This week, The Wall Street Journal confirmed what many existing suppliers residing within the Airbus supply chain probably know, that the commercial aerospace firm continues to be challenged in consistency in supply chain customer fulfillment.
The report, Airbus Tackles its Procurement Procrastination Woes, (Paid subscription or complimentary metered view) reports that Airbus executives are trying to end what has become an annual rite, the end-of-year hockey-stick effort to fulfill its annual target for customer airplane deliveries. Noted is that last December, commercial aircraft manufacturing delivered 79 aircraft in a single month representing about 12 percent of its annual total. However, these all-hands, round-the-clock efforts take an annual toll on manufacturing and supply chain resources, causing the New Year to get started on a muted rate.
Thus far through April, the company has delivered only 177 planes, just 27 percent of its annual committed output volume. As noted in prior Supply Chain Matters postings, deliveries of the new A320neo model single-aisle aircraft have shifted to June to allow engine provider Pratt and Whitney more time to correct some last-minute design and production issues. Additionally, the WSJ indicates that only four of the brand new A350 long-range jets have been delivered in the first quarter amidst supplier problems.
The company’s COO of commercial aircraft acknowledged to the WSJ the ongoing frustration and that: “we need to do better.” The report further indicates that the company is exploring further means to change the way airplanes are manufactured in a more predictable manner, language that often translate to additional manufacturing automation.
Both Airbus and rival Boeing face very aggressive supply chain and final manufacturing ramp-up targets over the next 3-4 years in order to meet both customer delivery expectations and aircraft program cash-flow milestones. At the end of April, Airbus reported net cash outflows of $3.37 billion largely as a result of delayed aircraft deliveries. In many cases, suppliers are not paid until finished aircraft are delivered to customers. Boeing is not immune to same challenges, having recently announced a series of significant job cuts and additional cost reduction initiatives.
Commercial aircraft supply chains thus remain in this unique quandary- upwards of 8-10 years of customer order backlog, but at the same time, enormous and continually building challenges in the ability to meet unprecedented supply chain and manufacturing output cadence.
Truly unique with its own set of dynamic challenges.