Hurdles in supply network of aircrafts

Hello ladies and gentlemen!

This week, we are going to have a look at the major challenges faced by the aviation industry w.r.t SCM (Supply Chain Management).

Boeing and Airbus, two of the world's largest commercial airlines, continue to maintain thousands of orders undelivered. Passenger needs and changing technologies have prompted airlines to devise competitive strategies to gain a greater share in the aviation market. These strategies have led to the complexity of aircraft design, processes, and SCM.

There are several challenges that contribute to the increase in complexity of SCM in the aviation industry and let's see the most important ones,

Raw material sourcing:

Metals and non-metal materials are required to manufacture an aircraft and no single country has all the materials required, as the markets are widely distributed across the globe. The timely delivery of all these raw materials is based on geological location and with the quality that meets the requirement of aircraft manufacturing. Procurement managers are faced with challenges to find the right suppliers, in order to fulfill the above criteria along with low costs and better specifications. The best way to deal with this challenge is to figure out a way to optimize the delivery time, knowing the location, identifying the capacity of suppliers, and find out the costs involved.

Reducing the risk of supply disruption:

Usually, there are risks in supply that happen because of incorrect forecast demand, inaccurate pricing projections, changes in design, or environmental issues. The supply disruption can be solved using two approaches,

Short term approach - This takes care of monthly, quarterly, and annual purchases which are often done as spot buys

Long term approach - This looks at lock-in contracts for five to ten years with both primary and secondary suppliers

Also, the most important factor is to maintain a good long-term relationship with the suppliers as they are the key player when it comes to supply during risks.

Being up to date with technology:

The aviation suppliers are struggling hard to maintain their pace with modern technologies such as automation and robotics. Software glitches led to the slow start of the engine type available on the A320, with Pratt & Whitney developing its innovative turbophones over two decades and spending over a billion dollars. The delayed delivery of luxury and business class seats from Zodiac Aerospace factories in the US also delayed the completion of Airbus' new wide-body A350.

The above experiences show that it is wise to balance reliability on human technology - and do not rely too heavily on machines alone to develop engines and equipment.

Lack of skilled labors:

Training to meet the needs of the workforce is not fast and limited skill sets are available in the management of complex projects. Technological advancement is at the heart of A&D industry growth, but airlines and the aerospace supply chain need to improve their human capital on the emerging technologies that drive their industry, such as additive manufacturing, machine learning, blockchain, and smart automation.

In the capital-intensive aviation industry, an agile and resilient supply chain, aside from efficient production processes, merits the highest level of attention.

Adios, Amigo!

- Varadharaju R