Airbus The Technology Integrated Supply Chain Joseph Peck

Airbus Founded in Turnover of over € 33.1bn. To date have produced over 8,000 planes, with over 15,000 ordered by their 391 customers. Produces both the world’s first fly by wire passenger plane (A320) and the largest passenger plane (A380). Boeing is the biggest rival (duopoly).

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Opportunity Airbus recognised that this long lead time was an issue, and tried to reduce it. As a plane takes roughly 100,000 man hours to build, the actual assembly is difficult to minimise (new processes require certification before they can be used). Instead they tried to remove all non value adding time. This was done partially through outsourcing, but mainly through introducing RFID.

RFID in everyday life Has been in general use for over 10 years o Car ignitions o Library books o Contactless payment Chips are very small - 0.4mm 2 (2004) [1] down to 0.2mm 2 size now (however tags this small are very expensive £5 per tag). [1] 4. Anonymous (2004), "Micro tracker", Technology Review, Vol. 107 No. 3, p. 18. [2] TATA Motors internal part costing's, 2013 Tags 1cm 2 cost approx. 4-10p each when bought on large scale orders. [2]

How RFID Works There is a tag and a reader. The tag is a small chip located on the product, the reader can be anywhere (entrance to warehouse/hand-held etc.). Data about the product is saved on the tag at every step of production/supply chain. As the tag passes near the reader, power is induced and a reflected radio wave is sent to the reader. This wave is detected and the data on the tag is gathered.

The Integration of RFID Gradually RFID is replacing traditional optical barcodes. In 2004 Bill Gates labelled RFID the next big thing, the biggest change to industry since plastic. [3] [3] Microsoft (2004), "Remarks by Bill Gates, Chairman and Chief Software Architect, Microsoft Corporation, Microsoft CEO Summit 2004", Redmond, Washington, 20 May, available at:

Airbus's Use Boeing introduced RFID for selected internal uses in Airbus introduced RFID in 2006 to all production sites and made all suppliers use it also. They have a central server that stores all information on site. It auto orders parts as needed, based upon usage, inventory and work schedule.

They have RFID portals at the entrance to the warehouse, and on each floor to track the movement of parts. [4]

The Effects Felt Reduction to overheads - next to no processing cost per order. Reduction in overall inventory and inventory tailored to work scheduled. Almost no stock-outs (Airbus claim no stock-outs since early 2007). [5] [5] Airbus Publication 2011

Conclusion Whilst Boeing partially introduced RFID, Airbus’s total integration of RFID helped it to gain a competitive advantage and become the market leader. Boeing only fully introduced RFID 2 years after Airbus but by then the market power was already shifting. The automatic ordering system has helped to improve efficiency without affecting quality or production cost.