Airbus Industries Criticises Supplier, Raises Issues About Own Contract Management?

Airbus Industries, the huge international aerospace manufacturer, recently made a most unusual public statement. The firm was explaining why they were suffering delays in delivering one of their new models, the A350 aeroplane. Airbus put the blame fairly and squarely at the door of one of their suppliers, French firm Zodiac Aerospace.

That firm is not a supplier of key engine components or similar, the sort of thing we might have expected to be the mission-critical, critical path item. No, this supplier provides cabin seating, on-board toilets and similar items, which highlights that the definition of strategic suppliers might not be quite as we expected for the firm!

Airbus said on Tuesday it had missed its delivery target for the new A350 by one aircraft in 2015, delivering 14 instead of 15, due to the late arrival of onboard toilets built by Zodiac”. The Airbus boss also said he was “very irritated” by the reaction of the Zodiac management, who seemed to be “in denial” about the problems. Zodiac has been de-selected as a preferred supplier for the new A330neo model too.

We were also interested because although is a French firm, they have two UK factories, one in Camberley apparently, the nerve centre of Spend Matters European operations. Must find out where it is! But apart from that local interest, the other noteworthy point was how unusual this sort of public statement is. Very new firms ever name and shame their suppliers in this manner, unless the dispute has actually got to the legal stage and the protagonists are facing each other in court.

One reason for this is that the events, whilst clearly bad news for Zodiac, also do not reflect particularly well on Airbus. How did this situation occur? Has the Airbus contract and supplier management of Zodiac been weak? Are they too dependent on that firm?

As we said, it does not feel like a particularly difficult spend category in terms of finding suppliers – although maybe it is a supply market that has hugely consolidated in recent years, as many have, leaving Zodiac as one of few firms who can provide these items. On the other hand, the firm’s profit margin is around 6% , which does not look like the outcome one might expect if the firm held some sort of monopoly position.

Anyway, you have to put it down to some sort of procurement / contract management failure for Airbus, as well as a supply failure by Zodiac. And that’s why we don't hear about these events often – nobody really comes out of it well.

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