See

discussions, stats, and author profiles for this publication at: https://www.researchgate.net/publication/301215392

Supplier Involvement in the Development of

the A380 Super Jumbo

Conference Paper · April 2009

CITATION READS

1 1,731

2 authors:

Thomas E. Johnsen Michael Andrew Lewis

Politecnico di Milano University of Bath
63 PUBLICATIONS 1,852 CITATIONS 60 PUBLICATIONS 1,689 CITATIONS

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Dynamics of governance (dys)function View project

Project ION Universities of Bath, Cambridge & Brighton View project

All content following this page was uploaded by Thomas E. Johnsen on 12 April 2016.

The user has requested enhancement of the downloaded file.

 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

Supplier Involvement in the Development of the A380 Super Jumbo

Thomas E. Johnsen & Michael Lewis

Summary
Supplier involvement in product development is a flourishing area of research. This paper
reports on supplier involvement in what is perhaps the most complex and challenging
product development programme to date: the development of the Airbus A380 aircraft.
Using an in-depth case study research method, the authors examine the technological
innovations and challenges of the A380 and explore how Airbus had to change its sourcing
strategy to accommodate the A380 challenge, and the extent to which Airbus sought to
reach into distant supply network relationships in identifying innovative solutions for the
A380.

Educator and practitioner summary:
The Airbus A380 programme represents a highly complex new product development project.
Understanding the challenges of managing supplier involvement in such a complex and
challenging context, is relevant to anyone seeking to understand the interface between
purchasing and supply management and complex product development.

Keywords: Supplier involvement, innovation, product development, Airbus A380

Introduction
Following numerous delays Singapore Airlines took delivery of the first of its 19 super
jumbos on 15 October 2007, and ten days later the world’s largest airliner lifted into the
skies above Singapore on its first commercial flight from Singapore to Sydney. On 18 March
2008 Singapore Airlines landed its first A380 at London Heathrow, completing the plane's
first-ever commercial flight to Europe.

The baseline A380-800 version seats 525-passenger in its tri-class layout or up to 853
passengers in full economy class configuration. To appreciate the sheer scale of the structure
it is worth noting that the chord of the A380 wing at the root (17.7m) exceeds the span of
one A320 wing by 3.2m. It completes the Airbus product range by finally fielding an airliner
to rival Boeing’s 747 and marked the coming of age of the European group as a fully
integrated company. It is a tremendously risky venture. Commercially, Airbus and its main
rival Boeing fiercely dispute the market projections for the A380-size category: Airbus
predicting a market of almost 1,100 aircraft carrying 500+ passengers, while Boeing forecast
demand for just 334. Technically, the A380 programme might appear as “conventional” as
any aircraft 30 per cent bigger than its predecessors can be, but the plane is actually a
combination of incremental improvements, entirely new technologies and radically
redesigned systems. Organisationally, the programme necessitated the creation of an
entirely new Airbus company and specific technologies have been procured and developed
using a range of collaborative and market-based mechanisms (not to mention the ongoing
politics of the funding arrangements).

The estimated cost of developing the Airbus A380 is around $12 billion although higher
estimates have been mooted. This cost and time constraint has put major demands on
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

aircraft developers to work more closely with the supply base in an effort to share risks and
rewards through the formation of partnerships and joint ventures; these are seen as key to
leveraging technologies and capabilities within the entire supply network. To compound the
new supply base and industry changes, and due to an increase in aircraft developments by
both Airbus and Boeing, there is a severe drain on design and development resources
throughout the globe. It is within the context of increasing technological complexity and
sophistication, levels of investment, and shifting supplier responsibilities and power that the
need for supplier involvement in aircraft development is growing.

This paper explores the role of supplier involvement in the complex and challenging
development of the Airbus A380 aircraft. We begin by providing an overview of the
development process of the Airbus A380, briefly explaining the background to the venture
and outlining the technological challenges faced by Airbus and its suppliers. We explore the
nature of and changes to the supply network supporting the A380 development and
production. Having introduced the context of the study we then explore the theoretical case
for supplier involvement in product development and innovation, focusing on the particular
challenges that stem from involving suppliers in a programme of the scale and complexity of
the A380.1 We report on an in-depth case study of the A380, focusing on the challenges
Airbus experienced in trying to involve suppliers in the development, and the extent to
which Airbus sought to reach into distant supply network relationships in identifying
innovative solutions for the A380.

Developing the Airbus A380: Background
Airbus began life as a joint venture between four European aerospace firms. This
Groupement d’Interet Economique (GIE) was established with the explicit intent of
challenging Boeing’s effective air transport monopoly. The sheer scale and complexity of the
A380 programme however, necessitated a transition to a more market-oriented corporate
entity and, in 2001, three Airbus partners merged to form the European Aeronautic, Defence
and Space Company (EADS), that owns 80 per cent of Airbus. The remaining 20 per cent was
owned by the UK partner, BAE Systems, until late 2006 when it sold its share to EADS for
about $3.9 billion.

Although a large number of A380 components are sourced from around the world (e.g.
Hawker de Havilland in Australia make the wingtips that are delivered to Broughton in the
UK), these European partners still define the principal geography of the A380 manufacturing
process (see Figure 1 below). This means that a complex combination of road, air, ship and
barge transportation is used in the delivery of parts to the enormous (500x250m) final
assembly line building in Toulouse.

INSERT FIGURE 1

Structure and Aerodynamics
The critical technological challenge for the airframe structure and aerodynamics lay in
‘blending’ innovative materials that would make it light enough to be operated profitably
with the more traditional materials that provide the backbone of an evolutionary design.

1
The term ‘programme’ tends to be used in the aerospace industry instead of ‘project’ reflecting the scale and
complexity of aircraft development. This is therefore the term adopted in this paper.
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

Traditional composites make up 22 per cent of the A380 by weight, aluminium 61 per cent,
titanium and steel 10 per cent, surface protection and miscellaneous materials four per cent
and ‘Glare’ (Glass-Reinforced fibre metal laminate) three per cent. Glare is one of the key
A380 technological innovations. A composite material (very thin layers of aluminium sheet
and glass fibre reinforced bond film), it is used for sections of the forward and aft upper
fuselage shells, crown and side panels. Manufactured by Stork Aerospace of the
Netherlands, the material is the culmination of 20 years of development work begun by Delft
University of Technology and the Netherlands National Aerospace Laboratory (NLR). Glare
offers 15-30 per cent weight savings compared with aluminium and offers enhanced fatigue
and corrosion resistance properties. The material can be cut, drilled, formed and milled
normally during manufacture and, equally significantly from an operational perspective, it
can be treated like aluminium by the operator for repairs. The A380-800 will incorporate 27
Glare skin panels covering a total area of 469 metres. 22 of the panels are being
manufactured by Stork at its new 12,000m2 Papendrecht facility, with the remainder being
second sourced under licence by Airbus itself at its Nordenham plant near Hamburg.
Incorporating such a large quantity of initially un-certificated material on the aircraft
required a significant amount of trust on Airbus’s behalf but Stork had established a track
record when they developed innovative thermoplastics for the A340-500/600 wing leading
edge. Extensive testing on Airbus’s 20m long “Megaliner” at Frankenwerder near Hamburg
also helped establish confidence.

Weight-saving strategies were also central to the creation of the 36.6m wings: ranging from
the use of a completely new structural layout, via the widespread use of composite ribs, to
new manufacturing processes and construction principles. Perhaps the most radical
departure for the wing was not the technology but the way in which that technology was
developed. Unlike every Airbus wing since the A310, the A380 wing was not put out to
competitive tender between the partners. Instead, the decision was taken to create a
collaborative arrangement whereby the partners would jointly select the design. One of key
innovations that this collaborative design arrangement generated for the A380 wing was the
“active” load management system. This means that once the plane is climbing away from an
airport, its fuel is pumped outboard and kept there until landing approach when it is
pumped back inboard.

Landing Gear
Goodrich is the largest single subcontractor on the A380 programme. Amongst a range of
components they supply the four-post main landing gear which is designed to bring the 560
tonne aircraft to a halt from 322 km/h in just 32 seconds. The nose gear (made by Messier-
Dowty in Velizy, France) stands five metres tall and the body-mounted main six-wheel body
landing gears measure five metres from wheel base to retraction point. Wheels and brakes
on all the gears are being provided by Dunlop Aerospace and Honeywell, which is designing
and manufacturing the metal matrix composite (MMC) wheels and brake piston housings.
Honeywell Aerospace Europe, claims a 25 per cent weight reduction against today’s “base
technology” by using the MMC wheels, and says the high-density carbon brake packs allow a
15 per cent volume reduction for the same heat pack mass and energy absorption capability.

Electrical Power
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

A Goodrich-Thales Avionics Electrical Systems joint venture is responsible for developing one
of the key systems innovations on the A380: a variable-frequency (VF) electrical power
generation system. This is the first time VF power has been available on a large commercial
aircraft. The major advantage of the VF system is the elimination of the complex hydro-
mechanical constant-speed drives.

Avionics
The A380 employs an Integrated Modular Avionics (IMA) architecture and is the first Airbus
in which modular avionics are fully networked with the flight management system (FMS).
Any input of data will alter related information on all affected system displays. Some
changes introduce conceptual simplicity. For example, A380 pilots control engine output by
selecting the required percentage of maximum thrust. Pilots to date have controlled the
engine by selecting either compressor rpm or exhaust gas temperature to achieve the
engine output they want. From an implementation perspective the A380 display and
controls layout is designed to be as close to the standard Airbus cockpit as possible, despite
its new modular internal architecture and capabilities, to enable an A340 pilot to complete
the A380 conversion course in seven or eight days’ training.

Hydraulics
There is almost one km of hydraulic piping and tubing in the A380 and the need to reduce
weight led Airbus to call for a radical rethink on hydraulics. Another first for a commercial
aircraft is the use of a partially decentralised hydraulic system with many of the flight
controls powered by electro-hydraulic actuators. Total weight savings realised by this
technological solution are about 1000kg.

Table 1 provides an overview of major component suppliers on the A380 and the estimated
value per shipset. The five largest contributors by value are Rolls-Royce, Safran, United
Technologies, General Electric, and Goodrich.

INSERT TABLE 1

This section has illustrated just some of the technological innovations involved in developing
the Airbus A380. The outsourcing of major components on the A380 necessitated major
changes in the ways in which Airbus integrated its suppliers into the development process. In
the following we briefly outline how Airbus had to develop its sourcing strategy to
accommodate these challenges.

The Airbus A380 Sourcing Strategy
Prior to the A380 programme, Airbus had a predominantly European procurement strategy:
the majority of its supply base was derived directly from the original French, German,
Spanish and British supply relationships. Moreover, because the partner companies
independently produced different types of component they each also had independent
procurement strategies. Given its importance to each of these suppliers, Airbus regularly
deployed an aggressive competitive bidding and supplier selection process based upon the
notion of ‘Total Cost of Ownership’. The selection amongst current and new suppliers was
based on performance in areas such as price, quality, supplier risk, integration to the supply
chain and total impact throughout the economic life of the product. Although Airbus
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

regularly applied pressure to decrease supply costs there was also some experimentation
with the introduction of techniques to improve the supply chain. These initiatives included
component standardisation, innovation financing, lead time reduction and risk sharing.

The scope and the ambition of the programme attracted worldwide interest which in turn
provided Airbus with a range of new sourcing opportunities. By expanding their supply base
globally (European companies lost their previous 70 per cent supply share), Airbus had the
opportunity of using the offer of work share packages, for instance where Chinese airlines
demanded a certain percentage of local manufacturing content in any planes purchased.
This allowed Airbus to access new markets and greater levels of financial risk sharing. This
promise of jobs and investment was particularly significant given the intrinsic political
challenges of selling planes into Boeing’s home US market: 50 per cent of contracts were
awarded to US companies.

The review of the supply base imposed through the A380 programme also led to a
rationalisation of the existing supply networks. Small suppliers were either replaced by
larger ones able to take on more work or lost their direct contact with Airbus by being
relegated to ‘sub-tier’ status. This created administrative cost savings for Airbus, by dealing
with fewer suppliers, and allowed them to increase their operational efficiency by working
with a more ‘modular’ process. The so-called Power8 restructuring programme launched in
2006 is set to further rationalise the internal organisation and significantly reduce the supply
base.

The A380’s parallel sourcing strategy combined some of the benefits of using single and
multiple sourcing by using sole-sourcing suppliers with similar capabilities to supply similar
components (of different aircraft models for example). Suppliers co-operated with Airbus to
reduce costs, assure quality, reduce time-to-market and increase operational efficiency,
whilst simultaneously competing on price and performance. This generated an environment
of creative tension. The most significant example of this strategy was evident in the A380
engines provided by both General Electric (GE) and Rolls-Royce. The operational choice was
left to the airline company buying/leasing the aircraft. For example, Emirates opted for a GE
engine, while Malaysia Airlines selected Rolls-Royce. There were similar sourcing strategies
for brakes and tyres driven by airlines in order to avoid dependency on any one major
supplier. More than one supplier for these components was therefore approved and
certified by Airbus to allow customers to negotiate deals with suppliers for the duration of
the aircraft.

Airbus thus faced not only a range of technological challenges in developing its super jumbo,
but also internal and external organisational challenges, especially in relation to the role of
suppliers in the development and subsequent production process. In the following we turn
to the theories that surround supplier involvement in product development and innovation
with a view to formulating specific research questions for our case study of the Airbus A380.

Theoretical Background
Supplier relationships are a focal point for innovative activity and play a critical role in
product development (Johnsen et al, 2006). Suppliers control product and process
capabilities and provide access to a wider network of suppliers, which contains a wealth of
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

potential knowledge and technologies. Interaction with suppliers and exploitation of a wide
supply network is essential to introducing new innovative product offerings to the market
place.

Both academics and managers have identified supplier involvement in product development
as a key factor in achieving competitive advantage. The academic literature on supplier
involvement in product development, which took form in the early 1980s (Imae et al, 1985;
Clark et al, 1987), has been expanding to include a wide variety of themes. For example,
Ragatz et al (1997) surveyed the role of formalised risk and reward sharing agreements, joint
agreement on performance measures, cross-functional and inter-company communication,
highlighting the sharing of proprietary information and the ‘not-invented-here’ syndrome as
common barriers. Other scholars have focused on the role of early supplier involvement,
thus highlighting the importance of involving suppliers at a much earlier stage than usually
practiced, ideally during concept development or early product planning (Handfield et al,
1999; Dowlatshahi 1998; LaBahn and Krapfel, 2000). Others have explored the role of
Purchasing in product development (Wynstra et al, 1999).

Given the complexity of modern aircraft it is not surprising that companies regard supplier
involvement as critical, and the role of supplier involvement in aircraft development has
been examined by a number of scholars (e.g. Wynstra, 1998). Bozdogan et al (1998) focused
specifically on the role of early supplier involvement in military aircraft development.
Drawing attention to the importance of governments championing closely-knit customer-
supplier relationships, the authors extended the concept of architectural innovation to
match product features with associated specialised technical skills of partners in the
development team. There is also an emerging body of research on innovation in complex
product systems (e.g. Gann and Salter, 2000), but relatively little of this work has focused on
supplier involvement issues. Yet no aircraft programme has ever been at the scale of the
A380 and the technological and managerial challenges of developing a super jumbo are
unprecedented, although Boeing is now facing similar challenges developing its super jumbo
- the dreamliner (Economist, December 6, 2007).

Following trends in other industries, aircraft manufacturers are turning to managing
technological complexity by sharing development risk across the supply chain. A
modularisation strategy may be an important step in managing the high level of
technological complexity that modern aircraft represent, although reducing modern aircraft
into clearly identifiable modules is a major engineering challenge. Designing modular
product architectures, companies should theoretically be able to reduce the level of
complexity they have to control - and fund – internally. Based on well-defined interactions,
or interfaces, between modules, modular designs allow design change in one module
without changes in other modules: complex development task are decomposed into simpler
elements that can be developed independently yet operate as a whole (Ullrich, 1995).
Sanchez and Mahoney (1996) suggested that modularisation strategies offer significant
design and manufacture advantages by allowing companies to leverage product variations
by substituting components, contain change by enabling common components within or
across product lines, enable concurrent and distributed component development processes,
and create loosely coupled knowledge domains: what the authors call ‘thinner’ customer-
supplier interfaces. Critically, modularisation should make it possible to reduce the amount
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

of investment in fixed assets by making suppliers responsible for high value-added activities
in design, manufacture and assembly of entire modules and sub-systems (Fine, 1998; Gadde
and Jellbo, 2002; Hsuan, 1999; Mikkola, 2003). Nevertheless, predictions of highly capable
and lean suppliers acting as system integrators have been met with some scepticism (Smith
and Tranfield, 2005).

Perhaps the problem lies with the generalised and perhaps naïve implication that all
suppliers become system integrators. Nellore and Söderquist (2000) suggest that ‘best in
class manufacturers’ delegate design tasks to suppliers using differentiated specification
strategies. Providing black box specifications to suppliers, manufacturers develop an overall
functional or global performance specification and leave it to suppliers to decide what goes
in the ‘box’. This is typically the situation with high risk and high value components such as
engine systems, and is consistent with a modular strategy. Based on survey analysis of the
European automotive industry, Karlsson et al (1998) highlight the importance of treating the
black box specification as an open medium for communicating functional and performance
requirements and necessary technical adjustments. Companies often manage less critical
components (lower value/lower risk) through white box specifications where they issue
detailed technical instructions to the supplier, leaving little room for the supplier to
influence decisions. ‘Grey’ box specifications refer to those areas where joint and co-
ordinated customer and supplier input is required as neither party has the technical
capabilities to control the design and development process on its own (Clark and Fujimoto,
1991). The black box approach thus provides an opportunity to delegate responsibility as
well as risks to suppliers. Furthermore, it offers manufacturers the opportunity to cascade
responsibilities ‘down’ through tiers of suppliers thus leveraging entire supply networks
(Lamming, 1996, Johnsen and Ford, 2006).

Given the level of complexity as well as the many innovative characteristics of the Airbus
A380 we may expect supplier involvement to be everything but straightforward. Shifting the
attention from supplier involvement in incremental product development to radical and
complex product innovation also requires that we consider the involvement of the wider
Airbus supply network instead of individual dyadic supplier relationships. The majority of
existing research has focused on supplier involvement in incremental product development
projects. In comparison, supplier involvement in radical product innovation has been less
prolific. Song and Parry (1999), Ragatz et al. (2002) and Song and Benedetto (2008) have
pursued the theme of supplier involvement in projects characterised by technology
uncertainty. Some research (e.g. Petersen et al., 2005) suggests that technology uncertainty
may further necessitate the need for supplier participation on the customer’s product
development team. Other research (e.g. Primo and Amundson, 2002), however, has found
the opposite: that existing suppliers may be less important than new suppliers in conditions
of technology uncertainty i.e. radical innovation.

Johnsen et al (2006) explore the role of supplier relationships in different types of
technological innovation and conclude that the relevance of supplier involvement depends
on the innovation life cycle: suppliers become relevant as the innovations reach the mature
stage where product/service applications become the dominant challenge. They also argue
that suppliers involved in innovation as opposed to (incremental) product development are
likely to be knowledge suppliers rather than purely materials suppliers. In a similar vein,
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

Bessant et al (2005) and Phillips et al (2006) explore the role of suppliers in discontinuous
innovation; in other words innovation that fundamentally breaks with the existing
technological paradigm. Arguing that discontinuous innovation calls for involvement of
suppliers that are located outside the existing supply network, they suggest that long-term
stable supplier partnerships, as commonly associated with world class Japanese
manufacturers (e.g. Womack and Jones, 1996), may have limited innovative potential;
supplier ‘dalliances’ rather than alliances are called for – evoking Wilkinson et al’s (1994)
earlier notion of dancing with several business partners rather than engaging in a stable
marriage. Innovating companies may therefore need to explore partnerships with actors
that are located on the periphery or even outside the company’s usual perceived supply
network boundary. Yet few scholars have explored the role of wider - or extra - supply
network relationships on product innovation.

The development of the Airbus A380 offers an opportunity to examine supplier involvement
in complex product innovation. Although Airbus itself is a powerful European-based
conglomerate, the technological and economical challenge of the A380 meant that Airbus
could not have developed the A380 without extensive risk and reward sharing partnerships
with key strategic suppliers. In fact, Airbus acknowledges that the A380 meets customer
expectations because of the collective actions of Airbus and its suppliers. But whereas
Airbus clearly sought a more extensive involvement of suppliers during the development, it
is unclear how they coped with the highly complex challenge of implementing supplier
involvement. On the one hand Airbus needed to delegate responsibility to suppliers through
advanced work packages. But on the other hand they also had to make sure that Airbus
maintained the ultimate control over the programme as any problems inevitably would
arrive at the door of Airbus. This case study therefore seeks to explore the following
question:
• How did Airbus adapt its supplier involvement practice to accommodate the challenge of
the A380?
• Did supplier involvement only relate to direct suppliers or were there attempts to reach
into the wider supply network?

Methods
As the largest ever passenger aircraft it is not surprising that the A380 story has received
much attention in the media. This has provided a wealth of information to build up an in-
depth case study, however, it is difficult to ascertain what is reliable information and what is
media hype. Therefore, in addition to extensive secondary information we have conducted a
large number of face-to-face and telephone interviews within Airbus across a range of
functions and Airbus sites in the UK and France with respondents representing a range of
functions, in addition to interviews with a small number of strategic suppliers. The research
has been carried out of a long period of time, tracking the development process during the
last five years or so of the programme right up to launch in late 2007 and beyond. This has
enabled us explore not only the perspectives of Airbus but also those of the supply base that
are essential to developing an understanding of supplier involvement issues. For
confidentiality reasons respondents have not been identified, and the tabular analysis of
responses from interviews has been generalised into major component groups (Table 2).


 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

Findings: Adapting Supplier Involvement Practice to Accommodate A380 Challenges

The A380 programme represented a mentality shift within Airbus towards supplier
involvement. Suppliers were involved earlier and more extensively in the A380 programme
than on previous aircraft programmes. The moment of involvement depended on
component importance, risk and general technological uncertainty: where new materials
had to be developed, e.g. for wing development, suppliers became involved during concept
development. In contrast with previous programmes, Airbus approached major suppliers
asking for their solutions to design problems rather than asking suppliers to ‘build to print’
according to a full technical specification. These suppliers had what was known as ‘early
plateau’: a physical shared space for suppliers within Airbus. Some supplier involvement
actually commenced prior to the A380 programme. Airbus programme plans show an 8-10
year development period but there was significant research and development activity for
many years prior to programme launch. Market research for a ‘Megaliner’ was conducted as
early as 1991 and a joint feasibility study of a Very Large Commercial Transport (VLCT)
aircraft was commenced by Boeing and several companies in the Airbus consortium in
January 1993 (originally aiming to form a partnership to exploit what was then seen as a
limited market). Although the timing of supplier involvement was generally around concept
development, some involvement was therefore even earlier.

A crucial part of the contractual arrangements with key suppliers became known as ‘risk
sharing’ partnerships, where suppliers’ return on development work was based on selling a
certain number of aircraft. For example, several contracts were based on the full return of
contribution and finance spread over 750 delivered aircraft; some estimates suggested that
it could take approximately fifteen years before the programme would break even. The risk
sharing partnerships were specifically formed as a new way of working with suppliers for
Airbus in order to accommodate the financial challenges of the A380. The risk sharing
agreements and the long design and development period placed a greater emphasis on
contracts, and it was a challenge to contract for eventual design modifications, although
much of the onus appeared to be pushed towards suppliers. Airbus reinforced risk sharing
arrangements with an open book policy, which required suppliers to divulge their cost levels
and giving Airbus a sense of cost control, although along with the long and uncertain pay
back period it was a potential source of conflict.

Interviews suggested that suppliers held stronger positions on A380 than on previous
programmes due to their financial contributions and technical commitments. This indicated
the strategic direction of Airbus in recognition that the technological capabilities had moved
into the supply base over the last few decades. One respondent explained that “there hasn’t
been any in house manufacturing of landing gear at [Airbus’s plant at] Filton for 30-40 years
so it’s an area of technology that has grown into the supply area and all the expertise is out
in the supply base for the detailed manufacturing development and certification of landing
gear; the same would be true for a number of the other avionics type systems”.

Based on capabilities, global location, history, financial position and contribution, offset
benefits, etc., Airbus provided two main types of work package to suppliers: ‘Build-To-Print’
and ‘Design and Build’. ‘Build-to-print’ packages referred to traditional arms-length
relationships where the supplier was issued with a set of drawings and specifications and a
contract to produce a product to drawings. Airbus held regular consultation meetings and
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

design reviews to encompass supplier capabilities and invite suggestions; build to print
packages reflect typical customer-controlled white box supplier relationships. In contrast,
the increasing use of suppliers for knowledge and technology leverage introduced a need for
‘design and build’ relationships. ‘Design and build’ was used to describe partial supplier
authority to design, develop and manufacture components or assemblies in partnership with
the aircraft manufacturer. Having resident engineers on-site during concept phases, these
suppliers aligned and integrated design and development methods with Airbus. ‘Design and
build’ arrangements also involved regular Airbus ‘authorities’ audit to monitor compliance.
Where build-to-print resembled a white box strategy, design and build indicated a black box
strategy, although the Airbus experience suggested that ‘design and build’ packages often
resembled more collaborative grey box relationships. Some respondents indicated a desire
to move in a modular design direction but recognised that designs are less standardised
than, for example, in the automotive industry which have adopted modularisation to a
higher extent.

The combination of early involvement of a small set of risk sharing partners and ‘design and
build’ packages were essential for coping with not only the technological but also the
financial challenges of developing the A380. Through ‘design and build’ packages Airbus
clearly sought to involve key suppliers early and closely in the programme, but this did not
happen without difficulty, perhaps as a consequence of such an approach being different to
the traditional approach employed by Airbus on previous programmes. Supplier
relationships based on design and build work packages were intended to be much more
strategic and collaborative than ‘build to print’ relationships. Early supplier involvement
therefore related specifically to ‘design and build’ relationship, where suppliers took the lead
on detail design and development. One of the challenges in ‘design and build’ relationships
lay in achieving a balance between ensuring supplier compliance and allowing suppliers a
degree of autonomy, that is, avoiding intervention to an extent that would hinder suppliers
in getting on with the job. Supplier interviews indicated that suppliers would have liked to be
less restricted by the level high of monitoring and control by Airbus, which inevitably they
regarded as a lack of trust in their capabilities. Some suppliers suggested that Airbus should
aim to provide all specifications and allowances, and then authorise suppliers to approach
the task in the way they see fit, within the agreed guidelines. One Airbus Procurement
respondent supported this idea, stating that Airbus should strive to issue and agree all
processes and procedures as early as possible in a development activity to ensure the
groundwork is completed only once.

From the perspective of Airbus, however, the situation was complex. Senior management
was concerned about getting too close to suppliers and stressed the need for strong
performance management coupled with detailed task management. Also, interviews with
Engineering respondents suggested that suppliers cannot be given full delegated design
authority as they would require close links into the Airbus design system in which tools and
techniques are proprietary. Indeed, Engineering staff within Airbus often perceived supplier
involvement as an intrusion, only existing to act as design off-load or cost saving.
Commercial respondents also perceived a problem with issuing fully delegated design
authority to suppliers but acknowledged that it might be outweighed by the potential
mutual benefits. Thus, although Airbus clearly sought to pursue collaborative black or grey
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

box strategies with some suppliers, in reality the implementation could be seen as strategic
off-load of capabilities due to capacity or cost benefits.
The requirements for suppliers on the A380 programme were stringent: suppliers were
required to be familiar with Airbus procedures, hold all necessary approvals, have defined
communication routes with Airbus, hold agreed data exchange protocols and comply with
Airbus performance management techniques. This helped Airbus to ensure that its rigorous
demands were met - most importantly safety and regulatory requirements. Nevertheless,
some respondents expressed the view that suppliers were left with little freedom to
innovate on their own terms, as Airbus required that suppliers conform with the Airbus way,
effectively becoming Airbus clones. One respondent recognised that the decision was
whether to “manage a defined box and get a box out the other end or to manage a cloud, in
ever changing shape and colour, and get something special out of it at the end of the
programme.”

Perceptions of the risks and benefits of ‘design and build’ supplier relationships varied.
Engineering respondents tended to shy away from giving suppliers any further
responsibilities for product development, indicating a ‘not invented here’ syndrome. In
contrast, suppliers all stated that they would relish the opportunity to be more closely
involved in development programmes, giving them an early start and an insight into the
strategies behind the new programme. However, this was an area that senior management
felt uncomfortable with, perceiving a need to reduce risk by maintaining internal control.
Considering the scale and complexity of the A380 programme this was by no means
surprising.

INSERT TABLE 2

Reaching into the Wider Supply Network
Integral to the A380 challenge was the need to bring together the wider supplier community
to help generating better solutions to technical problems. What Airbus called design/make
meetings formed a key part in this process. These meetings involved internal and external
development teams meeting up in common locations, forming a shared ‘pool of thought’ to
gain collective know-how. The benefits of the events were widely recognised as significant,
particularly during the early stages of the development window where problems were
difficult to pin down. Suppliers often had visibility of technology that would be available to
them in future and so could visualise potential future scenarios better than Airbus. The
collective know-how formed at the design/make events made an array of new knowledge
and experiences not readily available to Airbus. These events therefore provided
opportunities for Airbus to engage suppliers beyond an isolated one-to-one basis and to
access technologies and capabilities in the wider supply network.

In general, however, there were few attempts to reach beyond direct first tier suppliers, or
‘primes’, into the wider supply network. Airbus clearly pursued a systems integration
strategy whereby it sought to reduce and tier the supply base, allocating major sub-systems
integration roles to major first tier suppliers. The so-called Power8 programme seeks
amongst other cost reduction initiatives to consolidate the supply base, giving more
responsibility to risk sharing partners. This task partitioning is important in dealing with the
technological complexity and rising costs and by implication may make it less necessary, or
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

perhaps even counter-productive- for Airbus to go beyond its dedicated first tier suppliers.
Moreover, it was difficult for Airbus to engage suppliers that were not fully approved and
certified as Airbus suppliers. Instead, any radical technological innovations often stemmed
from industries that had a historical affinity with aerospace, such as defence or electronics,
so it was difficult for any new innovative “wild card suppliers” to get onto the aircraft
development programme. For example, the fly-by-wire technology introduced on the A320,
and later adapted to the A380, had previously existed on military fighter aircraft. So, despite
the many innovations that found their way onto the A380, most of these were either
generated within the existing supply network or through collaborative R&D arrangements,
for example the development of GLARE that stemmed from a university research
programme.

The small number of suppliers possessing the required capabilities also prevented
collaboration with new suppliers from outside the existing supply network. For many aircraft
components there were few of suppliers globally working with the aerospace industry.
Bearing in mind the relatively small volumes involved, aircraft manufacturers were often not
major customers compared with, for example, the automotive or electronics industry. One
Procurement respondent stated that “if you look at the map of suppliers on the 737 and the
map of the suppliers on an A320 and you compare it to an A380 you’ll find very few new
players”. It seems therefore that few new indirect suppliers found their way on to the A380
programme and that aerospace supply networks develop in an evolutionary rather than
revolutionary manner.

Conclusions and Implications
At the beginning of this paper we outlined the range of technological, financial, logistical and
organisational challenges, which Airbus faced in developing the A380. The findings suggest
that these challenges had a major impact on Airbus adapting its supplier involvement
strategies. The major lessons that Airbus and its suppliers have learned through this process
have meant that the A380 programme has acted as a demonstrator for future aircraft
development programmes within Airbus. Several respondents discussed how the lessons
from the A380 are currently being applied on the A350 programme, where for example,
suppliers have been involved even earlier and more extensively.

It is pertinent to question whether or not the increasing involvement of suppliers in
developing the A380 hindered or enabled the programme performance. The A380
programme suffered several set-backs, including a launch delay by app. two years and
escalating programme costs (according to some estimates the original €12 billion
development budget is said to have over-run by several billions). On two key measures of
new product development performance the A380 has therefore under-performed, although
it may take over a decade to judge if the ultimate measure of success – financial break-even
– has been realised. It is tempting, therefore, to suggest that supplier involvement in
developing the A380 has not paid off and that Airbus would have been better off not
involving suppliers. As the case study shows supplier involvement leads to many problems
including loss of control over the development process. However, most respondents pointed
to the fact that Airbus simply could not have afforded to develop the A380 on their own so
supplier involvement, especially in the form of risk sharing partnerships, so whether or not
supplier involvement were to be adopted was not the question: it was a question of how
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

best to implement. We should also bear in mind that previous research findings have
suggested that supplier involvement efforts are unlikely to bear fruit the first time (Birou and
Fawcett, 1994). Procurement practices and supplier relationships may not be advanced
enough to support supplier involvement (LaBahn and Krapfel, 2000), and Airbus have clearly
learned from the A380 experience in making changes in the ways in which suppliers are
involved on the A350 programme. In the following we summarise some of the problems
encountered by Airbus and relate these experiences back to the literature.

The literature suggests that early and extensive supplier involvement is an effective way to
cope with technological and organisational complexity (Gadde and Jellbo, 2002; Mikkola,
2003. It was not surprising therefore to see the practices widely employed in the aerospace
industry and in particular the A380 programme. Airbus wisely engaged key aerospace
suppliers in risk sharing agreements which reduced Airbus’s amount of investment by
making suppliers responsible for high value-added activities in design, manufacture and
assembly. Airbus operationalised risk sharing by delegating design tasks to suppliers using
differentiated specification strategies (Nellore and Söderquist, 2000). Using ‘design and
build’ packages they sought to provide functional, or black box, specifications to prime
contractors, although often seem to have ended up with more of a grey box approach
especially for new technologies (Clark and Fujimoto, 1991). Using ‘build-to-print’ packages
they provided detailed technical, or white box, specifications to suppliers of less critical
components.

Assigning ‘design and build’ supplier roles in complex product innovation is inevitably a risky
business and the literature suggests that a critical factor is the level of trust that exists
amongst the key players. The Airbus A380 case study revealed that close relationships and
trust were beginning to emerge within many parts of the supply network, but there also
seemed to different views amongst respondents and across Airbus and its suppliers when it
came to how much Airbus should assign complete design authority to ‘design and build’
suppliers. This was undoubtedly an issue of ensuring compliance with the specification set
by Airbus. Given the complexity and risk of the A380 venture it was hardly surprising that
Airbus felt the need to deploy high levels of control over supplier parts, however, the
question still remains as to whether suppliers may have done an even better job without
such strong intervention from Airbus.

Airbus suppliers seemed to welcome the idea of increased supplier involvement, as it
provided more opportunity for them to assess the viability of aircraft designs and to steer
their own capabilities in the direction of future programme requirements. The fact that
many first tier suppliers in the aerospace industry are seeking to become full systems
suppliers and in so doing vertically integrate to gain full control of their systems, is part of an
important trend across the aerospace industry towards increasing supplier responsibility for
design, manufacture, assemble and certification.

The A380 case study exemplifies a number of potential risks that may exist in a complex
product innovation programme which seeks to engage suppliers early and closely in the
process. Innovating companies need to manage the balance between on the one hand
deploying key partnership suppliers for risk and reward sharing and on the other hand
avoiding loss of control over the management of the innovation process. Allowing suppliers
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

onto a programme at a very early stage of development clearly puts suppliers in a position of
power when negotiations begin for long-term contracts, although Airbus seemed to avoid
this by using parallel sourcing where possible and by contracting with suppliers relatively late
in the development process. As companies such as Airbus shift manufacturing towards large
first tier suppliers in efforts to concentrate on narrower core competencies, this dilemma is
likely to intensify.

The idea that discontinuous innovation calls for involvement of suppliers located outside the
existing supply network (Bessant et al, 2005; and Phillips et al, 2006) did not find much
support in the A380 case. On the whole the A380 can hardly be described as a discontinuous
technology although it has incorporated many radical innovations, technologically as well as
organisationally. Regulatory problems and needs for compliance seem to restrict the
opportunities for introducing new suppliers into the supply networks.

References
Babka, S. (2006) EADS: The A380 Debate, Morgan Stanley Research Europe, September.
Bessant, J.R., Lamming, R.C., Noke, H. and Phillips, W.E. (2005) Managing Innovation beyond
the Steady State. Technovation, Vol 25 (12) pp 1366 – 1376
Birou, L.M. and Fawcett, S.E. (1994) Supplier involvement in integrated product
development: a comparison of US and European practices. International Journal of
Physical Distribution and Logistics Management, Vol. 24, No. 5, pp. 4-14.
Bozdogan K., Deyst J., Hoult D. and Lucas M. (1998) Architectural Innovation in Product
Development through Early Supplier Integration. R&D Management, 28 (3), 163-173
Clark, K.B. and Fujimoto, T. (1991) Product Development Performance: Strategy,
Organization, and Management in the World Auto Industry. Cambridge: Harvard
Business School Press.
Dowlatshahi, S. (1998) Implementing early supplier involvement: A conceptual framework.
International Journal of Operations and Production Management, Vol 18 No. 2 pp
143-167.
Economist (2007) Opposite headings? Why both Boeing and Airbus are grumbling about their
supply chains, December 6.
Fine, C. H. (1998) Clockspeed: winning industry control in the age of temporary advantage.
Reading, Mass. Perseus Books.
Gadde, Lars-Erik and Oskar Jellbo (2002) System Sourcing- Opportunities and Problems.
European Journal of Purchasing and Supply Management, Vol. 8, pp. 43-51.
Handfield, R.B., Ragatz, G.L., Petersen, K.J., Monczka, R.M. (1999) Involving suppliers in new
product development. California Management Review, Vol. 42, No. 1, Fall, pp. 59-82.
Hsuan, J. (1999). Impacts of supplier-buyer relationships on modularization in new product
development. European Journal of Purchasing and Supply Management, Vol. 5, pp.
197-209.
Johnsen, T. and Ford, D. (2006) At the Receiving End of Customer Supply Network
Intervention. Journal of Purchasing and Supply Management, Vol. 11, No. 6, pp. 183-
192.
Johnsen, T. Phillips, W., Caldwell, N. and Lewis, M. (2006) Centrality of Customer and
Supplier Interaction in Innovation. Journal of Business Research, Vol. 59, No. 6, pp.
671-678.
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

Karlsson, C., Nellore, R. and Söderquist, K. (1998) Black box engineering: redefining the role
of product specifications. Journal of Product Innovation Management, Vol. 15, pp.
534-549.
LaBahn, D. W; and Krapfel, R. (2000) Early supplier involvement in customer new product
development: A contingency model of component supplier intentions. Journal of
Business Research, Vol. 47, No. 3, pp. 173-190.
Lamming, R.C. (1996) Squaring lean supply with supply chain management. International
Journal of Operations and Production Management, Vol. 16, No. 2, pp. 183-196.
Mikkola, J.H. (2003). Modularity, component outsourcing, and inter-firm learning. R&D
Management, Vol. 33, No. 4), pp. 439-454.
Nellore, R. and Söderquist, K. (2000) Portfolio Approaches to Procurement: Analysing the
Missing Link to Specifications, Long Range Planning, Vol. 33, pp. 245-267.
Nelson, R. and Winter, S. (1977) In search of a useful theory of innovation. Research Policy,
Vol. 6, No. 1, pp. 36-76.
Petersen, K. J., Handfield, R.B., Ragatz, G.L. (2005) Supplier integration into new product
development: coordinating product, process and supply chain design. Journal of
Operations Management, 23 (3-4), pp. 371-388.
Phillips, W.E., Lamming, R.C., Bessant, J.R., and Noke, H. (2006) Discontinuous Innovation
and Supply Relationships: Strategic Dalliances. R&D Management, Vol 36 (4), pp 451-
461.
Primo and Amundson (2002) An exploratory study of the effects of supplier relationships on
new product development outcomes. Journal of Operations Management, Vol. 20
(1), pp. 33-52.
Ragatz, G.L., Handfield, R.B. and Scannell, T.V. (1997) Success factors for integrating
suppliers into product development. Journal of Product Innovation Management, Vol.
14, No. 3, pp. 190-202.
Ragatz, G.L., Handfield, R.B. and Petersen, K.J. (2002) Benefits associated with supplier
integration into new product development under conditions of technological
uncertainty. Journal of Business Research, Vol. 55, pp. 389-400.
Sanchez, R. and Mahoney, J.T. (1996) Modularity, Flexibility, and Knowledge Management in
Product and Organisation Design. Strategic Management Journal, Vol. 17, (Winter
Special Issue), pp. 63-76.
Smith, D.J. and Tranfield, D. (2005) Talented suppliers? Strategic cganhe and innovation in
the UK aerospace industry. R&D Management, Vol. 35, No. 1, pp. 37-49.
Song, M. and Parry, M.E. (1999) Challenges of managing the development of breakthrough
products in Japan. Journal of Operations Management (17), pp. 665–688.
Song, M. and Benedetto, A.D. (2008) Supplier's involvement and success of radical new
product development in new ventures. Journal of Operations Management, Vol. 26
(1), 1-22
Ullrich, K. (1995) The Role of Product Architecture in the Manufacturing Firm. Research
Policy, Vol. 24, pp. 419-440.
Wilkinson, I., Young, L. (1994) Business Dancing: An alternative paradigm for Relationship
Marketing. Asia - Australia Marketing Journal, 2, 1, pp. 26 - 41,
Wynstra, J.Y.F., Van Weele, A J & Weggeman, M. (2001) Managing Supplier Involvement in
Product Development: Three Critical Issues. European Management Journal, Vol 19,
No 2, pp 157-167.
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

Wynstra, F. and ten Pierick, E. (1999) Managing supplier involvement in new product
development: a portfolio approach. European Journal of Purchasing and Supply
Management, Vol. 6, pp. 49-57.

Table 1 – Major Suppliers on Airbus A380
Company Components supplied Estimated Shipset Value per
A380 (USD)
Rolls Royce Trent 900 engine 18
Safran Nacelles, braking controls, nose landing gear, communications 15
& data systems: 10% share of GP7200 engine
United Auxiliary Power Unit, air conditioning system, GP7200 engine 10
Technologies (JV with GE)
General Electric GP7200 engine (JV with Pratt & Whitney) 9
Goodrich Landing gear, fight control systems, evacuation systems, cargo 8
loading, aerostructures, engine components
Finmeccanica 4% share of airframe production, air conditioning, 5
humidification, insulation systems
Alcoa Aluminium, fasteners, fuselage sections, fuselage stringers and 3.5
skins, support structures, fittings
Thales Cockpit control & displays, in-flight entertainment, radio 3.5
altimeter
MTU 22.5% share of GP7200 engine 3.2
Honeywell Flight management system, SATCOM, navigation systems, 2.5
wheels & brakes
Smiths Group Actuation, landing gear systems, fabrications 1.5
Rockwell Collins Avionics & navigation equipment, communications 0.5
infrastructure
Source: Babka, Scott (2006) EADS: The A380 Debate, Morgan Stanley Research Europe, September.

Table 2 – Perceptions of Supplier Involvement in A380 programme
Landing Gear Wing/Structure Fuel System Engine Tooling
Timing Clear trend towards Use of advanced Early involvement Involved in early -
earlier involvement. composite materials as having to work concept
2 or 3 suppliers work requires earlier closely with wing development
in parallel on supplier engineers
solutions. involvement;
suppliers involved
when concept
frozen.
Risk sharing & Need for earlier Supplier selection Contracts include Risk sharing 3 year contracts.
contractual contracts difficult as strongly driven by modification arrangements for Airbus funds
arrangements specifications (and ability to co-finance. clauses to ensure development: development tests
costs) vague. Suppliers expected suppliers bear suppliers take on
Supplier risk sharing to amortise some design risk.
essential. Contracts investments over change costs.
for aircraft life - ship set sales. Design
trend towards mid- modifications
life contracting. impact supplier
profitability as price
fixed.
Relationship Airbus desire to have More Airbus-supplier - Long term Suppliers viewed
ongoing interaction and strategic as experts: should
relationships dialogue, but A380 relationship suggest solution.
only the beginning between Airbus Open
and trust still low. and engine communication.
suppliers
Supplier Landing gear only Airframes both ‘build Design and build Design and build Some design and
classification ‘design and build’ to print’ – concept build
relationship. Trend development by
towards fewer full Airbus – and ‘design
systems suppliers and build’ (supplier
led)
Dependency & Supply base Always at least dual Several suppliers Dual source for Uses several
 Johnsen, T.E. and Lewis, M. (2009) Supplier Involvement in the Development of the A380 Super Jumbo. In
th
Proceedings of the 17 Annual IPSERA Conference, Wiesbaden, Germany, April.

sourcing reduction implies suppliers to reduce bid - single source airlines to choose sources to
greater dependency dependency. selected. Airbus (engine suppliers increase
- Airbus always try to Collaboration broadened supply deal directly with competition and
bring in competition coupled with base to increase airlines). Reduces avoid dependency
competition. competition supplier
dependency
st st
Beyond 1 tier Access through 1 Many new Generally not Difficult due to Some indirect
tier except where suppliers from task partitioning – suppliers directly
technical auto industry little value looking approached when
problems or new introduced but beyond direct EADS approved
materials search. problematic due suppliers.
to aerospace
intricacies.


Figure 1. Major Sub-Assembly Production Network

View publication stats