When aircraft seats are late, airliners sit undelivered at the factory doors — a visible sign of commercial aviation’s creaking supply chain — or are even delivered with empty cabins, lacking the ability to fulfil airlines’ revenue requirements. It’s an increasingly frequent occurrence, as the supply chain fights to return to normal from pandemic supplier shutdowns at a time of significant geopolitical disruption.
Seatmaker Recaro is the market leader in widebody economy seats and a major player in the narrowbody market, with final assembly lines in Germany, Poland, China and the United States. Chief executive officer Mark Hiller tells us that its supply chain is seeing “repeated problems across multiple areas — for example, disruptions in a certain raw material, triggering disruptions throughout the supply chain of components and cabin products. In aviation and cabin interiors in particular we often rely on very specific materials and on few sources, given high hurdles of certification and on the other hand relatively low volumes compared to other industries. This makes our supply chains more vulnerable to disruptive events and it is more of a repetitive task for our teams to manage these disruptions and cost increases.”
A vicious cycle of factors combine to cause problems, including for cabins uncertainty among airframers — with some lines ramping up and others seeing delays and blockages — combining with resulting demand for retrofit cabin refurbishment alongside the latent demand for refurbs, all in the context of major geopolitical tensions and disruption to international shipping from the Red Sea crisis plus its knockon effects in terms of port capacity.
At present, Hiller says, “inflight entertainment certainly remains high on the radar still in 2024. Currently, freight is a concern again, especially from a reliability and lead time perspective. The number one tool to first of all prevent (rather than recovering) these issues is an ever evolving forecasting: any issues arise when demand changes are not clear and transparent enough with enough time in advance and proper alignment. With more accurate forecasting as well as forecasting on a more detailed level, down to component level or raw material of sub-tier suppliers), you mitigate many of the issues.”
By and large, when specific supply chain shortages arise they are individual rather than generalised, although inherently if there are enough individual issues then they all contribute to a certain generalisation.
“Once a risk has indeed materialised, having a focused task force to manage the situation is key,” Hiller says. “Every issue is different, but the same structured approach can be applied to all of them. Being very open and transparent on both sides of the issue is key, and working out plans and actions to recover the situation is as important as tracking these.”
Within the seats supply chain sit many niche specialist precision manufacturers like MGR Foamtex, which supplies high-standard safety-certified foams and textured elements to seats. These can be incredibly complex, with a modern business class seat specifying a dozen or more individual foams and covers.
MGR Foamtex managing director Jon Rose tells us that “by default, the onerous flammability and certification requirements applicable to aircraft interiors often creates single source supply of raw materials. The pandemic has exaggerated this problem in respect of lead-time, cost, and availability.”
Managing the supply chain is an increasingly important element of supplier selection
Long and hard-won experience, collegial working relationships and a partnership mentality within the interiors supply chain are helping to straighten out the supply chain, however.
“Our experience with managing single source supply chains has well equipped us to cope with the more recent pandemic related problems,” Rose says. “Raw materials remain the critical path, particularly those that are project specific. With some materials quoted on a 22-week lead-time we simply can’t wait for customer purchase orders or material requirements planning-driven demands. Instead, we engage a process we refer to as macropurchasing, where we pre-identify all the long lead raw material requirements per aircraft set.”
From this starting point, Rose says, “liaison with the seat OEM [original equipment manufacturer] to discuss both their delivery plans and secure some contractual protection allows us to purchase materials while respecting the manufacturers’ lead time, thereby ensuring we have the required materials available to us. Macro purchasing also supports new seat build programmes where the bill of materials is often immature prior to seat build.”
Experience and understanding within the industry is also critical, with in-chain customers like seatmakers and airframers having more sympathy than perhaps they did in the past, since they understand the issues that the supply chain is currently facing — and because they themselves are part of the cause.
Indeed, notes Rose, “one of the biggest problems currently affecting supply chains is the delay in new aircraft build and subsequent delivery. Seat OEMs are often forced to delay their build plans and adjust their supplier delivery schedules. This can often generate significant increases in stock levels and cash flow concerns for the component supplier. As the airframe manufacturers recover and new aircraft type build matures this should ease, but right now keeping close to our seat OEM customers to identify any programme changes at the earliest opportunity remains critical to us. There appears to be a very welcome trend from at least some OEMs to better engage — and earlier — with their critical suppliers. One major OEM told us that ‘they need to do better at listening to suppliers’ and another that ‘we need to better use the expertise in the supply chain’. This is not an across-the-board experience, but it is an approach that will always lead to better outcomes for all parties.”
Outside the specialist supply chain, basic commodity parts remain a problem; this is not just an aviation issue.
“Macropurchasing has alleviated many issues but commodities such as adhesives, fasteners, plus some foams and fabrics remain problematic,” Rose says. “Last year we experienced one delivery problem with a hook and loop tape supplier that literally brought a major seat manufacturer’s production line to a standstill.”
The time is ripe for digitalisation to help improve the situation
Already, Rose notes, “most major seat OEMs now use digital portal type systems to convey their requirements, although the systems vary from one manufacturer to another. This can be helpful with forecasting demand ahead of purchase order issue.”
Increasing the digitalisation of the supply chain, including upgrading existing systems and adding new elements, is a major lever that the industry can pull to improve matters.
“Change we will see in digitalisation of supply chains for sure: big data will be utilised much more efficiently to increase transparency and early warnings,” Hiller predicts, to include “much more direct data sharing and processing. Only in that way supply chains of the future will remain manageable.”
Fundamentally, he notes, “supply chain management will be changed drastically by digitalisation, and it will be positive and helpful. In the complex and highly connected supply chains we use, we need digitalisation to stay on top and secure the supply chains — and make them robust and agile at the same time. Conventional and artificial intelligence will help to provide risk analysis, and early warnings, as well as valuable support in managing disruptions.”
Author: John Walton
Published: 2nd July 2024
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