LSCM

PROJECT
Submitted to: Submitted by:
Rajendra Todalbagi CHAYAN CHANDRA (17058)
Associate Professor- Operations MONISH (17069)
REGINA VAZ (17080)
SAHIL SILHI (17082)
VISHAL (17094)
SHOBHITA (17099)
AEROSPACE & AVIATION
ATR & BOMBARDIER
GROUP-3
 General Industry analysis
• Aerospace is the human effort in science, engineering and business to fly in the Earth and surrounding.
Aerospace organizations research, design, manufacture, operate, or
maintain aircraft and/or spacecraft. Aerospace activity is very diverse, with a multitude of
commercial, industrial and military applications.
• Technology that is a direct result of coding or products created by industries and redesigned for an
alternate purpose. These technological advancements are one of the primary results of the aerospace
industries, with $5.2 billion worth of revenue generated by technology, including computers and
cellular devices.
• Over the past 30 years the airline industry has seen a number of changes, such as the increased market
share of low-cost carriers (LCCs) as well as facing its fair share of challenges. The next 30 years are
likely to be more turbulent, as a new wave of technological change and innovation unfurls
Supply Chain of Industry

 Strong growth from major commercial aircraft sales (excluding BGA, Helicopters) grew significantly over the last year.
This strong growth has impacted rest of the industry (engine, component, Tier1-2 suppliers etc.), resulting in robust
growth for the entire Aerospace industry.
 Loss of military spending has made the Original Equipment Manufacturers (OEMs) focus more on the commercial
aerospace segment. With Boeing and Airbus reporting significant backlogs over next decade, Aerospace industry demand
across manufacturing segments (aircraft, engine and Tier 1 components) is expected to exceed $5.6T over next 20 years
 Aerospace OEMs are employing LEAN principles such as Just-in-Time deliveries to their assembly lines, the Kanban system
for managing inventory, and point-of-use delivery for kits.
 Aerospace OEMs are sourcing sub-systems rather than piece parts and thus, reducing the number of suppliers in order to
improve their supply chain efficiency. Although currently 80%-90% of raw material inventory is pulled by OEMs, the trend
is growing towards Vendor Managed Inventory (VMI), where suppliers own the inventory and are responsible for moves to
the OEM – fundamentally changing the supply chain equation.
 Low cost airlines are relying heavily on PBH contracts for their engine and component maintenance. In addition to
outsourcing their heavy frame maintenance to MROs, some low cost airlines have even started outsourcing their complete
line maintenance as some low-cost airlines do not own any spare parts inventory.
 ATR

• It was established in 4 November 1981, ATR is a joint partnership

between two major European aeronautics players, Airbus and ATR. ATR has
sold nearly 1,700 aircraft and has over 200 operators in more than 100
countries. Every 8 seconds, an ATR turboprop takes off or lands somewhere
around the world. Toulouse, Southern France based turboprop aircraft
manufacturer ATR is the world leader in the market for regional aircraft up
to 90 seats
• ATR uses the latest manufacturing techniques and high-tech
engines. ATR utilizes the highest amount of advanced, composite
materials among regional aircraft. Approximately 20 percent of the ATR
42 and ATR 72 structure is made of composites, which helps reduce fuel
burn and emissions.
 Bombardier

• Bombardier is the world’s leading manufacturer of both planes and trains.

Looking far ahead while delivering today, Bombardier is evolving mobility
worldwide by answering the call for more efficient, sustainable and
enjoyable transportation everywhere.
• Our vehicles, services and, most of all, our 69,500 employees are what
make us a global leader in transportation.
• Bombardier is headquartered in Montréal, Canada and our shares are
traded on the Toronto Stock Exchange (BBD). In the fiscal year ended
December 31, 2017, we posted revenues of $16.2 billion.
 Supply Chain Strategy of ATR

• The supply chain is a key element of ATR business model. Suppliers are directly involved in
creating value for the company and they contribute to company reputation.
• ATR acquires about 80% of goods and services from suppliers located in the main countries
of operation: Italy, UK, USA and Poland.
• ATR intends to build long-term relationships with its suppliers, based on principles of
transparency, integrity and trust.
• Suppliers must have a behaviour that is consistent with the values and behaviours
expressed in the Code of Ethics and in the Anti-Corruption Code, also recalled by the
Supplier Code of Conduct.
 Supply Chain Strategy of Bombardier

• The objective of the Procurement organization is to ensure Bombardier

Transportation maintains its lead position in the aerospace industry. They aim
to continuously optimize our supply chain and ensure efficient project and
commodity management.
• Our global supply chain is constantly evolving and increasingly integrated within
our activities. More than ever, our suppliers' expertise plays a critical role in
designing and manufacturing advanced components for our products. This
makes suppliers key partners in our success.
• In Bombardier Transportation flawless execution of our projects is one of our
priorities. We expect commitment and performance from our suppliers in order
to support this initiative. Our supplier improvement teams constantly measure
and review the performance of our suppliers, delivered goods and services. We
have numerous Continuous Improvement activities with our suppliers, work out
Supplier Development Plans and establish strategic partnerships.
 Competitive Strategy of ATR

• We constantly explore new ideas to turn them into new technologies that
improve our world and design the future one. We invest in research and
development to provide sustainable and competitive solutions.
• Integrating the technological excellence of our laboratories and the highly
specialized know how of our technicians and engineers, we work to make
the world a safer place, protect people.
• We are on their side, with a long-term commitment, to manage products,
systems and services. Providing reliable, timely and customized solutions
that guarantee the cutting-edge technology, maximum operational
efficiency and security for end users.
 Competitive Strategy of Bombardier

• to move the world through our enterprise strategy – a roadmap that

drives our commitment to solve for the world’s ever-growing need for
mobility through innovation.
• The centrepieces of our strategy are three interrelated growth strategies
that help to innovate, partner and operate as a responsible and industry-
leading company.
• Over our 70-year history, Bombardier has built an extensive and diverse
portfolio of category-defining mobility solutions that set us apart from our
competitors.
• By strengthening and expanding our global presence we have the
opportunity to capture new business, optimize our cost structure and
strengthen Bombardier’s global leadership and competitiveness.
 Facilities ATR

 ATR’s Aircraft Division is engaged in the design, development, production,

logistics support for trainer aircraft, and the relevant integrated systems
for crew (air and ground operators) training, military and tactical transport
aircraft, special mission’s multi-role aircraft, regional twin-engine
turboprop aircraft, unmanned systems and moreover the manufacturing of
nacelles
 Facilities of Bombardier

• Bombardier Aerospace has manufacturing, engineering and services

facilities in 27 countries. The production facilities are located in Canada,
the United States, the United Kingdom (Northern Ireland), Mexico and
Morocco.
• Montreal Trudeau International Airport – Headquarters. Challenger 300,
605 and 850 final assembly and flight test. Global family interior
completion.
• Belfast, Northern Ireland – Aircraft fuselage, engine nacelle, wing
manufacturing and assembly facility.
• Wichita, Kansas – Learjet family final assembly and flight test.
Sourcing and Procurement at ATR

• Suppliers are directly involved in creating value for the company

• ATR acquires about 80% of goods and services from suppliers located in the
main countries of operation: Italy, UK, USA and Poland
• It builds long-term relationships with its suppliers, based on principles of
transparency, integrity and trust
• Procurement process is handled by Leonardo Global Solutions (LGS) and the
Purchasing units of the Divisions, each one for Its area of expertise
1. Centralised procurement activities
2. Procurement support services
 Sourcing and Procurement at Bombardier

• Matrix organisation-organized by divisions and commodities

• For each commodity there is a lead buyer in charge of developing a sourcing
strategy including a preferred supplier panel.
• Divisions and site procurement teams are in charge of operational
procurement.
• While the company imports the steel needed, it sources the transformers and
motors from local companies. About 30% of the manufacturing process and
equipment's sourcing is localised, which the company wants to take above
50%.
 Challenges of ATR

• Continued rise in asset integrity management.

• Handling of new composite produced aircraft.

• Increasing overall production costs.

• Late arrival of materials like lavatories and business class seats from factories.
 Challenges of Bombardier

• Quality control issues at the manufacturing level

• Non-standardization in many of the thousands of parts causing delays

• Lack of coordination between global production

• A supply chain backup causing, at various times, manufacturing employees to

be laid off due to a lack of parts

• Solution - Innovation in field of supply chain design - C-Series aircraft

 Analysis of ATR

 Growth and competitive positioning

• Book-to-bill ratio, as an indicator of future revenues.
• Revenues and delivery units, as measures of growth.
• Market share (in terms of revenues and units delivered), as measures of our
competitive positioning.
 Customer satisfaction
• On-time aircraft deliveries, as a measure of meeting our commitment to
customers.
• Fleet dispatch reliability, as a measure of our products reliability.
• Regional availability of parts and material to support customer requests.
 Analysis of Bombardier

• Responsible procurement

• Human rights and UK modern slavery act

• Supplier relationship management

• Risk management in the supply chain

• Capacity building
Financial Analysis of ATR
RATIOS 2015-16 2016-17

DAYS OF RAW MATERIALS 158.01 157.09

DAYS OF SEMI FINISHED GOODS 89.29 90.2

DAYS OF FINISHED GOODS 4.11 4.65

LENGTH OF SUPPLY CHAIN 251.41 251.94

INVENTORY TURNOVER 1.59 1.64

ASSETS TURNOVER 0.47 0.49

RETURN ON ASSETS 0.01 0.02

SUPPLY CHAIN COST 1532.8 1673.4

SUPPLY CHAIN INEFFICIENCY RATIO 0.13 0.13

SUPPLY CHAIN WORKING CAPITAL 4600 4519

SUPPLY CHAIN WORKING CAPITAL PRODUCTIVITY 2.6 2.88

Financial Analysis of Bombardier

Supply chain cost 2205.55 1899.9

supply chain inefficiency ratio 12.1371 0.11628

supply chain working capital 4,411 3,896

supply chain working capital productivity 4.1197 4.19379

ROA -0.2332 -0.043

Asset turnover 0.79343 0.71581

inventory turnover 2.60418 2.79586

 Recommendations
 Inventory Is Not an Insurance Policy. Inventory stores are rising in this cyclical
industry. We are sounding the alarm. The industry needs to re-examine
inventory policies and practices to reverse this growing risk.
 Raise the Bar on Risk Management. It is a fact. Supply chains are global and
the risk of disruption is increasing. Look to other industries, consumer
electronics especially, that have designed agile supply chains to counter the
risk of unexpected events knocking production offline for weeks and/or
months.
 Digitization of the supply chain.
 Conclusion

The aerospace & defense industry operates a complex supply chain with a
multitude of challenges. Growth is slowing. Governmental contracts are not only
shrinking but becoming more stringent. Operating margin is declining and
inventory is climbing. An increased focus on supply chain excellence can help.
Other industries are leading and aerospace & defense manufacturers can regain
lost ground quickly with renewed focus.
THANK YOU!!!!