In any relationship, public displays of commitment can be important. In business, it means that parties take a position knowing they are in full view of their peers.
Setting the stage for such a display is important for Matthais Naumann (pictured below), senior vice-president, global information management services, at defence and aerospace company EADS.
Part of his role has been to lead the development of AirSupply, an online supply chain hub created by five leading European aerospace manufacturers.
Hosted in the cloud by supply chain supplier SupplyOn, AirSupply allows suppliers to work with Airbus, Dassault Aviation, EADS, Safran and Thales through a single portal. Getting these founders to agree and commit to application specifications was essential, says Naumann.
Business process leaders, largely from the procurement function at each of the partners, took part in a signing ceremony in September 2009, in front of their counterparts, to show that they agreed to the system’s business requirements following a “very, very intensive workshop”, he says.
In a similar vein, senior managers from the manufacturers’ IT departments made a display of commitment to a solution design dossier in December 2009, he adds.
Breaking supply chain bottlenecks
We are going for a seamless communication from customer down to tier two, to erase all potential failures
Matthais Naumann, EADS
The resulting data hub started to go live at the beginning of 2012. It is now used by 500 of the 1,000 or so direct suppliers to the aerospace giant.
In October, it hit another major milestone. Liebherr Aerospace signed up both as a supplier and as a customer.
By supporting firms in this dual role, Naumann says the hub will help avoid supply chain bottlenecks which threaten the aerospace industry.
The sector takes these problems seriously. In 2010, Jim McNerney, Boeing's chief executive officer, said the supply chain was the “key question” in increasing capacity following the 2008 downturn.
By cascading information about contraction or expansion in demand more rapidly and accurately to second tier suppliers and beyond, Naumann says companies signed up to AirSupply, as a customer and a supplier, will help to mitigate the danger of supply chain bottlenecks – where second or third tier suppliers are unable to meet demand and hold up production at top tier manufacturers.
“Our fear, in times of the ramp up, which we fortunately have, is sooner or later we will have a bottleneck somewhere in our supply chain which we do not identify early enough,” he says.
The supplier portal not only helps avoid supply chain bottlenecks, it allows suppliers to interact with a variety of customers through a single channel. For the founding manufacturers, it means they get to use the same, best-in-class portal, developed specifically for their industry based on the technology SupplyOn built for the automotive industry, says Naumann.
The AirSupply system takes input from manufacturers’ enterprise resource planning (ERP) systems. These forecasts for materials resource planning (MRP) are resource intensive and done over weekends. These outputs go into the AirSupply hub, which then creates the messages which are distributed back to the manufacturers, each of which will have messages from multiple customers.
These AirSupply messages are then mapped to the suppliers' own ERP systems, which calculate the extent to which the supplier is able to meet demand. The results are then uploaded to the AirSupply system and transferred to customers.
These steps exploit existing SupplyOn and SAP data tools, using IDoc as well as XML formats. They can be followed by suppliers which use the system in a customer mode, using their customers’ data for collaboration with their own suppliers, improving data quality and reducing error.
“We are going for a seamless communication from customer down to tier two, to erase all potential failures which can happen through human interaction,” he says.
Enabling accurate forecasting
Previously, top tier manufacturers did not know the accuracy of the data they were receiving from top tier suppliers.
“In the past, when we received a forecast confirmation we were not so sure how it was created. Even when the forecast sounded good, confirming ‘we are able to deliver to your requests’, it was unclear whether it was built on data from telefax, spreadsheets or whatever,” says Naumann.
Although AirSupply is designed to address these concerns, creating a seamless data flow through the supply chain does have its technical challenges.
BoostAeroSpace, a joint venture formed by Airbus, Dassault Aviation, EADS, Safran and Thales, was meticulous in recording every technical detail of the process of extracting data from the EADS ERP systems for AirSupply and mapping AirSupply messages into customers’ and suppliers’ own ERP systems.
From these records, BoostAeroSpace has created comprehensive documentation and training programmes to help customers and suppliers connect with the hub, says Naumann.
However, he admits that all the suppliers connecting to the hub so far have been using SAP.
Tim Payne, Gartner research director, supply chain research group, says examples of supply chain hubs exist in industrial chemicals, automotive and micro-electronics. Notable suppliers, aside from SupplyOn, include Elemica for chemical companies and Exostar for the electronics industry.
Building such hubs can be difficult where one firm is dominant in the sector, he says. This is why transparent governance is important from the start.
“Sometimes a player in a supply chain has got an awful lot of power and they can pressure customers or suppliers into agreement to use a platform and get a standard. Trying to influence this depends where you are in the supply chain,” says Payne.
“Getting buy-in is very important. They need to know it is not ‘if I win, you lose’. You need to set it up so that even the smaller players can understand that by getting involved there is something in it for them," he says. "The more connection and visibility there is in a value chain, the more everyone should benefit, if it is done in a fair and equitable way. It should not be seen by the master of supply chain coming in and wanting to reduce cost and get better prices.”
Read more about online supply chain hubs in manufacturing
Cloud for business transformation
The AirSupply roll-out also shows how powerful cloud computing is becoming, not just as a way of slashing start-up costs, but for deeper business transformation, says Payne.
“In these sorts of areas, there is a more tangible business benefit of it being a cloud. You get this community: it is one-to-many – one suppler to multiple customers. People can be linked up and that becomes a network. You can argue that there is a business value for cloud, not just a cost advantage,” he says.
EADS’ Naumann says the AirSupply system needed to be hosted in the cloud by an independent third party to avoid conflict between the founding partners over service levels.
“It was clear when we wanted to go for a common industrial hub there must be a common professional service provider with a contract and SLAs. Any claims go to them and not to us,” he says.
But to work with the supplier, the founding firms formed BoostAeroSpace, which gathers business requirements and manages the technical specifications of new versions.
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New entrants, such as Liebherr Aerospace, will sign a contract with SupplyOn and another small contract with BoostAeroSpace, which also runs the user groups.
Perhaps unusually, BoostAirSpace is in turn paid by its service provider, SupplyOn, because it takes on so much of the responsibility, such as extracting the new version requirements from customers and supporting the marketing and sales, says Naumann.
With this structured development method, which creates a commitment to business and solution specifications, BoostAeroSpace and SupplyOn have completed the 2012 upgrade, set to go live in December.
The most significant new feature allows buyers to manage shipments of equipment between suppliers, paid for by the top tier manufacturer. This occurs, for example, when video screens transfer from their manufacturer to the seat-maker, with Airbus picking up the bill.
The business requirements and product specifications are ready for the 2013 release, says Naumann. This is set to feature functionality to manage quality control in the system, as well as other new functions.
Completing each of these release milestones is managed with the conspicuous involvement of business leaders and IT department members. “When it comes to the end of the development, to avoid any bad surprises we organise a so-called 'factory review’. We travel to SupplyOn, and invite the business process owners to give input data and check whether the output data is correct,” he says.
From creation to sign-off, the AirSupply hub relies on the explicit commitment from its business owners. With a career path including spells as CIO at Eurocopter and Airbus Deutschland, Naumann knows this is what it takes to keep a collaborative project airborne.