Research Paper (undergraduate), 2017
14 Pages, Grade: 18 (90%)
2. Operations and Supply Chain - Organizational Design Decision Areas
2.1. Service Level
2.2. Product and Design
2.4. Information System
Airbus is operating internationally and the second largest aircraft manufacturer in the world. This paper elaborates on the organizational decision areas of the supply chain of the main aircraft sections of Airbus’s flagship, the A380 (see appendix E and F). The main body of the paper contains the six decision areas and the selection and description of corresponding KPIs. The report ends with a short conclusion.
Quality, safety, reliability comfort and design are the key factors that Airbus customers (airlines) are looking for and thus these factors gear up the purchase of aircrafts. Among these, security is one of the top requirements. A desirable and reliable airliner should conform to sets of regulations and possess highest standards of quality to ensure passengers’ safety. For example, powered by Rolls-Royce Trent 900 engines (Norris, 2005), the A380 complied with strict regulations of the International Civil Aviation Organization (ICAO) and received joint European Aviation Safety Agency (EASA) and Federal Aviation Administration (FAA) Type Certification (Airbus, 2006). More specifically, the A380 applies advanced speed protection technology, which prevents the plane to fly over 30 degrees where it could lose lift and stall. Furthermore, it utilizes the electrical signals through wires to actuators that move the control surface consistent with pilot’s input. In fact, before the A380 went on the market, it underwent about 1200 hours of test trials.
Customers also pay great attention to reliability, which is mainly reflected in the after-sales maintenance of the plane. Airbus has an efficient and global after-sales framework which is dedicated to offer immediate assistance for every customer. For instance, 5000 technicians from all over the world work around the clock to offer end-to-end life cycle solutions for customers to fly Airbus planes (Airbus, 2017). In addition, every Airbus customer is assigned with a Customer Support Director who oversees coordination as well as implementation of urgent assistance. As proximity is crucial in maintaining stronger customer relations, Airbus increased its emergence by positioning over 250 field service representatives in about 150 cities, close to the airlines to solve problem with efficiency and proficiency (Airbus, 2017). Other services might add value to the final product such as the unprecedented capacity, extreme comfort, and innovative design.
The service level is vital to the success of the A308, thus being monitored with the following KPIs. The first KPI should be, customer satisfaction index as overall customer satisfaction is especially vital in an industry in which the number of products is rather low compared with other industries. The second KPI is the product downtime as any defect of the A380 results in actual costs as well as high opportunity costs.
The A380 is the world’s largest passenger airliner, over 800 people per flight (Madslien, 2005). It is a bulky plane with two decks of 6000 square feet surpassing the original jumbo jet (Boeing 747) (Kingsley-Jones, 2006). Since its launch, the A380 has been regarded as the unique and luxury super jumbo. The A380 was crafted to raise the bar within the aerospace industry in terms of design as well as passenger comfort (Mouawad, 2014). It consists of an appealing and luxury cabin design (see appendix A) and staircases that connect the upper deck and the lower deck. Compared with other planes, the A380 gives a unique travel experience as it balances storage efficiency and mobility within the aircraft. Likewise, it has exceptional bar-like rooms for entertainment; Wifi is provided and people can enjoy dining, chatting or watching TV on stylish and comfortable sofas. First-class customers can enjoy an in-flight hotel experience thanks to private suites made available to them. The business class (on the upper deck) is equipped with a connectivity platform at the front and great comfortability is ensured owing to adjustable seats and beds (Hamilton, 2014). Additionally, the A380 provides great comfortability for its passengers but also for the crew with respect to compartments.
The A380 lifts efficiency due to fewer operational costs (Hamilton, 2014). Meanwhile, it is friendly to the environment in that its engine type allows the plane to achieve 20% less fuel consumption per person (Lalor, 2008). The environment of the aircraft is built around a unique aspect: The zero-noise experience (A380 noise reduction award). In fact, the silent secret of Airbus A380 is attributed to its patented composite inlet installed inside the engine nacelle to optimize the airflow control and to minimize engine noise. The single piece inlet is specially designed to absorb sounds owing to its homogenous surface (only 38 millimetres thick) (Marks, 2005). Its acoustic panel absorbs a significant amount of the total noise of the aircraft (NetComposites, 2005).
To monitor the product and design two KPIs are selected. Firstly, fuel efficiency is critical and should be measured as a ratio for all phases of a flight. Secondly, passenger experience index should be chosen because the overall experience of the end-users is important to the success of the product.
The Airbus Managed Inventory or AMI is a system developed by Airbus that enables automatic replenishment of low-value inventory and non-repairable parts. The inventory is managed in an optimized way as it is based on historical consumption data and agreed inventory levels. This system allows Airbus to reduce costs related to replenishment while avoiding excessive inventory or obsolete items’ storage. (Satair, 2017) When it comes to the link between Airbus and its suppliers, the company highly values the VMI, or Vendor managed inventory, as a way to integrate suppliers to its network. A case in point would be the 600 suppliers integrated via the Air Supply solution. Not only does it allow for a more efficient handling of resources, but it also strengthens the link between customers and suppliers. In a sense, this Air Supply solution inherently transforms the supply chain by enhancing the ability to foresee and optimize the capacity planning, the delivery and supply orders as well as the consumption metrics. (SupplyOn, 2011). The supply chain of necessity has taken over the anticipation oriented supply chain. In fact, the market, by pressuring the suppliers, drives the production and it is no longer the other way around. In the airplane industry, the push orientation is outdated and the market is driven by customers’ order that pull the product through the whole supply chain. (Hines, 2014).
As of KPI’s related to the inventory management or Airbus, it is important to consider both the ability to accurately estimate the inventory and the inventory turnover. Firstly, inventory accuracy allows comparing the recorded inventory with the actual stock in the warehouses. Secondly, inventory turnover enables measuring the ability of Airbus to sell its inventory in a one-year period.
Airbus, among many in the aerospace industry, has chosen SupplyON as the provider of its supply chain’s information system. The objective is to optimize the logistic processes through a practical platform that is developed by SupplyON (SupplyOn, 2010). The platform is the standard for all the companies that operate in the aerospace industry while backing up the cooperation with suppliers and ensuring transparency. Through a cooperation between three of the biggest corporations: Dassault Aviation, Safran and Thales, the fledgling project that goes under BoostAerospace started taking roots in mid-2010 (SupplyOn, 2010). Collaboration among industry leaders has become a necessity to keep up with the soaring competition (Krause, 2007). The collaboration is embodied through systems called Global Manufacturing Virtual Networks. (Rodríguez and Vilana-Arto, 2010) These systems are enabling horizontal collaboration between actors that operate in the same industry. The platform enhances Airbus’s competitiveness while cutting costs. As many scenarios, can occur in an industry where an aircraft is made of 4 million individual parts, reaching an optimum level in the processing of information and the reactivity is of paramount importance.
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