Boeing supply chain image 550x332 1
Last summer, on the Sunday evening before the Farnborough airshow, we were at a “preshow” event hosted by Aibus. Several of the company’s senior leadership were present. Of the few speeches, one especially resonated. Christian Scherer told the assembled media that he wanted to get a message out to the supply chain firms, and that was to stop second-guessing Airbus’ production rates.
The statement struck several as “out of left field.” Over the past year, we have been working with firms in the supply chain, and it has been abundantly clear why the supply chain does this second-guessing. We covered supply chain challenges this past year from several angles.
Each conversation led us further up the knowledge curve. The onerous contract language to be a supplier to an OEM was an eye-popper. These contracts made it clear why supply chain firms must de-risk their business.
A direct outcome of this learning led us to change our data tracking radically. Instead of focusing exclusively on deliveries, we had to go deeper into the production process. We selected and started tracking OEM data from the first flight. The first flight cannot occur unless the aircraft is fully built. Then, there is a period of test flights, culminating in a delivery.
As we delved into this new data lake, we focused on current production programs: Airbus programs from the NEO onward, Boeing programs from the 787 and MAX, Embraer programs from the ERJ-175 and E2, and all the COMAC programs.
We developed two data visualizations—one freely shared on our site and a more detailed version for subscribers. Both models are regularly refined. We update them twice daily and add more pages as we have new ideas. One early idea was to monitor the period between the first flight and delivery, which declines as a program matures. We call this the metric delivery day.
On page three of the model linked above, you will see this series of delivery-day charts without the red arrows. We added the arrows to the trends below. The one we see shows the successful industrialization of the program as it matures.
Airbus has matured its commercial programs, but the pandemic briefly threw them off. Hence, perhaps, Mr. Scherer’s statement.
Boeing did not get an arrow; the MAX was quickly and effectively industrialized, but grounding and other problems threw it off course. Similarly, the twin (787) also saw excellent program maturity but ran into trouble.
Embraer shows the maturing of the E2 program, while the ERJ-175 was mature for a long time and briefly thrown off by the pandemic. COMAC shows the C909 (formerly ARJ21) with regular “bounces” as the program progresses. However, the C919 follows a more typical maturing curve.
Displaying OEM production and deliveries this way offers supply chain firms a visual insight.
Returning to Mr. Scherer’s ” second-guessing” comment – looking at these charts, you can readily understand why supply chain firms want to know what is happening. Really going on, that is. OEMs guide their suppliers via a production rate expectation. Supply chain veterans tell us this guidance is often inaccurate and reflects what the OEM hopes for—hope, as they say, is not a strategy nor a reality.
Supply chain firms must secure raw materials like titanium more than a year before delivery. This metal mostly comes from Russia, and we know how easy that is today. This is only one example. As a Boeing supplier, the past few years have been an awful tsunami survival act. Look at those waves! Only the irrational would not seek de-risking. Spirit Aerospace is the poster child for a tsunami hit and having to be rescued.
Spirit was rescued because it is significant and critical to the MAX program. But what of the myriad of smaller suppliers? They are much further down the line and feel the whiplash much later and far worse. We know Boeing vendors are laying off people even though Boeing’s strike is over and production has restarted. It takes that long for the impact and recovery as you move down the line.
Complicating this negative impact is the fear that losing key skills is dangerous. Lay off senior machinists, and you risk losing them forever. Expensive milling machines that require skilled hands and eyes become much less useful as new people have to be trained – making costly mistakes as they learn. And who covers the cost of the errors? The small vendor, of course.
Being an OEM vendor is like the kiss of death – it is excellent to get a kiss, but sometimes, it can kill you.
OEM vendors benefit from outside benchmarking to test projections. We would be happy to chat if you’re in the supply chain.
Views: 163
