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FEATURE OUTSOURCING

Consultant Kevin O’Marah, writing in AMR being established by Boeing, Embraer,
Research Outlook, notes that: “DDSN gives Airbus and more to outsource structural
leading companies cost, time and efficiency design and development, control system
advantages that boost profits.” Using design, simulation, high-level cockpit
sophisticated systems for its outsourcers, equipment support software and
the company used computerised tracking composite design and testing.
for specialist tools loaned to customers One example of this symbiosis of
for outsourced maintenance – and saved supplier and manufacturer is the rise
€100,000 (around US$130,000) in a year. of Hexcel Composites, a company spun
But – and here is the important point off from Cambridge University which
in Airbus’ argument – this approach “also produces the majority of the carbon
positions winners to grow with dramatically composites for the A350. “We are looking
faster response to opportunities – as forward to celebrating the A350 XWB first
much as 70% faster time-to-market for flight later this year,” says Nick Stanage,
new products,” adds O’Marah. Hexcel President and COO. “Our expansion
Additional savings come from the has been successful because of our close
supply process itself. The specialist cooperation with Airbus and their global
material suppliers can join in to build a partners. This combination of advanced
highly effective supply chain model for technology and operational excellence is
raw materials such as carbon fibre pre- the foundation for our business.” And it is
preg. This has resulted in shorter lead worth several billion dollars too. Lower-
times, greater responsiveness, reduced tier suppliers too are likely to have to adopt
transportation of materials, point of use this more flexible approach if they are to
delivery, less packaging, reduced inventory survive the cost pressures from above –
and less requirement for cold storage and the move to increased outsourcing.
space. All bonuses for the accountants –
delivery of the main parts and materials and waiting customers too. Special skill sets
from over 15 suppliers in Britain, Indeed, the majority of manufacturers So the best approach would seem to be
Germany, Spain, France, the United and suppliers now outsource their work to accept that the increasing complexity
States, and elsewhere in the world. These to some degree. An increasing proportion and cost of aircraft manufacture (let’s not
outsourced items would then be shipped of components are designed, tested or include design at this stage) demands
and assembled in Toulouse in south- supplied by outsourcers. that specialist companies work on
western France after being delivered For example, India-based Tata different areas of the construction. It is
by plane, train, barge and truck. All of Consultancy Services’ (TCS) aerospace not as though Boeing feels the need to
the logistics and QA were built in to the engineers worked in partnership with make its own tyres for every aircraft it
corporation’s business plan. US-based Oracle in 2005 to test RFID tags builds – but it will obviously still have a
This meant Airbus had already for aircraft maintenance parts on Virgin’s hand in the specification.
established a core competency in the UK-based Heathrow warehouse in the UK. So why not buy in major components
integration of its outsourcing into its overall Following this successfully outsourced such as aircraft wings and the like?
production and project management trial, 14% of operators have now adopted Indeed, as outsourcers and aviation
when it attempted the all-new A380, a RFID technology for tracking both manufacturers work in an increasingly
major leap forward comparable to the components and personnel, and some for collaborative way, outsourcers will be
787. It was not introducing carbon fibre baggage handling too. expected to provide more and more
components made in Japan or titanium The other bonus that outsourcing end-to-end capabilities, working
milled parts from the UK as a reaction to brings is the ability of manufacturers on conceptual design, sourcing and
market pressures – it was simply applying to tap into a global skills pool to find component manufacturing as well as
an already established process. the expertise to improve processes and within a specific supply environment.
Airbus’s integrated outsourcing products. As part of this process, they But the real elephant in the room
network used what it calls a Demand can use smart cross-fertilisation of IP to to all this rosy outsourced future is not
Driven Supply Network (DDSN). DDSN is both sweeten the deal (“we will tell you the problems with getting the right
a replenishment management model that how we design wings if you tell us how component at the right time to the right
uses a well-established set of processes to cure carbon sheets over large areas”) place – washing machine manufacturers
and technologies to provide demand and also to set up import/export credit sorted that years ago – but the potential
signals that drive the supply of parts. arrangements. Joint venture units are transfer of IP from a prime manufacturing
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