OEM supply chain disruptions: Taking the temperature


Eagle-eyed visitors arriving at Geneva Airport enroute to EBACE 2023, may have noticed posters warning against disruptive and abusive behaviour. These were meant as a warning for travellers but could equally have applied to the climate protestors who (temporarily) closed the airport after breaching the show’s Static Display Area. Another kind of disruption – to manufacturers’ supply chains – also received a good deal of attention at the three-day event.

Disruptions to manufacturers’ supply chain disruptions are worse than last year – with no end in sight – or getting better and likely to be resolved by the end of the year – depending on which business jet manufacturer you consulted at EBACE 2023. Dassault was less than optimistic about a speedy resolution to the supply chain challenges affecting its production.

“Today, it is worse than last year,” Éric Trappier, chairman and CEO, Dassault Aviation told Corporate Jet Investor (CJI). After the global pandemic, Dassault looked forward to ramping up orders and then came the tragedy of the Russian invasion of Ukraine. “We saw restrictions on materials and governance and an increase in the price of energy here in Europe and that has created more tensions for the supply chain.”

While Dassault acknowledged supply chain challenges, the manufacturer said it had anticipated and mitigated them by boosting investment at its sites around France – at Mérignac, Biarritz and Seclin in the north of the country.

Boeing Business Jets singles out the impact of supply chain challenges on fleet renewal. “The post Covid recovery in the supply chain has not been as robust as we would have liked – that is well known in the industry. That’s certainly influencing near term deliveries,” Thomas Sanderson, Boeing’s director of Sustainability & Emerging Technology Product Marketing told CJI. “I know our competitors have indicated they are seeing similar challenges, as we share a lot of our supply chains.”

But Boeing’s guidance remains that the manufacturer will fulfil the delivery targets for 2023 set at the beginning of the year – albeit with summer phasing during the summer.

Gulfstream believes supply chain disruptions are improving. “I think it is modestly improving throughout the industry for the next six to nine months,” Mark Burns, president, Gulfstream told CJI. “I do see a level of commitment from companies we are dealing with to resource and have a forward looking plan. That allows us to increase our production rates as we would like.”

Initially the challenge was securing electronics and things used in jet construction such as adhesives and later evolved to mechanical systems, he said. Going into the pandemic the manufacturer adopted a just-in-case philosophy in place of just-in-time. “In some cases we have pre-ordered inventory from suppliers two years in advance, to make sure they feel comfortable, as they ramp up their supply base and hiring, that they have a long term commitment.” Gulfstream amassed significant stock going into Covid of about $1.4bn for just aftermarket support, said Burns. “So, I think we weathered that storm a little better than most.”

Bombardier agrees that since the start of the pandemic the supply chain landscape has changed. The challenge has changed from moving large parts around to intervening with the manufacturer’s tier one, two and three suppliers to ensure the continuity of supply, said Mark Masluch, senior director, Communications, Bombardier. “We have deployed supply chain specialists and embedded them with our suppliers, so we are not at the end of the line [if problems arise],” he said. “That’s the first perspective: to understand supply chain issues early on and to support our suppliers.”

That direct intervention with suppliers has taken a range of forms from helping individual firms resolve particular problems to, in one care, acquisition of the business. Last year Bombardier bought US aviation and aerospace component manufacturing business Schrillo in order to ensure the smooth running of its production lines.

Boosting the manufacturer’s inventories has proved another useful strategy. As production increases at Bombardier, so inventories have increased, he said.

“Managing the supply chain has been a team sport,” Masluch told us. “Each situation requires a different solution.”

So, will supply chain disruptions grow worse or wane as the year wears on? Trappier at Dassault believes the industry has reached the point of peak disruption but is less clear about when the challenge will be resolved. “We are now in a phase that is the maximum and will be back in a normal phase in the coming months or years – it’s too early to tell.” But he added that supply chain disruptions affect the whole aviation industry.

Burns, at Gulfstream and Sanderson, at Boeing Business Jets take more optimistic views. “The near-term supply challenges are sort of contained within the year,” said Sanderson. The manufacturer would continue to increase production targets to support commitments made to business and commercial customers. “It’s in all our interests to accelerate getting the most efficient aircraft into the fleet.” Pictured is the EBACE 2023 Static Display at Geneva Airport – before the protestors struck.

Signs of protest at Geneva Airport during EBACE 2023.