bodied aircraft in the world. From 1984 to 2002, Airbus came up with 8 aircraft families, with seating capacity up to 800 in the A380 model.
In April 2005, A380 made its debut journey and Airbus estimated that it would achieve breakeven for the project on the sales of 250 units. Deliveries on A380 were supposed to start from May 2005. However, Airbus had difficulties meeting the schedule. Because of the different versions of CATIA at its different plants, there was a mismatch in the design specifications of the A380 at these plants. CATIA is a 3D software suite that supports multiple stages of product development like conceptualization, design, manufacturing, and engineering, which is widely used in the industry. This led to Airbus having to redesign the wiring of the about 530kilometer long cable in the aircraft. The delay of more than one year cost the CEO of Airbus and the Head of the A380 project to lose their jobs, as Airbus faced the threat of losing significant market share to Boeing and had to pay penalties for late deliveries.
In February 2007, Airbus announced a restructuring program, Power8, with a target of 2billion euros annual cost savings and 5billion euros cash saving by 2010. 10,000 of the 87,000 employees across its plants will be retrenched. Airbus targeted improving the productivity of its engineering operations by 15% and reducing the cycle time of manufacturing aircraft from 7.5 to 6 years. Lean manufacturing principles will be adopted. The power8 program also had a module called Smart Buying under which Airbus aimed to reduce its supply cost base, through sharing the risks with them and make them responsible for performance of Airbus, bringing down the number of logistics centers from 80 to 8 by 2010.
MAJOR SUPPLY CHAIN INITIATIVES
Airbus had sixteen sites in Europe for manufacturing and assembly, and support centre in North America, Japan and China. It procured the spare parts required for manufacturing aircraft from across the globe. Around 80% of the cost of the aircraft manufactured by Airbus came from the external sourcing of goods. Airbus leveraged on information technology to manage its supply chain and improve its efficiency. Amongst the initiatives, Sup@irworld and implementing RFID technology played a key role in improving efficiency and visibility in its supply chain.
Prior to 2003, purchasing managers at different plants of Airbus and its suppliers interacted independently for various purposes like initiating tenders and assigning logistic providers. There was no standardization for parameters like supplier code, spare parts code, etc, across various Airbus facilities. Airbus realized the inefficiency in operations with its different manufacturing plants ordering the same spares from different suppliers and logistics providers. Tracking the position of components in transit...
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