Airbus Spares optimizes logistics: Saving millions with integrated planning

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The spares division of European Airbus set up an innovative logistics concept.

The Advanced & Integrated Planning Project optimizes the provision of spare parts with stocks at the storage locations and helps control costs.

Airbus Spares Support and Services division has had its head office at Hamburg Fuhlsbttel for 30 years and has the largest Airbus spare parts depot worldwide, employing 500 people. The core business of this Airbus unit is to supply customers with aircraft spare parts. Altogether two million different spare parts are contained in the Airbus data base. These range from huge wing spars and landing flaps to a microchip. In addition, the Fuhlsbttel service centre also stocks special tools and ground support equipment.

Worldwide, constant availability of spare parts is essential. Five large depots in Hamburg, Frankfurt, Washington DC, Singapore and Peking guarantee the supply to Airbus aircraft distributed worldwide. An important aspect is the supply of spare parts for older models, which have to be provided with stock for a period of 30 years after the last of each construction type went into service.

In recent years the division of 600 worldwide co-workers has changed increasingly from a mere distributor of spare parts to a service provider with emphasis on customer advisory services and the control of internal, world-wide delivery chains.

Planning

This functional change of the activities has created a fundamental reorientation of current worldwide spare part logistics. Planning, procurement and distribution is supposed to take place more effectively and faster in the future, taking into account regional conditions, fleet development, historical sales figures and part categorization. Since commencing the project two years ago, the aircraft manufacturer has been supported by SAP Consulting business advisers. Without the industry and practical know-how of the team from Walldorf it would not be possible to set up a project of this depth, said Olaf Lawrenz, senior director, Centre of Competence Airbus Spares Support and Services. Due to strict supply standards even small errors in the planning or implementation phase can produce high financial risks.

Beginning second quarter of 2006, outline and detailed planning for the purchase and supply of spare parts are to take place with the close involvement of the entire internal production network. The basis for this is a partially automated planning and forecasting system. With this Airbus is promising itself optimized stocks, shortened delivery times and accurate planning. The procurement required for this, however, represents an enormous challenge because parts for the spare parts depots usually come exclusively from current production series. When compared with automobile manufacture, aircraft construction requires smaller quantities of items, with longer turn-around times and is therefore substantially more expensive, said Lawrenz.

Extensive deployment

The SAP APO (Advanced Planning and Optimization) component of mySAP Supply Chain Management (mySAP SCM) is at the heart of the new logistics solution. The main functions are planning the demand and the delivery chain network as well as cooperation within the delivery chain. SAP APO supports the strategic, tactical and operational planning. It is the basis for a substantial competitive advantage and increased customer satisfaction. Aftersales support has long become a crucial factor in the sale of aircraft. Above everything, the integrated forecasting system provides more reliable planning data. Within the context of the planned integration with production IT systems at each centre of excellence (CoE), Airbus is also striving to improve the lot sizes for procuring spare parts from manufacturers. Airbus Germany, Airbus France, Airbus UK and Airbus Spain would all profit from the enquiry-based logistic processes that would result, and from the exchange of detailed forecast data.

The present expenditure to determine the relationship between availability, return on capital and the world-wide distribution of spare parts is enormously high, because the need differs, depending for instance on the place of operation of the aircraft and the routes served," said Lawrenz. The different employment of the aircraft demands separate calculations for each region. At present, planning still takes place manually to a large extent, though on the basis of the figures obtained from the SAP system. The parts are categorised according to the speed/frequency of demand and handled accordingly.

The introduction of SAP APO, however, allows consumption-dependant sales and distribution planning, combined with partial process automation. Approximately 3000 part numbers show a constant reorder frequency and a relatively small financial risk. These are suitable for automatic ordering in the future. The resulting reduction in workload enables our planning managers to concentrate on out of the ordinary enquiries, for example the procurement of a rudder, whose  transportation is only possible with the help of an Antonov or a Boeing 747 and therefore contains a comparatively high financial risk.

A further effect of the SAP planning tool is the improvement of off-shelf performancethe proportion of the ordered partsthat can be delivered directly from the depot due to optimization of sales planning. This is important because if a part requested by a customer is not available, then in urgent cases the spare part may even have to be taken from an aircraft which has already been manufactured. This creates increased expenditure.

Sales, development and production planning

The integration of planning data from different divisions is critical. For example, only the integration of planning with current sales data plus the correct transfer and evaluation of the relevant parameters will provide the design fundamentals necessary for precise forecasting. No longer should consumption within certain time periods be considered, but rather consumption based on individual orders. Also the design department should be involved, as Lawrenz said: Spare parts are subjected to frequent changes, due to the technical revisions of the aircraft. However, the financial risk can be reduced. If information about required numbers of parts is provided early, it is very helpful. In this way, the stock of parts can be matched to demand. This is most important if the construction of the parts is changed and smaller quantities of the items have to be stored.

The current comparison of the data with the actual production is the basis for the time-optimized supply of the spare parts depots as well as for determining the optimum size of depot. This is important, since there is no separate production line for producing spare parts. The withdrawal of parts from production series requires a certain lead time for the procurement of the raw materials and therefore the timely demand submission by Airbus Spares.

Project success through comprehensive consultation

In the project partnership between Airbus Spares and SAP, the aircraft manufacturer supplied the bulk of the process and business know-how, however the advisers of SAP Consulting contributed valuable product and development knowledge, said Lawrenz. New early warning functions were developed to indicate when the category of a spare part changes from medium- to fast-mover. These ensure timely planning amendments and improve the forecast accuracy. 

For the automation of the planning and provision processes, SAP designed the control of the spare part life cycles in the event of a technical overhaul (phase in and phase out).  By using modern methods for the consolidation of demand, the advisers also succeeded in further reducing the planned process costs, said Lawrenz.  Orders based on the forecasts also permit the subsequent consideration of geographical and time-related factors, since the demand for specific spare parts is subject to seasonal variations. This provides the informational advantage to production planners at the various CoE production locations.

Project conditions, payback and further plans

A return on investment (ROI) was calculated on 1.3 years. In terms of the overall project, the attainable savings in the delivery chain are millions of Euros, said Lawrenz.

Beyond the present project, Lawrenz sees great potential for further collaboration processes. Vendor Managed Inventory (VMI), with which Airbus Spares, as the supplier, takes over the responsibility for the continuing supply of spare parts to the customer, stand in the forefront. Consideration is also being given to bonus models for customers, based on the accuracy of the supplied forecasts. Integrated cooperation with the producing factories also promises more realistic turn-around times for individual spare parts.

Lawrenz says teambuilding, sufficient free capacity of project participants, good preparation for the project in workshops and a continuous flow of communication on the status of the project and the next steps to be taken as paramount to the success and rapid implementation of the Advanced & Integrated Planning Project. Changes to the supply chain must not bring disadvantages to the customer during the course of the project, nor endanger a single aircraft used world-wide in its enterprise, said Lawrenz. We are pleased that the SAP project has run so far without larger difficulties.

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