The aerospace industry is used to dealing with crises. But this crisis, triggered by a virus, is different, especially in terms of its global dimension.
What are the main features of this crisis? Health systems at the limit, too many people dying, closure of non-essential businesses, hardly any travel nationally and internationally, closed borders, home offices, home schooling, disruption of global supply chains and so on.
But like all other crises, this one will come to an end. And we are convinced that affected processes, companies, people etc. will emerge more robust, more trained and better prepared for the future than they were before the crisis. From our own experience, it is like a law of nature: as long as you survive the crisis, you will be stronger than before.
Why are we so optimistic that this crisis will also end and when will that happen?
In our projects, we always try to align our team to the customers needs. In 2017, we hired a former Airbus colleague for one of our crisis management challenges at a German aerospace supplier (Tier 1). Prior to that, she worked for a large international management consultancy. Right at the beginning of our project, she asked us if we had ever thought about using "business intelligence tools".
We had no idea and she explained their usefulness for analysing large amounts of data (Big Data). One of the team members - our logistics and IT expert - immediately started trying out the recommended QlikSense BI desktop version for analysing flow disturbances in manufacturing. Quite quickly, thanks to the improved transparency of the data, we found an important driver that neither our client nor we had been aware of before.
Normally, the service life of an aircraft is quite long. The fierce competition in this market requires OEMs to launch new products with significant improvements over the previous model. The main focus is usually on fuel efficiency and range, which is linked to the search for innovative lightweight structures in all aircraft components. The long development phase of an aircraft and the early commitment to a certain specification could force the OEM and its supply chain to sell a not yet mature innovation quite early. Therefore, from our experience, it is quite "normal" for the final development steps to take place in parallel with the production ramp-up. If this process is not well managed, the risk of a negative impact on production performance is obvious.
In this blog we now want to talk about the Production Control Room (or "War Room"), which is a central element in crisis management. Basically, it is a place where all relevant crisis management information comes together and where you can exchange information about the current crisis status on a daily basis.
The structure of the Control Room follows the value creation process (see below for an example of a typical composite manufacturer):
There are some signs that tension is mounting in the aerospace supply chain. Problems with the engine software for the A320 Neo and the delayed delivery of seats and other interior components for the A350 are currently putting a heavy strain on Airbus' final assembly lines.
Therefore, this is perhaps the right moment to explain our view on crisis management in operations. We think the most important element is focus. And the focus has to be on stabilising the operational processes. If you try to solve all emerging process problems in parallel, you will not achieve the main goal, which is to return to on-time delivery (OTD). In our crisis model, we recommend doing a deep dive into the relevant processes after you are back to OTD. We then use our "crisis conclusion" approach to sustainably improve unstable production processes.
Airbus has announced these days a rate increase to 60 single aisle aircraft per month. This will be a big challenge not only for Airbus but also for the whole supply chain. If you are part of it, the key question is: Are you ready to reach rate 60 with the required quality and delivery reliability?
Not all crises can be avoided, but many can. From our point of view, it is actually not that difficult. Good and, above all, robust planning is a good start. And the necessary knowledge is usually available among the employees in the respective companies.
Basically, there are two challenges that need to be differentiated here. On the one hand, the variability of capacity utilisation by adapting production planning to a changing order situation and, on the other hand, changes brought about by the introduction of new products.
The aviation industry in particular has always been and continues to be characterised by great dynamism:
- Continuous increase in production rates
- New aircraft types at ever shorter intervals
- Adaptation of the supplier structure forced by the OEMs to increase efficiency in the supply chain
Increase in production rates
With an annual passenger growth rate of 5%, the demand for new aircraft is almost as high. Added to this is the need to replace ageing aircraft.
If you look at the delivery figures of the two big aircraft manufacturers Airbus and Boeing, you see a continuous increase over decades, interrupted only by major crises (the dollar crisis in the 1990s, the Gulf War and the terrorist attack on the World Trade Center in 2001).
At foliofive, we distinguish between three essential phases in the area of crisis management:
- The crisis check, which looks into the future and verifies whether the company is well prepared for the challenges that will arise
- Crisis management, in which the crisis has already occurred and only quick and pragmatic intervention can stabilise the disturbed processes again.
- Crisis follow-up, also called "conclusion" at foliofive. Here, the actual causes of the crisis must be identified and permanently eliminated through procedural and organisational measures.
In our first blog entry, we start with an in-depth look at the crisis check.