Supply Chain Integration Challenges in Commercial Aerospace: A Comprehensive Perspective on the Aviation Value Chain

290 Pages·2017·11.69 MB·English

by  Klaus Richter

Klaus Richter · Johannes Walther
Editors
Supply Chain
Integration
Challenges in
Commercial
Aerospace
A Comprehensive Perspective on the
Aviation Value Chain
Supply Chain Integration Challenges
in Commercial Aerospace
Klaus Richter (cid:129) Johannes Walther
Editors
Supply Chain Integration
Challenges in Commercial
Aerospace
A Comprehensive Perspective on the Aviation
Value Chain
Editors
KlausRichter JohannesWalther
AirbusGroup IPMAG
BlagnacCedex,France Hannover,Germany
ISBN978-3-319-46154-0 ISBN978-3-319-46155-7 (eBook)
DOI10.1007/978-3-319-46155-7
LibraryofCongressControlNumber:2016961240
©SpringerInternationalPublishingAG2017
Thisworkissubjecttocopyright.AllrightsarereservedbythePublisher,whetherthewholeorpartof
the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations,
recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission
or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilarmethodologynowknownorhereafterdeveloped.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this
publicationdoesnotimply,evenintheabsenceofaspecificstatement,thatsuchnamesareexempt
fromtherelevantprotectivelawsandregulationsandthereforefreeforgeneraluse.
Thepublisher,theauthorsandtheeditorsaresafetoassumethattheadviceandinformationinthis
book are believed to be true and accurate at the date of publication. Neither the publisher nor the
authors or the editors give a warranty, express or implied, with respect to the material contained
hereinorforanyerrorsoromissionsthatmayhavebeenmade.
Printedonacid-freepaper
ThisSpringerimprintispublishedbySpringerNature
TheregisteredcompanyisSpringerInternationalPublishingAG
Theregisteredcompanyaddressis:Gewerbestrasse11,6330Cham,Switzerland
Contents
Introduction:SupplyChainIntegrationChallengesintheCommercial
AviationIndustry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
KlausRichterandNilsWitt
PartI ProductDevelopment
Aviation’sFutureIsasBrightasItsPast. . . . . . . . . . . . . . . . . . . . . . . . 19
AndrewGordon
CabinDensification:SpaceFlex2andBeyond. . . . . . . . . . . . . . . . . . . . . 31
ScottSavian
InnovationChallengesintheHigh-Tech,Long-CycleJetEngine
Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
AlanH.Epstein
OpenInnovationintheAviationSector. . . . . . . . . . . . . . . . . . . . . . . . . 57
JohannesWaltherandDanielWa¨ldchen
DisruptiveInnovationThrough3DPrinting. . . . . . . . . . . . . . . . . . . . . 73
ReinhartPoprawe,ChristianHinke,WilhelmMeiners,JohannesSchrage,
SebastianBremen,JeroenRisse,andSimonMerkt
PartII ConfigurationandDemand
FulfilCustomerOrderProcess:CustomizationofCommercial
Aircraft. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
GabrielOehme
End-to-EndDemandManagementfortheAerospaceIndustry. . . . . . . 105
AvinashGore´ andAlexanderNathaus
MainDifferencesandCommonalitiesBetweentheAircraftandthe
AutomotiveIndustry. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
HorstWildemannandFlorianHojak
v
vi Contents
PartIII ComponentManufacturing
TrendsintheCommercialAerospaceIndustry. . . . . . . . . . . . . . . . . . . 141
GernotStrube,KarelEloot,NadineGriessmann,RajatDhawan,
andSreeRamaswamy
SuccessThroughCustomerCo-Development,GlobalFootprintandthe
ProcessesIn-LinewiththeCustomer. . . . . . . . . . . . . . . . . . . . . . . . . . . 161
MarkC.HillerandJoachimLey
VerticalIntegration:TitaniumProductsfortheAircraftIndustry. . . . 177
OlegLeder
PartIV AssemblyandIntegration
QualityGates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 193
IsabelleSciannamea
LeanComplexityThroughTailoredBusinessStreams. . . . . . . . . . . . . . 209
RichardHauser,Hans-J€orgKutschera,andBenoitRomac
DrivingtheDigitalEnterpriseintheAerospaceIndustry. . . . . . . . . . . 221
HelmuthLudwigandAlastairOrchard
PartV LifeCycleBusinessModelsandAftermarket
TheAero-EngineBusinessModel:Rolls-Royce’sPerspective. . . . . . . . 237
PeterJohnston
TheMaterialValueChainServicesinCommercialAviation. . . . . . . . . 249
J€orgRissiekandMikkelBardram
PredictiveMaintenance:HowBigDataAnalysisCanImprove
Maintenance.. . . . . . . . . .. . . . . . . . . . .. . . . . . . . . .. . . . . . . . . . .. . . 267
JimDailyandJeffPeterson
Outlook. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 279
StefanBerndes
Introduction: Supply Chain Integration
Challenges in the Commercial Aviation
Industry
KlausRichterandNilsWitt
Abstract Airlines, aircraft OEMs and their suppliers were affected by numerous
changesinthecommercialaviationsectoroverthelastdecades.
Since the 1970s, airlines have seen a significant increase in air traffic and seat
mile cost pressure due to regulatory changes, shift of traffic towards developing
countries, especially Asia, and emergence of new business models such as Low
CostCarriers.
OntheOEMandsupplierside,thebusinessfocuschangedfromdefencetocivil
and the manufacturing base went through a phase of consolidation. Furthermore,
increased demand for new aircraft and cost pressure from the airlines triggered a
transitionfromjobshopproductiontosmallseriesproduction.
This development fostered associated changes in aircraft technology such as
enhanced cabin space efficiency and new engine technology. It requires a supply
chainthatisabletocopewiththechallengesofairlinespecificcustomization,while
delivering into a serial production process. Cost pressure and competition from
emerging countries have led to a shift in the manufacturing base, while the
assembly processes have seen the adaptation of automotive concepts such as
LeanProduction.Additionally,theaftermarkettodayoffersnewbusinessopportu-
nitiesandwillpotentiallybenefitfromrevolutionaryconceptsinthenearfuturedue
toincreaseduseofdigitalizationtechnology.
1 Development of the Aviation Industry Over the Last
Decades
The entire commercial aviation industry has gone through a series of significant
changesinthelasthalfcenturyaffectingairlines,aircraftOEMsandsuppliers.
K.Richter•N.Witt(*)
Airbus,BlagnacCedex,France
e-mail:[email protected]
©SpringerInternationalPublishingAG2017 1
K.Richter,J.Walther(eds.),SupplyChainIntegrationChallengesinCommercial
Aerospace,DOI10.1007/978-3-319-46155-7_1
2 K.RichterandN.Witt
1.1 Airlines
Ontheairlineside,thebusinessmodelevolvedfrombeingdrivenbytightauthority
regulationandstate-ownedflagcarriersintoamodelbased onfierceinternational
competition.
In the 1970s, the U.S. and Europe were by far the most important markets in
terms of revenue passenger kilometers and accounted together for 76% of world
airlinetraffic(includingroutestoCanadaandJapan).Atthesametime,thesetwo
marketsweretightlyregulated(AirbusGMF2011).
IntheU.S.,forinstance,priortotheAirlineDeregulationActof1978,fareson
domesticroutesweresetbythegovernmentagencyCivilAeronauticsBoard(CAB)
and airlines were only allowed to operate routes after prior approval. The only
U.S. airline, for example, that was granted permission to operate transatlantic
flights to Europe was PanAM. This only changed in 1979 when the International
Air Transport Competition Act also allowed American competitors to offer inter-
nationalroutes(Pompl2007).
At the same time, in European countries many state-owned so called “flag-
carriers”existed.MajorplayerssuchasAirFrance,LufthansaandBritishAirways
hadcontrollingpublicownershipuntil1984,whenBritishAirwaysbecamethefirst
of the trio to be fully privatized. Even today, some countries maintain partial
ownership of their national airlines [e.g. the French state maintains a minority
share in Air France (Air France KLM 2016). Landing rights were essentially
allocated in a tit-for-tat mode between the European countries and the
U.S.(Cento2009).
Whilethissetuphelpedthegovernmentstoguaranteeacertainlevelofaccessto
airtravel,italsokeptcompetitionatbay.Priceswereessentiallycalculatedusinga
costplusapproach,guaranteeingthecompanies’financialhealth(Pompl2007).
In 2008, the transatlantic market of airline traffic was liberalized through the
OpenSkiesAgreementbetweenEuropeandtheU.S.Inaddition,theemergenceof
LowCostCarriers(LCC)andconsolidationofthebigFullServiceCarriers(FSC)
ledtoachangeinthemechanicsofairtrafficandunitcostbecamemoreandmore
important.
Inaddition,followingthetremendousGDPandpopulationgrowthinotherparts
of the world, the center of gravity of global air traffic moved more and more
eastwards. While the non-Western world accounted for only 24% of Revenue
PassengerKilometers(RPK)in1970(AirbusGMF2011),justAsiaandtheMiddle
East alone represented 31.4% and 8.9% respectively in 2014 (ICAO Annual
Report2016).
Allinall,airtraffichasdoubledevery15yearscausingacorrespondingrisein
demand for capacity and therefore a significant increase in aircraft sales and
production. Nevertheless, competition and high volatility in demand, linked to
economic developments, oil price volatility and catastrophic events like 9/11,
SARS and armed conflicts, have globally caused limited airline profitability. On
Introduction:SupplyChainIntegrationChallengesintheCommercialAviation... 3
average, Airlines only reached break-even between 1990 and 2012 and only
bouncedbacktoanaverageEBITmarginof7.7%in2015(Pearce2015).
1.2 Aircraft Makers and Suppliers
Inthe1960s,theworldwasinthemidstofthecoldwarandespeciallyinEurope,
aerospacewasfirstandforemostakeyindustryinthearmsrace.Therefore,many
companies in this sector were focused on state-funded defense projects (Schmitt
and Gollnick 2016). Even commercial aviation projects such as the Caravelle in
France or the VFW 614 in Germany were at least to some degree made possible
through state support. While the sales of civil aircraft were dominated by
U.S. companies, even these made a large part of their business through defense
projects(Wittmeretal.2011).
InordertoovercometheU.S.dominanceinthecivilaircraftmarket,Franceand
Germany joined forces in 1969 and formed the Airbus consortium which was
officially set up in 1970. While the partner-companies remained independent
legalentities,theypursuedacommonaircraftproject,theA300.Thejointproject
was governed by work-share agreements, somewhat similar to what had already
been done in trans-national defense projects such as the Transall. A small central
entity, called ‘Airbus Industrie’ was at that point in time in charge of the overall
coordinationaswellassalesandcustomerservice(Airbus2016).
Over the years, further aircraft types such as the A310, A320 and A330/A340
were added and sales climbed due to the growing market as described above but
alsoduetotheincreaseinmarketshareforAirbus.In2000,AerospatialeofFrance,
GermanDASAandSpanishCASA,mergedintoEADS.Thisnewcompanyowned
80% of Airbus S.A.S. while British BAE SYSTEMS held the remaining 20%
(Airbus2016).ThenamechangetoAirbusGroupalongsideasignificantreduction
of political influence in 2013 was the last step in European aircraft manufacturer
consolidationascanbeseeninFig.1.
The American manufacturers of large civil aircraft also went through a long
consolidationphase.WhenLockheeddecidedtoexitthelargecivilaircraftmarket
in 1981 after the commercial failure of the Tristar, only two American manufac-
turers remained. These two, McDonnell Douglas and Boeing finally merged in
1997atatimewhereDouglas’marketsharehadfallenbelow20%intheU.S.,so
that only Boeing commercial aircraft remained. Russian manufacturers could not
matchthecompetitivenessoftheWesternmanufacturersaftertheendoftheCold
Waranddisappearanceoftheprotectedcommunistmarkets(SchmittandGollnick
2016).
Airbusmanagedtosecureasignificantportionofthecommercialaircraftmarket
andtodayholdsamarketshareofapproximately50%,whichcanbeseenasatrue
European success story. In parallel, aircraft production rates increased consider-
ably, causing a change from job shop production to small series production. The
A300, for example, reached its maximum annual output in 1982 at 46 deliveries,
4 K.RichterandN.Witt
Aircraft Manufacturers Fusions in Europe (Status 2013)
Saab Saab
Hawker Siddeley
British Aerospace BAE Systems
De Havilland
Hunting Marconi Electronic Systems
Bristol
SIA Marchetti
Selenia
Aeritalia Alenia Finmeccanica
EFIM (incl. Augusta)
Aermacchi
Dassault Dassault
Matra
Aerospatiale Matra
Aerospatiale EADS / Airbus Airbus Group
MBB DASA
Dornier
MTU
MTU
TST
Fokker
CASA CASA
Fig.1 ConsolidationofEuropeanaircraftmanufacturers(SchmittandGollnick2016)
whiletheA320Familytodayismovingtoamonthlyproductionrateof60aircraft
by2019.Thisalsohadsignificantinfluenceonthesupplychain,sinceitneededto
copewith notonlyanincreasednumberofshipsets butalsoamoreindustrialized
setup.Atthesametime,aircraftOEMsreducedtheirdegreeofverticalintegration,
requiring suppliers to take over larger work packages and also to enter into risk-
sharing agreements including their own design responsibility, which further
supportedtheconsolidationofthesupplierbase(SchmittandGollnick2016).
The challenges in the airline world described in the beginning of this chapter
result as well in cost pressure on aircraft OEMs and subsequently suppliers. This
furtherfostersthetransformationtoamoreindustrializedsetupthatleveragesscale
efficiencies.
1.3 Motivation for This Book
The idea of the book is to describe the challenges for the commercial aviation
supplychainalongtheentireproductvaluechaininordertoallowaholisticview
on the drivers for transformation and the changes that have either been
implementedalreadyorwillprobablyneedtobeimplementedinthenearfuture.
In order to get a complete overview, the book is composed of a set of articles
written by experts and practitioners from academia, suppliers, consulting compa-
niesandAirbus.