Making the most out of aerospace supply chain

With OEMs under pressure to deliver 38,000 new aircraft over the next 20 years, suppliers need to be on top form when it comes to aircraft production. And unless the activities of suppliers and OEMs are managed properly, the delivery of these new aircraft may be significantly delayed. 

OEMs often make demands on suppliers that are not manageable, but the potential for a new contract means suppliers may not want to turn it down. For example, in aerospace, OEMs are shifting design responsibilities onto tier 1 suppliers who don’t often have much experience in this area.

This triggers various issues for suppliers, including their need to invest in new machine tools and labour in order to meet these design requirements. But what if they don’t have the money to do this? 

And when it comes to using particular design tools, suppliers often have to adopt specifically what the OEM is using. The costs of these systems and the lack of understanding from the suppliers’ side can lead to the production of poor quality parts, which does nothing to benefit the relationship between OEMs and suppliers. 

But it’s important to understand that issues between suppliers and OEMs aren’t entirely the fault of OEMs. Suppliers may also play their part in what can be a tricky relationship. 

If suppliers don’t speak out early enough and tell OEMs ‘we cannot cater for these specific needs’ then suppliers may be shooting themselves in the foot. Although suppliers may be under financial pressures and need to secure future contracts with OEMs, it can be a fatal mistake to take on work that is not realistically achievable.

The end result can be frustrating for OEMs but fatal for suppliers. For an OEM, if parts are delivered late or of a poor quality, they can move to another supplier (but that’s assuming OEM’s have high buyer power and a selection of suppliers to work with). 

But for suppliers, if they decide to venture into a new business function, say, design, this can lead to high costs in terms of investing in the right tools and people. And the lack of experience in this area increases the possibility of creating poor quality parts that OEMs won’t accept.

And as these costs mount up, suppliers may reach a point where they run out of capital to support their original business function and the new business function they’ve moved into.

So what can OEMs and suppliers do to overcome these issues? One option is to consider greater levels of collaboration. OEMs should look carefully at which suppliers are in a financially stable position to handle aircraft design requirements. Suppliers in turn need to be honest with OEMs and themselves, in terms of whether or not they can meet these requirements. This can avoid a situation of suppliers taking on too much work and OEMs not receiving high quality service.

Another way OEMs and suppliers can work together is through joint cost reductions. For example, if OEMs can place orders with suppliers on a more predictable schedule, suppliers can reduce their overheads and save money. Moreover, if OEMs place orders of a higher quantity, suppliers can benefit from economies of scale and reduce their own costs.

These cost savings can contribute to the suppliers’ investment into the tools and labour to meet OEMs’ design requirements, should the supplier move into this area. 

But even with lower costs, how can suppliers overcome the issue of developing poor quality parts? Well, some of the money saved from collaboration between OEMs and suppliers could go into training the workforce.

By training the workforce, suppliers can reduce the chances of poor quality part development and delays in part production, helping them to save money and improve their relationship with OEMs. 

So where can you sign up for training? Well, DTE are a Certified Education Partner of Dassault Systemes, providing high quality, hands-on training in the use of CATIA software to help improve design and manufacturing.

DTE also provide bespoke training, tailored to specific customer requirements. And with that, trainees are encouraged to bring a particular part along to the session, so they can work specifically on this part and walk away from the session with a tangible element. 

Overall, OEMs and suppliers need to collaborate in order to make the entire process of aircraft development successful. By helping one another to reduce costs and improve time to market, the target of 38,000 new aircraft over the next 20 years will be reached. 

For more information about overcoming challenges in the aerospace supply chain, download the eBook ‘Aerospace supply chain: Real world strategies for surviving and handling growth’.