Why Airbus Runs a Superplant Manufacturing Operation

Executive Summary

• Due to outsourcing, Airbus runs a superplant, which is multiple plants feeding master plants.
• We cover this superplant concept.

Introduction

Superplant is a container term for three functionalities that allow locations that are traditionally considered “separate” to be planned as they are part of one giant plant or superplant. Superplant is the most accurate modeling of location interdependencies for production and supply planning provided by standard advanced planning functionality. Superplant alters the assumptions along which a planning system makes decisions. Therefore, it can see relationships that software, which lacks these functionalities, cannot access.

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Superplant allows for manufacturing processes to be planned and integrated across plants. It will enable sources of supply to be automatically and dynamically selected based upon changing circumstances. It allows the integrated planning of external partner plants to be treated as if they were internal plants. These three functionalities are logically grouped under superplant as they all relate to improving the planning scope on how locations are treated when solving a combined supply and production problem. Superplant is characterized by an expansive and integrated view of planned locations, the ability to react to changes in capacities nimbly, and redirect to other supply sources. Superplant is not a management technique. It is a particular set of software capabilities that must be configured, tested, and accounted for in various areas, from user training to integration to ERP systems.

Background on Airbus

Airbus began as a consortium of aerospace manufacturers made up of companies from four countries (France, Germany, the UK, and Spain) with manufacturing operations in these four countries and China. Airbus is primarily a commercial aircraft manufacturing but produces some military aircraft. Airbus has been quite successful at managing international manufacturing operations and is a company that is headquartered in Toulouse, France, but it highly international. Airbus has about the same number of aircraft orders per year as Boeing.

Airbus’s Superplant

Airbus operates a superplant because they coordinate manufacturing across multiple plants to produce an airplane’s finished product. Airbus has done this to a far higher degree than Boeing, and this is evidenced by a particular plane they created designed to transport aircraft subassemblies.

Airbus, however, has a number of other plants in different European locations, reflecting its foundation as a consortium. An original solution to the problem of moving aircraft parts between the different factories and the assembly plants is the use of “Beluga” specially enlarged jets, capable of carrying entire sections of fuselage of Airbus aircraft. – Wikipedia

The specially designed Airbus Beluga heavy-lift airplane is what ties together the Airbus Superplant. Aircraft of this type can carry products that would be tough to carry any other way. Secondly, the items being carried by the Airbus Beluga are more significant in volume versus their weight.

Airbus has also developed specialized loading equipment to load and unload the Airbus Beluga and used at all of the plants to which the Airbus Beluga flies. All the Airbus Beluga does is transfer subassemblies and components between Airbus plants.

The Boeing Article on Manufacturing Outsourcing in Aerospace

In a 2001 article by Dr. Hart-Smith, an employee at Boeing, he states that there are definite advantages to the superplant approach. Although he does not refer to it as “superplant” specifically in the article, The article is more focused on outsourcing generally. However, the parallels are evident from the quotation followed by Airbus.

The clear advantage of having a small number of jet engine manufacturers, separated from the airframe manufacturers, is that there are economies of scale, a level of competition, and the means of retaining a critical mass of technical expertise. These are the ideal conditions under which out-sourcing makes sense. The same is true in the avionics industry. It is for these reasons that Airbus makes extensive use of specialty shops in the production of detail parts for their aircraft. A small number of shops produce the small-machined parts for all aircraft made on the Continent. Other factories concentrate on the production of long skinny-machined details, like wing skin planks for the Mystére aircraft. Restricting the manufacture of stiffened panels to only a few sites made it possible to automate this process and introduce self-assembling (jigless) structures long before they were used on the 757. The reason for this level of automation, at the start of the process is primarily one of precision, to reduce the costs of subsequent assembly steps. All of the horizontal tails are built at one site, in Spain, and all of the wings in the United Kingdom, with large wings at Chester and the small wings at Bristol. – Outsourced Profits – The Cornerstone of Successful Subcontracting

Dr. Hart-Smith then explains why this is the case.

The underlying principle behind this kind of work-share arrangement is that it is the only way, for low-volume production, to economically justify the use of cost-saving equipment that could not be justified if it had to be replicated and under-utilized at a far greater number of sites (emphasis added). In addition, the great majority of Airbus production, other than as offset for sales, is confined within a small area, which has reduced transportation costs with respect to those incurred by the more dispersed production used by the former McDonnell Douglas Corporation. – Outsourced Profits – The Cornerstone of Successful Subcontracting

Plant Upgrade Investment Planning

When Airbus made its factory investments for the Airbus a330 and the Airbus a340, it did so by reviewing all of its plants and determining the appropriate investment location based upon current capabilities and several other factors.

In preparation for production of the Airbus a330 and Airbus a340, Airbus’s partners invested heavily in new facilities. In England, Filton was the site of BAe’s £7 million investment in a three-storey technical centre with 15,000 m2 (160,000 sq ft) of floor area. BAe also spent £5 million adding a new production line to its Chester wing production plant. In Germany, Messerschmitt-Bölkow-Blohm (MBB) invested DM400 million ($225 million) at various manufacturing facilities in the Weser estuary, including at Bremen, Einswarden, Varel, and Hamburg. France saw the biggest investments, with Aérospatiale starting construction of a new Fr.2.5 billion ($411 million) final-assembly plant adjacent to Toulouse-Blagnac Airport in Colomiers; by November 1988, the pillars for the new Clément Ader assembly hall had been erected. – Wikipedia

How Common is the Superplant Requirement?

The advantages of a factory specializing that are configured and leveraged by Airbus are common throughout manufacturing. Many companies perform integrated manufacturing using a combination of manufacturing facilities. However, almost every one of them performs these tasks with inappropriate tools. I have witnessed this firsthand with several of my clients. One reason for this is that multi-plant capable planning software is not known to exist. In fact, up until recently, this type of multi-plant planning had few software solutions that could plan this way. Almost all supply and production planning applications have been developed to allow the planning of plants as isolated islands. This means that only the supply planning system can see outside of any one location. However, this approach will not work for super plants, which have routings that span multiple plants. With multi-plant planning capabilities, a company can adjust in a very flexible manner. This is explained in the quotations below from the Superplant book.

A superplant not only has the ability to evaluate whether to place demand onto internal resources, but also to leverage subcontract and contract manufacturing partners in a similarly flexible manner based upon circumstances. A superplant can perform subcontracting, but may also be able to produce the same item internally, meaning that internal production is compared against subcontracting production.

A superplant can constrain a routing, regardless of how many plants it passes through based upon a bottleneck/drum resource that resides in any one of the plants.

A superplant can nimbly evaluate the best location to source a product automatically and as part of the standard planning run. A superplant can flexibly alter its source of supply based upon the setup of as many sources of supply as actually exist, and allowing the software to make the determination between alternatives.

The best way of thinking about the output of superplant planning is that the output depends upon the particular circumstance. In some circumstances one alternative is selected and in another circumstance a different alternative is selected. These circumstances change all along the planning horizon meaning that different alternatives are the best to select at that point in time.

Introduction to Multi Plant Planning

Multi plant planning is how multiple plants can be accounted for by planning the relationships between locations. You will learn how multi plant planning works versus the traditional way of planning all supply network locations.

What Is Multi Plant Planning?

Multi-Plant Planning or sometimes called multi-site planning, is the ability to model and make decisions to schedule production between alternate internal production locations, producing the same product. In some cases, this is comparing processes that would produce a finished good; however, in other cases, it is a component or subcomponent which is input to another production process at a downstream factory. From the software perspective, multi-plant planning combines aspects of supply planning and production planning into a single planning run. 

The Ability to Plan a Single Virtual Plant (for some products)

Multi-plant planning functionality disrupts the traditional division of responsibilities between the supply planning system and the production planning system. For software to meet the criteria of being multi-plant capable, it must meet the following criterion:

1. It must have the ability to create alternate routings that span locations. Multi-facility planning can treat all resources and all plants as if they are part of one enormous “superplant.” This functionality is selectively activated when it meets the business requirement.
2. It must have configurable intelligence which can allow it to make decisions among alternative routings.

The Current and Traditional Supply and Production Planning Systems

In a traditional (and by far the most common types of applications today) supply planning/production planning application, if a company were to have 100 resources across ten factories, any resource assigned to one factory is unavailable to be combined with other resources in other plants. Under the current and traditional approach, the supply planning system controls all logic and flow between the supply network locations. The production planning activity within a plant is limited to just that plant.

This software design was colored by the assumption that production planning occurs in a parochial manner. Once this concept was adopted, all vendors, roughly speaking, adopted the same assumption. However, the assumption is not always correct. Factories do not merely accept raw materials and ship finished goods. Instead, many factories receive raw materials and ship out sub-components. Other factories receive sub-components and ship out components or subassemblies. Many possible combinations of factories are possible and always have been.

Doing More than MRP

In the history of supply chain planning, methods have moved from the more oversimplified to the more accurate as time has passed. The ability to model more accurately has improved both with software and hardware improvements. For example, MRP, at one time, the leading edge of supply and production planning, uses some highly simplified assumptions to generate its planning output. Multi-plant planning is yet another example of this general increase in modeling accuracy.

Regarding recent developments in supply chain software, multi-plant planning shares many similarities with the supply planning technique of multi-echelon planning (see link for definition). Both methods/technologies expand planning decision-making to be location agnostic. 

How Multi-Plant Planning Differs from the Traditional Approach

With multi-plant planning software, each resource would be assigned to a particular factory. Routings would be allowed to together a series of resources through a single factory (the standard approach) or more than one factory. This requires transportation between factories rather than simple stock movements between workstations within a single factory.

1. There may be only one routing between more than one plant for a particular product in some cases. In that case, the application is performing simple multi-plant planning.
2. In other cases, the application may have multiple routings — so-called alternate routings –, and the application must decide upon the best routing for a particular circumstance.
3. The application may be comparing routings that are entirely contained within one factory versus routings, which together resources from multiple external plants.

Any number of scenarios is possible. However, the core of functionality is first the ability to have routings across factories, and second, a way to make decisions among alternatives. 

The Superplant

Superplant uses specific planning functionality to most efficiently manage the location dimension of supply and production planning. Secondarily it is the use of financial inputs to drive the functionalities.

Detailed Description

Superplant is a container term for three separate functionalities. These functionalities allow locations that are traditionally considered “separate” to be planned as they are part of one giant plant or superplant.

Superplant is the most accurate modeling of location interdependencies for production and supply planning provided by standard advanced planning functionality.

Superplant alters the assumptions along which a planning system makes decisions. It can see relationships that software, which lacks these functionalities, cannot access.

1. Superplant functionality allows for manufacturing processes to be planned and integrated across plants.
2. Superplant functionality allows sources of supply to be automatically and dynamically selected based upon changing circumstances.
3. Superplant functionality enables the integrated planning of external partner plants to be treated as internal plants.

These three functionalities are logically grouped under superplant as they all relate to improving the scope of planning. They do so on how locations are treated when solving a combined supply and production problem. Superplant is characterized by an expansive and integrated view of planned locations. And the ability to nimbly react to changes in things such as capacities and redirect to other sources of supply.

Superplant is not a management technique. It is a specific set of software capabilities that must be configured, tested, and accounted for in various areas, from user training to integration to ERP systems.

The Superplant is made up of three leading-edge software functionalities.

1. Multi-Plant Planning: (sometimes called multi-site planning) is the ability to model and make decisions to schedule production between alternate internal production locations, producing the same product. In some cases, this is comparing processes that would produce a finished good; however, in other cases, it is a component or subcomponent which is input to another production process at a downstream factory. From the software perspective, multi-plant planning combines aspects of supply planning and production planning into a single planning run. While most production planning software treats each factory as an island, they cannot account for production capacity across all plants.  Multi-plant planning functionality disrupts the traditional division of responsibilities between the supply planning system and the production planning system. (select for definition)
2. Multi-Source Planning: Multi-source planning is the ability of planning software to have more source of supply, such as two locations (Location A and Location B) which supply a third location (Location C) for a product, and for the software to alter its source determination based upon any number of factors. One example of multi-source planning would be that since Location A has a lower cost of production, that Location A is typically selected by the software to supply Location C. Except in instances where Location A lacks the capacity to meet the distribution demand at Location C. True multi-source planning should be able to immediately adjust the source determination, between any number of locations, in an automated fashion. (select for definition). Several software vendors propose Multi-source planning, but few can pull off multi-source planning in production, a non-prototype environment. Multi-source planning allows the flexibility to move to the best supply source, which changes based upon the timing (in many cases). To perform multi-source planning, the software needs to have an optimizer.
3. Subcontracting/Contract Manufacturing Planning: Subcontract/contract manufacturing planning can plan subcontract locations in a seamless fashion as if the subcontract locations were internal plants. (select for definition)

Superplant functionality can process a problem with:

• Multiple manufacturing processes across different factories.
• With flexible sourcing based upon changing circumstances.
• With the ability to plan subcontract locations as if they are internal locations.
• An environment is created where the integrated factories can be considered as a “superplant.”

This is where each factory serves as a resource in one global “production line.” It is where locations with multiple sources of supply can dynamically select the best source of supply.

The General State of Superplant Functionality

The Superplant Concept is both a goal, but also a test of supply chain planning software. For an application or set of applications. As the Superplant Concept’s functionality is spread across supply and production planning applications, the software must have all three functionalities.

Currently, extremely few applications can perform multi-plant planning—the most difficult of the Superplant Concept’s functionalities.

Multi-source planning and subcontracting planning are far more common functionalities. They are also common problem areas for many vendors.

This means functionality in this area often does not match the statements made by software vendors. Consequently, it is far more frequently the case that manual decision-making on the part of planners is used instead of software functionality. This is the case for both multi-sourcing and subcontract planning.

Financial Implications to the Superplant Concept

Companies that successfully implement all three categories of Superplant functionality should receive significant financial benefits from doing so.

Superplant functionality allows the company to leverage its internal plants and sources of supply better. And also to better leverage its subcontractor even contract manufacturing partner plants. Financial impacts are both output and input to the Superplant Concept. Part of the Superplant Concept method is to use the profitability of different decisions to drive the decision-making within the application or applications.

Conclusion

Superplant manufacturing applies the ultimate in manufacturing flexibility for achieving the desired objective. While the strategic decision to integrate plants can be performed with financial analysis, Dr. Hart-Smith argues in his paper for a more sophisticated way of determining to outsource – a method that can be applied to companies that would like to take advantage of the benefits of multi-plant manufacturing. To plan a superplant, it is important to have access to superplant capable planning software.