Airbus’ venture into digital – what appears to be bold may only be scratching the surface

Ever thought the aircraft industry is at its peak and has become somewhat boring? Airbus is trying to prove us wrong. It has started on a path towards digitization by appointing a native Google CTO and creating a Digital Accelerator. 3D printing for higher flexibility, connected aircraft for on-point responsiveness and continuous tracking of supplier relationships are only some of the ideas they have for the future supply chain.

The commercial aircraft industry has been dominated by only incremental innovation for decades, but it seems like this trend is about to change. Airbus has appointed a former Google manager as CTO and has vouched to digitize the company with a compelling vision for its future – first changes, e.g. to their supply chain are visible today.

The advancement of digital technologies and connectivity provides significant opportunities for Airbus and other companies in manufacturing industries. A recent survey highlighted that 80% of companies thought digital operations (incl. supply chain) are a critical driver for their competitiveness [1]. In fact, a manufacturing case example showed that using digitization in supply chain has improved time to market by 50%, reduced engineering cost by 40% and improved quality and thus customer satisfaction [2]. These effects are indicative of benefits to be expected at Airbus, but will probably be even higher in magnitude due to the complex nature of Airbus’ supply chain [3]. Other players, like Rolls Royce [3] have already progressed on this journey, so Airbus should leverage new technologies to not be left behind. Embracing digitization in the supply chain may also change the relationships with suppliers and customers to tighter collaboration and may open up possibilities for new products or services [1].

Airbus has started to harness the opportunities a digitized supply chain represents.

The company has placed significant importance on data integration between partners, suppliers and customers to improve learning, preventive maintenance and supply chain planning. Together with other aerospace companies Airbus has created the Boost network for collaboration with partners [4]. Airbus has also partnered with the data analytics company Palantir to create Skywise [5] [6], a data link between OEM and customer collecting operational data of in-service aircraft[1]. A similar system is envisioned for the collaboration with suppliers, e.g. to create smart contracts that track quality and compliance of products [6].

Furthermore, Airbus has started using additive manufacturing for the A350 XWB aircraft to leverage the benefits of decentralized production, like high flexibility [7] [8]. Together with blockchain technology Airbus envisions a future where a significant part of the supply chain is distributed (e.g. to customers) and “sensitive design data could be sent to any 3D printer (…) to build Airbus’ … parts” (Thompson, [6]). Airbus has created a blockchain working group to evaluate this use case [6].

Finally, the company has started to make organizational changes for a true digital company that go beyond digitizing the supply chain. In 2016 the role of CTO was filled by Paul Eremenko who has digital experience from working at Airbus innovation Centre and Google.  Furthermore, Airbus created a Digital Accelerator and focused additional resources on IT capabilities. [6]

It appears that Airbus has made several changes to address digitization, like horizontal and vertical data integration, distributed manufacturing and organizational adjustments. However, maybe Airbus is only scratching the surface – all of these changes will only be effective if Airbus ensures the proper foundations are in place: Capabilities, vision and basic infrastructure.

Even though Airbus has started to create an organizational structure that accommodates digital, on average only 13% of companies have the talent required for a digital transformation [1]. Therefore, Airbus should probably prioritize attracting and retaining suitable employees now and make a clear make vs. buy decision for all elements of the business.

Airbus also needs to clearly define the goals it wants to achieve with digitization and all analyses and initiatives need to be linked back to that. 40% of companies are not satisfied with the effects their digital initiatives have had, probably due to a lack of focus. For example, IT platforms for data acquisition spanning the whole value chain are valuable[2], but they are not sufficient because “few (companies) have decided what they want to do with … (the data) at this point.” (Greenfield, David) [9]

Finally, Airbus should get the fundamentals of IT (collaboration tools, security infrastructure) right before attempting to implement more advanced applications. Since there are huge security risks associated with digitizing the supply chain (e.g. when sharing proprietary product designs for distributed manufacturing) [11] Airbus should ensure its security task force prepares for future changes. Similarly, to incorporate new systems (e.g. Skywise) in the current company, basic IT infrastructure probably needs to be upgraded[3].

Clearly Airbus is only at the beginning of their journey towards digital. Important questions remain to be answered, for example:

  • How should Airbus balance focusing on its core strengths (building aircraft) and playing in the digital space, while avoiding a situation of dependence on IT providers (like Palantir)?
  • How should Airbus’ behavior towards suppliers and customers change once the supply chain is “truly digital” with perfect information and transparency at all times?

[1] 25,000 sensors per aircraft give live updates on all important parameters [6]

[2] Since companies focusing on the entire value chain are four times more likely to be an industry front runner [13]

[3] For example, in 2015 the Airbus CEO mentioned the introduction of something as basic as a common IT collaboration-platform as a long term goal [14]

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Bibliography

[1] McKinsey, “Digitizing the value chain,” [Online]. Available: https://www.mckinsey.com/business-functions/operations/our-insights/digitizing-the-value-chain. [Accessed 13 November 2017].
[2] Siemens, “The digital future of US manufacturing,” [Online]. Available: https://www.siemens.com/content/dam/internet/siemens-com/us/home/company/topic-areas/digitalization/documents/cg-mc-digital-future-of-us-manufacturing-en.pdf. [Accessed 12 November 2017].
[3] R. M. Z. R. R.R. Bales, “The development of supply chain management within the aerospace manufacturing sector,” Supply Chain Management.
[4] Microsoft Azure, “Rolls Royce and Microsoft collaborate to create new digital capabilities,” [Online]. Available: https://azure.microsoft.com/en-us/resources/videos/rolls-royce-and-microsoft-collaborate-to-create-new-digital-capabilities/. [Accessed 15 November 2017].
[5] Boost Aerospace, “About Us,” [Online]. Available: http://www.boostaerospace.com/about-us/. [Accessed 12 November 2017].
[6] Aviationweek, “Airbus launched Skywise data platform,” [Online]. Available: http://aviationweek.com/paris-air-show-2017/airbus-launched-skywise-data-platform . [Accessed 12 November 2017].
[7] F. Magazine, “Airbus gets aviation industry a step closer to the holy grail of big data and plane connectivity,” [Online]. Available: https://www.forbes.com/sites/oliverwyman/2017/07/20/airbus-gets-aviation-industry-a-step-closer-to-the-holy-grail-of-big-data-and-plane-connectivity/#215544043e86. [Accessed 11 November 2017].
[8] Airbus, “Airbus news,” [Online]. Available: http://www.airbus.com/newsroom/news/en/2017.html. [Accessed 14 November 2017].
[9] Stratasys, “Stratasys direct manufacturing slected Airbus 3D print polymer,” [Online]. Available: http://investors.stratasys.com/news-releases/news-release-details/stratasys-direct-manufacturing-selected-airbus-3d-print-polymer . [Accessed 11 November 2017].
[10] D. Swanson, “The Impact of Digitization on Product Offerings: Using Direct Digital Manufacturing in the Supply Chain,” University of North Florida, 2017.
[11] Accenture, “Accenture on Digital In Aerospace and Defense: Perspective on Digital Supply Network In Aerospace and Defense,” [Online]. Available: https://www.accenture.com/t20170504T050402Z__w__/us-en/_acnmedia/Accenture/Conversion-Assets/DotCom/Documents/Global/PDF/Digital_1/Accenture-Transcript-Jeff-Wheless-Video.pdf. [Accessed 11 November 2017].
[12] Accenture, “Insight Blockchain in Aerospace and Defense,” [Online]. Available: https://www.accenture.com/us-en/insight-blockchain-aerospace-defense. [Accessed 12 November 2017].
[13] BCG, “BCG publications,” 2017. [Online]. Available: https://www.bcg.com/publications/2017/transformation-becoming-digital-frontrunner-aerospace-defense.aspx.
[14] “Enders: Digital Transformation the next big Airbus Group project,” [Online]. Available: http://aviationweek.com/commercial-aviation/enders-digital-transformation-next-big-airbus-group-project].. [Accessed 11 November 2017].

 

 

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1 thought on “Airbus’ venture into digital – what appears to be bold may only be scratching the surface

  1. Thanks, Bettina! I worked with one of Airbus’ suppliers on many of its planes, including the A320, and the upcoming A380 and A320neo. Unfortunately, Airbus has been facing major delays on the delivery of these platforms. I wonder how they can use new digital innovations to optimize their supply chain. They should be able to use new technologies to understand supply chain issues earlier, and perhaps use a building information modeling software to help them better understand how one supplier challenge may affect a delivery in the future. This will save them from the embarrassment they are currently having with the A380.

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