Aircraft manufacturer Airbus is reorganizing its supply chain beginning next April. To secure the seamless flow of components, tools and equipment to its production site in Hamburg at all times, the second largest worldwide after Toulouse, the planemaker will manage the material flow and storage of goods on its own qaccount and also insource all warehousing activities. That‘s bad news for logistics giant Kuehne & Nagel, that will lose a lucrative order after managing the aircraft manufacturer’s component business over many years.
Airbus is changing its strategy. Instead of outsourcing more and more activities and subcontracting them to partner companies as done in the past, the time of externalizing work packages seems to
be drawing to a close.
This is indicated by the management’s decision to reintegrate all logistics and warehouse issues into the company. Obviously, a strategic U-turn after many years in which external contractors were included in aircraft manufacturing mainly for cost saving reasons. But the fiasco that U.S. competitor Boeing experienced during the construction of the B787, where the suppliers were unable to deliver components in time, which brought the program to near collaps and made it extremely expensive, showed the limits of the outsourcing strategy.
Data control becomes key issue
In Airbus’ case the insourcing strategy is not driven by costs, at least not primarily, but by the company’s aim to regain the control of data generated in the highly complex aircraft construction and sourcing process. Sebastian Peters, Head of Global Logistics for Airbus Civil Aircraft Programs confirmed this to local media: “It gives us control of all data relating to the flow of materials and enables us to closely monitor the chain from the door of the supplier to our Hamburg plant.” He went on to say: “In case the delivery of components is delayed, we can intervene immediately and find alternative solutions.”
Centerpiece of the insourcing project is a huge warehouse with 45,000 square meters of floor space that is erected in direct neighborhood to the assembly line. Airbus holds that the facility, dubbed “Sky Hub” is to be the largest warehouse within the entire Group, creating several hundred jobs.
Scaling up production rate tentatively
The strategic change coincides with the European aircraft manufacturer’s announcement to gradually ramp up the production rate of its single aisle family, although at a slower pace than originally anticipated. While 40 variants of the A320 family are currently produced per month, it will be 43 in Q3 and 45 in the final quarter. The original plan called for 47 A320 models to be finished each month. The A220 monthly production rate will increase from four to five aircraft per month from the end of Q1 2021 as previously foreseen.
The end of the cooperation in contract logistics between Airbus and K+N only concerns Germany. In contrast, at the frame worker’s production sites in the UK and Spain both players continue their collaboration for the time being.
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