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While visiting in Canada this weekend on a weekend vacation with some of the family to visit Niagara Falls, I picked-up a copy of the Toronto Globe and Mail weekend edition to scan the business section. There are not many newspapers that still provide high quality content, and I have to state that the Globe and Mail was a refreshing change that really impressed me on the depth of its reporting. This is a newspaper that is well-written with informative business and supply chain related articles. If you are ever in their circulation area, do pick-up a copy.
What caught my interest was a four page spread, Bombardier’s C Series poised to take flight, penned by Greg Keenan. This article provided insightful depth on how aircraft maker Bombardier is taking a huge strategic gamble on the supply chain deployment and market launch of its new C-Series aircraft scheduled in 2012. The C-Series is a 100-150 single-aisle passenger aircraft that is the the cornerstone of the company’s plan to compete head-on with the likes of Boeing and Airbus for advanced, lightweight commercial aircraft that can deliver compelling fuel efficiencies for airlines.
The C series will also feature an outsourced global supply chain for many of its major components, allowing Bombardier to concentrate solely on innovation, design and final assembly needs. For instance, the fuselage is sourced with Shenyang Aircraft in China. The wings will be manufactured in Ireland, the tail section in Italy, and the landing gear in Germany. All of the major components are to be shipped to Bombardier’s final assembly facility outside Montreal’s Mirabel airport for final integration.
If all of this sounds rather familiar, it is very similar in concept to the Boeing 787 Dreamliner outsourced supply chain, where first customer shipment remains over two years late. We have penned numerous commentaries on Supply Chain Matters regarding the various supply chain snafus encountered by the 787 Dreamliner program, not the least of which centered on Boeing’s lack of program coordination and communication with all of the major outsourced suppliers. Boeing, thus far, has had to assume direct responsibility for two Dreamliner major suppliers and a second final assembly facility is in the works. Boeing was not alone in navigating these perils, since Airbus also had its own supply chain challenges with the A350 program.
Bombardier hopefully has the opportunity to gain some key learning as it embarks on its own highly global outsourced program. Consider for instance that one of the largest assemblies, the fuselage, will be assembled in Shenyang China and shipped via by a combination of ocean and surface transportation to Montreal. The wings will feature innovative, lighter weight composite materials, and in-turn will have to make a trans-Atlantic voyage from Ireland and surface transportation transfer to Montreal. All of this implies a strong dependency on cost efficient and reliable global transportation.
Bombardier management acknowledges the risks about to be undertaken in the C-Series program. The stakes are high, over $211 billion in revenues over the next 20 years. The program has also slipped from its original 2010 market entry timetable. Gary Scott, the company’s president of commercial aircraft and high visibility leader for the C-Series has had 29 years of prior experience with Boeing and its 737 program. We would therefore surmise that Mr. Scott has had the benefit of learning both the importance and riskiness of major global supply chain coordination and visibility has become for aerospace providers with a large outsourcing footprint.
The Mail article astutely points out that airlines like Southwest have previously demonstrated the compelling cost and efficiency savings of adopting and operating on just one model of aircraft and thus the C-Series faces significant challenges in its goal to displace an existing Boeing or Airbus fleet. On the flip side, Scott and Bombardier management are of the belief that the sourcing of major aircraft components to a supplier in China could place the company in the favorable eyes of China’s expanding airlines. Then again, as we have all observed in other critical growth industries, such as alternative energy or high speed rail, China could decide to source solely to stand-alone Chinese aerospace providers.
Thus far, Bombardier engineers have been leveraging simulation and visualization technologies to evaluate the various engineering dimensions of the C-Series. From a global supply chain perspective, engineers have also been savvy enough to leverage existing excess capacity in Montreal to launch a prototype test facility for the C-Series, prior to actually building a new assembly facility.
One hopes that Bombardier’s engineers will be able to get a better perspective of the global supply chain engineering, planning and synchronization challenges that must be overcome, since there is little room for error. The company will also be wise to leverage advanced information and business intelligence technology tools to enhance global supply visibility and synchronization.
With the C-Series program, Bombardier is in a high-stakes gamble for competitiveness among global based airline customers. Successfully integrating and synchronizing a globally sourced supply chain may well be the key differentiator in long-term success. The aerospace industry and we, at Supply Chain Matters will certainly be monitoring developments over the coming months.