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OM in the News: Global Sourcing Creates a Giant Backlog at Boeing and Airbus

Barry Render

airbus-sourcing“The aviation industry is bulging with orders for new planes,” writes The Wall Street Journal (Feb.24, 2017). If only it can get them made. There were so many almost-finished jetliners, missing their engines, piled up at an Airbus factory last May that executives joked they were in the glider business. It ceased to be funny when a frustrated Qatar Airways canceled orders for 4 planes that were months overdue.

Airbus and Boeing must build 30% more planes annually than they do now to meet existing orders, in one of the industry’s steepest production increases since World War II. The scale of the ramp-up is putting companies to the test.

Suppliers of seats, toilets and engine parts are stretched to the limit and sometimes falling short. In one of the worst holdups, Pratt & Whitney informed Airbus in September it would ship only 75% as many engines in 2016 as planned. P&W struggled with making the engine fan blades, which initially took twice as long as expected. French aviation-parts supplier Zodiac Aerospace was late delivering business-class seats, which cost about $100,000 each, for new Boeing 787s headed to American Airlines. Zodiac also was late delivering seats and lavatory doors to Airbus for its A350 long-range jet, at a time when Airbus was sharply raising production of that plane in 2015.

Both Boeing and Airbus are making adjustments to cope, retooling factories and tightening oversight of their globe-spanning supply lines. Airbus may dedicate more resources to “supporting and understanding proactively possible hiccups with suppliers in the future,” said its CEO.

Classroom discussion questions:

  1. Why are the supply chains so hard to manage?
  2. Can Airbus and Boeing bring more manufacturing in-house?
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