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BUYER SUPPLIER
RELATIONSHIP
AIRBUS

International School of Business &


Media ; Kolkata
Abhijit Samanta
Major Challenges for
Aircraft Manufacturing
Industry:
High Cost of doing R&D
High Risk Involved in doing R&D, US$10 billion.
Complexity of Production Cycle.
Application of extremely diverse technology.
A large no. of enterprises must be involved.
SWOT Analysis of A380
Project
Strength:
üAirbus A380 is a triple-decker aircraft with a
passenger sitting capacity of 550.
üThe project will through a big competition to
Boeing B747 which is a 400 sitter aircraft.
üThe success of the project will bring a
revolution to the entire airlines industry which
in long run generate more order for A380.
SOWT Analysis contd…
Weakness:
üInvolvement of high cost.
üComplexity of the entire project is very high.
üInvolves too many stakeholders.
üEvery dimension of the project is very much
diversified form one another.
SOWT Analysis contd…
Opportunity:
üIt is required to develop a very level of
integration among various stakeholders.
üHuge opportunity of outsourcing a lot of critical
task which will reduce the company’s effort,
time and energy.
üHigh opportunity of engaging technically sound
and advanced systems to enhance effective
operation.
SOWT Analysis contd…
Threats:
üAssembling various parts of the aircraft at the
assembly point in a timely manner.
üEstablishing network in more than 30 countries
covering almost the entire world.
üA very high concern with quality.
üMaintaining high level of negotiation with
various stakeholders.
üStructuring all the procurement departments in
most effective way.
General Overview of Aircraft
Manufacturing
An aircraft has mainly five distinct area in its
structure.
1.Airframe / Fuselage.
2.Engine / Power Plant.
3.Aircraft Radio and Navigation System.
4.Aircraft Electrical System.
5.Aircraft Instrumentation System.
Airframe / Structure
In each of the
areas high level
of integrity is
Engine required

Main Assembly Point Final Product = Aircraft


raft Electrical System

craft Instrumentation System

Radio and Navigation System


Critical Points that has to be
achieved by Airbus:
1.An integrated network among 1500 contractors in
more than 30 countries all over the world has to
be established.
2.All the suppliers must have the ability to deliver the
demanded quality within specific time frame.
3.Bringing all inputs like components and services
from the worldwide was the biggest logistics
challenge for the company.
4.The production schedule must be designed most
effectively keeping all the constraints in mind.
5.The most critical task was to integrate various
procurement departments.
A high level of integration is required to be established among
various procurement departments.
Int
egr
ati
on on
ti Capital Goods Procurement
a
egr
t
In

Services procurement

Airframe Procurement Dept .


Integrated Centralized control.

n
Integratio
In
te
rag
t io
n

General Procurement
Equipment and Propulsion system.
Integratio
n
Outsourcing Overview
Buyer – Supplier Critical
Points
Information
flow
AIRBUS SUPPLIERS
Material
flow
Tasks performed by
AIRBUS:
1.Performance Control.
2.Drive Correction.
3.Improve Action.

Let to better
relationship with
suppliers
‘AIRBUS SOURCING’ the
online system:
Allowed buyers and suppliers to:
1.Exchange requirements.
2.Proposals.
3.Technical innovations.
Conclusion
The success of the entire project lied in some
critical aspects like:
1)Developing a very sound information system
between AIRBUS and its suppliers.
2)A very high level of integration among various
purchasing departments that allowed AIRBUS to
do a better and effective negotiation.
3)To co-ordinate with various issues like Time, Quality
and Cost.
4)Establishing the entire supply chain network in
such a way so that smooth flow of materials
occurs.
5)Continuous monitoring and evaluation of the entire
system so that probability of failure becomes
minimum.