Reference no: EM131040283

Supply chain information that was previously generated manually is increasingly being generated by sensors, RFID tags, meters, GPS, and other devices and systems. How does this reality affect supply chain managers? For one thing, it means they will have real-time information on all products moving through their supply chains. Supply chains will therefore rely less on labor-based tracking and monitoring, because the new technology will allow shipping containers, trucks, products, and parts to report on their own status.

Airbus is one of the world's largest commercial aircraft manufacturers, producing more than of the world's new aircraft with more than 100 seats per plane. As its suppliers became more geographically dispersed, Airbus was finding it increasingly difficult to track parts, components, and other assets as they moved from the warehouses of various suppliers to the company's 18 manufacturing sites. To make its supply chain more visible, Airbus created a smart sensing solution that can detect any deviations of inbound shipments from their intended path. Here is how the sensing solution works:

As parts move from suppliers' warehouses to the Airbus assembly line, they travel in smart containers fitted with RFID tags that hold important information. (We discuss RFID in detail in Chapter 8.) At each stop along the supply chain, RFID readers communicate with each tag. If shipments end up at the wrong location or they do not contain the correct parts, the RFID readers alert employees so they can fix the problem before it disrupts production. Airbus's supply chain solution, the largest of its kind in manufacturing, has significantly reduced the number and severity of incorrect shipments and deliveries as well as the costs associated with correcting these problems.

In turn, alleviating these problems has allowed Airbus to reduce the number of overall travel containers by 8 percent, to avoid signify cant inventory carrying costs, and to increase the overall efficiency of its parts flow. Sources: Compiled from D. Pearson and D. Michaels, "Airbus Wants Suppliers to Consolidate," The Wall Street Journal, November 8, 2012; "At Airbus, It's Clear Skies and High Visibility," The Smarter Supply Chain of the Future (IBM Corporation), 2012; "Examining Airbus and Boeing Supply Chain Issues," Manufacturing Business Technology, September 22, 2011; "The Smarter Supply Chain of the Future," IBM Corporation, 2009; www .airbus.com, accessed March 22, 2013.

Questions

1. Discuss the value to Airbus of supply chain transparency (i.e., knowing where every part is in real time).

2. What are potential problems with using RFID tags throughout Airbus's parts supply chain?