Developing the links in the chain 

The market dominance of major aerospace manufacturing OEMs such as Boeing and Airbus may appear immovable, but these commercial giants are acutely aware that the position can easily change.

Boeing not only faces competition from its traditional rival, but also from other manufacturers either developing and manufacturing new aircraft or extending existing platforms to include more seats and longer flying ranges.

Added to this is the continuing demand, particularly from low-cost carrier customers, for more functionality, reliability, passenger amenities and seats on their aircraft for lowest cost, bid winning prices, and threats from emerging nations signing joint ventures and similar commercial agreements to help develop their own aerospace manufacturing capabilities.

With competition growing the company has to find cost reductions and efficiencies in its own in-house operations and amongst its partners in the supply chain. In fact, nearly two thirds of the cost to build all of Boeing’s aeroplanes comes from its suppliers.

Denzil Lawrence, Boeing Commercial Aeroplanes’ supplier development analyst, comments: “Boeing celebrated its centenary last year. It was great to mark that long history in aircraft manufacturing but it also gave us a chance to focus on what we need to do in order to be around for the next hundred years. We are very serious about the threat we face from the competition.

“This means we need to work together with our suppliers in order to thrive. However, this is not a simple cost cutting exercise. We have to work in partnership to find more expertise and innovation, not only to reduce our costs but theirs as well.”

Orders and more orders

Currently, demand has never been higher. Boeing estimates 41,000 new aircraft will be needed between now and 2036. That’s orders valued at $6.1 trillion. Demand is particularly high from Asia and the single aisle market, so there are growing opportunities for subcontractors to become Boeing suppliers either directly or to its Tier 1 and Tier 2 partners.

One key area where the company needs to find opportunities is the rate at which it builds its aircraft or ‘Delivery Discipline’ to use Boeing’s own term.

Lawrence explains: “We don’t want customers to wait any longer than they have to because they may go to a competitor who can deliver in a shorter time. That’s why we are looking to see what our suppliers can do that will help us deliver on time or even early.”

Boeing has six major principles when it comes to promoting and selling its civil aircraft: design and build quality; airplane performance; reliability and maintainability; delivery discipline; world-class support and competitive pricing. Companies looking to supply the OEM need to be aware in which of these areas they can be most helpful to the company according to Lawrence.

“Can you improve your manufacturing technology to help us make things faster, or cheaper? Are you making parts that will enable us to have longer times between maintenance schedules or exploring novel technologies that will enable us to change the next generation of aircraft?

“If a company is approaching us, or one of our bigger suppliers, try to position your products, capabilities and expertise in these areas of our competitiveness so we know how you can help us.”

On current programmes Boeing already has well-established supply chain networks but there are openings for companies with innovative ideas. In the UK Boeing’s spending with the UK supply chain has tripled since 2011 to £2.1 billion in 2016.

“Innovation is about what we can all do differently and what we can learn, from our supply chain: what skills, capabilities, and emerging technologies is the supply chain developing and perfecting and how can those innovations be an enabler not only to Boeing but to our tier 1, 2 and 3 companies,” Lawrence says. It could be a new cutting tool technology or process, an advance in Industry 4.0, or system that gives us better traceability or enables us to build aircraft faster.”

With programmes that are still at the early stages of development, Boeing has to make many decisions before it gets down to the practicalities of choosing suppliers.

After establishing the market needs for developing a new aircraft, the company then has to decide a number of ‘Make or Buy’ decisions.

Lawrence comments: “There are many different options. It could be we decide to manufacture something in-house or we may decide not to pursue a particular aspect of manufacturing ourselves, because there is better expertise available in the supply chain who can provide it more cost effectively.

“With emerging technology, we need to know what is being developed when we are making these decisions. That is why we are very interested to hear from the supply chain about their innovations and the impact they could have on our manufacturing.”

There are six categories suppliers can target in the Boeing supply chain: Structures, such as body sections or wings; Systems, such as avionics or landing gear; Interiors, seat and galleys; Services, management and spares; Common commodities such as machined parts and sheet metal, and lastly Propulsion, engines, struts, nacelles.

“Small businesses can still promote innovations and expertise. We buy systems from our tier 1 and 2 suppliers but we are very aware that a lot of the innovation that helps to make those systems be made better, cheaper and faster comes from suppliers in tiers 3, 4 and 5.”

Distinctive differences

Lawrence adds that companies looking to get business from the Boeing supply chain need to avoid being ‘Me-too’ suppliers with no new benefits to offer the OEM.

“Are there specialisms, niches, expertise you have that others don’t? Are you developing a new material or process? It doesn’t have to be unique, it could just be something that you are really good at. There’s no benefit just approaching us as an ordinary machine shop.”

Collaboration is also something that Lawrence believes has huge benefits for companies trying to make inroads in the aerospace supply chain. Especially if they can join government or industry funded projects.

“You may have a customer who is involved in a collaborative funded programme that you can also contribute to. Build relationships with Catapult centres, universities, trade associations. A lot of advanced innovation can originate from SMEs participating in these programmes.

“We recognise that we also need to be more collaborative ourselves and active with programmes such as NATEP and the work of the Aerospace Technology Institute (ATI).”

A successful example of collaboration that Boeing has benefited from is its partnership with the University of Sheffield and the creation of the Advanced Manufacturing Research Centre (AMRC).

The partnership has led to the company building its first manufacturing facility in Europe, Boeing Sheffield, due to open in 2018.

“It’s a direct result of that partnership that has led to Boeing Sheffield being built. A lot of the processes that will be taking place in the new facility have been developed with the AMRC and the supply chain companies that have been taking part.”

Lawrence concludes: “There is a lot of change happening with our supply chain strategy at the moment. We are trying to realign what we do so we can be more dynamic responding to emerging capabilities and resilient to market changes.”

www.boeing.co.uk