Page 4: Managing the supply chain
British Aerospace and its partners know the penalties for failing with the Eurofighter project could be severe even as far as cancellation of the project. However, they recognised that it also represented a unique opportunity to develop and construct a new combat aircraft programme from the ground up, based on an entirely new business strategy.
Production is already underway in the four countries and final assembly of the first aircraft commences in 2000 for delivery in 2001. Each country is responsible for producing particular sections of the aircraft; for example, the left wing is being built in Italy and the right wing in Spain. British Aerospace is manufacturing amongst other sections the front fuselage and the central and rear fuselage is being made in Germany. This specialisation creates considerable economies of scale and therefore lower unit costs.
The only duplication that will occur is in the final stages of production as each country undertakes the (final) assembly of its own aircraft. This will provide the infrastructure necessary in each nation to support the aircraft when in service with the Air Forces. This attention to cost has been forced on the production partners as the NATO defence budgets have shrunk since the end of the Cold War. Lean production techniques, which were developed in Japan and successfully applied to the western car industry during the 1980s, have been introduced at all the production centres.
Since British Aerospace has to buy in 70% of its raw materials from outside its own resources, the management of the industrial supply chain is of critical importance. Although having to rely on a myriad of suppliers is always a potentially high-risk area within such a project, it has also presented British Aerospace with an opportunity to transform its approach to production. The intention has been to move away from the traditional batch production methods and towards a regime called ‘one-piece flow’, a pull system from the customer right back to the suppliers of raw materials.
The factories operate a just-in-time approach to the control of stocks, with components arriving only when they are needed. Previously, these supplies had been delivered in batches because of unreliable forecasting techniques. Having inventory lying around on the factory floor, whether it be small components or fully assembled aircraft, resulted in much more cost to the manufacturer than the direct labour costs, long understood to be the cause of similar projects going over budget in the past.
New materials have been developed specifically for the Eurofighter, particularly carbon fibre composites and advanced alloys, which have demanded new standards in manufacturing. A £100 million investment programme has equipped British Aerospace with highly technical machinery, capable of delivering panels and fittings that are accurate to 70 microns (three thousands of an inch). This ‘right first time’ approach has reduced wastage and thereby further reduced the unit cost. It has also made fitting replacement parts and repairs much more straightforward, increasing the aircraft’s operational availability.
Almost every aspect of the aircraft’s performance was computer modelled before any of the prototypes took to the air. The extensive test flight programme has confirmed most of the computer predictions of the plane’s capabilities. The Kosovo conflict demonstrated that Europe did not have a true multi-role aircraft, and had to pass aircraft responsibilities to the US Air Force. Consequently, the Typhoon’s air-to-air and air-to-surface capabilities are eagerly awaited by the European Air Force.