'Complex' supply chain issues affect 2022 aircraft deliveries

Although there is a general sense of optimism about 2023, many in aviation can’t shake the feeling that the industry is still dancing on a knife’s edge.

With global supply chain challenges likely to continue well into the new year, it’s no wonder. The unstable supply chain was part of the reason the world's biggest planemaker, Airbus, fell short of its 2022 delivery goals. Airbus announced on 10 January that it had delivered 661 aircraft, missing its stated target of “around 700” commercial aircraft.

At an industry conference in late November, Airbus CEO Guillaume Faury said the supply chain crisis is likely to be "longer than we thought a couple of months ago, more challenging and more difficult."

“I would not expect things to start getting better before the middle of next year [2023, ed.] and we don’t expect the situation to be normalized before the end of [the] year," he said, according to Bloomberg.

Faury later told reporters that the “very complex” supply chain situation will be the company’s “main challenge” in 2023. Primary rival Boeing delivered 480 aircraft in 2022. Although that was significantly more than the 340 delivered the previous year, Boeing reduced its 2022 delivery target twice over the course of the year. Announcing the year's final numbers, Commercial Airplanes President and CEO Stan Deal stressed the importance of "driving stability within [...] the supply chain" in the coming years.

The issue isn't just impacting the airframers. At the recent MRO Europe conference in London, the Satair Knowledge Hub conducted more than a dozen interviews. Supply chain challenges came up in each and every one.

Satair’s head of planning, Matthew Eli Eli, told the Knowledge Hub that it feels like the industry “has moved from one crisis to another”, with the snarled supply chain replacing COVID-19 as the industry’s biggest challenge.

“Our whole entire supplier base is feeling the strain of the constraints coming from reduced raw material availability on the market, manpower and also simply logistics supply chains constrained across the globe,” he said.

Shortage of materials and labour

As Eli Eli indicated, the crisis is due to a confluence of several factors. One is that much-needed resources are in short supply.

“There are certain components in the industry for a variety of aircraft, that are simply very, very hard to come by and very hard to get,” Joost Groenenboom, aviation principal at the consultancy ICF, said.

As we reported in June, a shortage of cast and forged components left major engine manufacturers unable to deliver as many engines as planned. Wiring, electronics and raw materials like aluminium and titanium have also been harder to obtain than usual.

While a lack of raw materials and general logistic challenges are universal problems plaguing nearly every industry, aviation faces the additional blow of a labour shortage that was worsened by the pandemic. Job cuts and early retirements spurred by the downturn are now making it harder for all sectors of the industry to keep up with the pace of recovery, including MROs.

“Just like we see a lot of challenges on turnaround times and delivery performance on the production side, the MRO sector is no different,” Matthew Jessee, Satair’s head of business development for global distribution, said. “They also have challenges with turnaround time and performance issues.”

For at least one sector of the aviation value chain, however, the crisis is also presenting an opportunity. With new parts harder to come by, many are now looking to the used serviceable materials (USM) market to fill the gap. Lee McConnollogue, CEO of the teardown and part-out company eCube, said that the crisis is driving growth for his business and the USM market as a whole.

“People are now seeing USM as really the only way to circumnavigate the challenges that the OEMs have in supplying new product,” he said. “Longer term, I think USM will become normalised and we’ll see it as a key component of any supply chain.”

Given the cost and environmental benefits of USM, McConnollogue was hopeful that “these hopefully short-term supply chain issues will have a lasting long-term legacy for all of aviation.”

A more proactive and responsive supply chain

Other MRO Europe attendees we spoke with agreed that there could be a silver lining to the supply chain crisis. There was a sense that, in the words of Groenenboom, “the normal and the standard solutions don't really work anymore.”

Eli Eli said that the industry needs to get better at using the “treasure trove of data” at its disposal to better predict and automate processes that can relieve some of the congestion of the supply chain.

“In terms of supply chain planning, in order to process the data which we have today, we require a form of automation, connecting all the data that can kick out a forecast so we can most intelligently plan for our customers and secure the material availability,” he said.

Jessee agreed that the supply chain needs to become more forward-thinking.

“We're talking about a supply chain that typically has very long lead times. It cannot be a just-in-time reaction when you're talking about complex machine-finished goods,” he said. “We can help stabilise this by getting back to proactive programme management, less reacting to things and being more proactive about what the future looks like [and getting] a little more clarity around forecasting fleet compositions and customer dynamics.”

Too global to go local

The supply chain problems have led to a chorus of critics calling for a rethink of the way goods are moved around the world. The consultancy Roland Berger wrote in November 2021 that the aviation supply chain “is no longer robust enough” and urged OEMs and suppliers to move toward a “local for local” model.

Jessee said that he could see the logic in that suggestion but ultimately finds it unfeasible, considering that many vital raw materials are only available in certain parts of the world.

“While it does make sense to try to keep things localised if you can when you look at our industry, I still think we're too global to get really local when you start getting granular on things like raw materials,” he said.

The Satair Takeaway

As Jessee suggests, aviation’s global supply chain model is not going anywhere. And for the time being, neither are the system’s inherent problems. While the global supply chain crisis is likely to subside this year – some analysts predict “a full reversal to normality” by as early as March – the industry could do itself a lot of favours by using the crisis as a catalyst to build a more proactive and dynamic supply chain.