Comparison of supply networks of Boeing and airbus

Abstract

The aerospace industry is almost a duopoly with Airbus and Boeing being the two major players. Despite this, the industry is a very low profit margin industry. This is because of the soaring prices of raw material, energy and the increasing labour costs in the emerging markets. China and India are among the top three buyer of passenger planes in the world. So, to overcome the above challenges and serve the biggest customer segment, the supply chain of the aerospace industry is highly globalized. More and more outsourcing is being done in terms of design, sub-assemblies manufacturing and technology. In fact, there is so much overlap in the supply chains of Airbus, Boeing, their tier I and II suppliers, the supplier’s subcontractors and so on, that they should be characterized as a supply network rather than a supply chain. Thus, there is increased interdependency among all these firms involved in the process from start to end. The criticality of the components is so high that RFP is a coordinated process among the various suppliers and customers in the supply network. About 60-80% of the total costs are attributed to suppliers. A mere delay in the supply of a small part like fasteners caused delayed delivery of the Dreamliner 787. Thus, for the aerospace industry it is not enough to study the simple buyer-supplier relationships in isolation. The tools of network analysis would help us understand the ways in which we can extract more value from the suppliers. Besides, networks function as an avenue of innovation in the supply chain and equipment sourcing. Hence, it might be worthwhile to do an analysis of the structural properties of both Boeing and Airbus and do a comparative study to develop some general insights regarding best practises supply chain strategies in the aerospace industry.