SUPPLY CHAIN

STRUCTURE
AVIATION INDUSTRY

Abstract

This article presents the Supply Chain Structure of

the Aviation Industry.

Abhishek Bendigeri
1527103
Akarsh
Dubey

1527104
Pulla Avinash
1527122

Supply Chain Structure- Definition

The Supply Chain Structure refers to the set of choices made in assembling the components
of a supply chain
together.
These
Aircraft Demand
include
choices
regarding
the
number
(Passenger, Cargo)
of layers that make
up a supply chain, the
composition of each
layer, the type of
information
flow
across the layers and
the
nature
of
integration achieved
Demand
Fulfilment
between the layers.
(Airlines, Logistics Industry)
Supply Chain
Structure of
Aviation Industry
Airframe Manufacturers
(Jumbo Jets, Regional Jets)

Tier 1
Suppliers
(Aircraft Interiors, Actuators, Engines)
Tier 2
Suppliers
(Aero Structures, Engines, Landing
gears, Avionics Systems, Sub-systems)

Tier 3 Suppliers
(Components and Parts)

Low Cost Region Suppliers

For the successful players, the coordination and integration of supply chain practices
and processes are becoming quite important and requires immediate intention.
Traditionally, the large aircraft manufacturer would define and give specification as to
what the Tier 1 suppliers should produce for them. The airframe manufacturers would
do the total aircraft design and detailed specifications and drawings of sub structures
and sub systems to their suppliers. In todays time, Tier 1 suppliers and Airframe
manufacturers have become super integrators and coordinators of airplane production.
The aerospace industry needs to adopt new strategies to achieve greater dependence
on Tier 1s, increased risk sharing by suppliers, adoption of low cost region suppliers,

increased outsourcing of aero structures and an increased transparency in the aircraft

program schedule. Resources are shared and proposal making is a joint process
between suppliers and customers.
There is an increased focus on systems integration, less internal production capability,
a desire to work with less Tier 1 primes, and significant reduction in direct dealings
with Tier 2 and Tier 3 suppliers.
The supply chain structure affects performance on account of several factors:
1) The number of layers
The supply chain structure always involves several layers. In the aviation industry,
there exists 7 layers of supply chain structure. However, one of the key issues in
the structure is the impact of the number of layers on the overall system
performance. When the layers increase, there also arises a delay in the flow of
material and information. Further, an increase in the delay results in higher
investment in inventory in the supply chain.
2) Delays in the chain
There are finite delays between a pair of layers to send and receive information
and goods. For instance, Airframe manufactures take almost two days time to
transmit order information. The delay could be primarily on account of the
business process involved in the purchase ordering process. On account of these
delays in information and material flows in the supply chain, sufficient levels of
inventory are maintained at every level.
3) Decision-making patterns
Decisions on how much to order and when to order are taken independently
of other supply chain members. Thus, while the Supplier 3 may choose to review
these aspects every ten days, the low cost region suppliers have a review every 7
days.