Airbus 2010 Annual Report Download - page 83

BUILDING THE FUTURE
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SOURCING
Management of the supply chain became increasingly
coordinated in 2010, following further integration of
EADS’ procurement organisation. While it will take several
years for the full synergies to be realised, 2010 saw
increased leverage of Group buying power and enhanced
management of suppliers.
External procurement is equivalent to approximately 70%
of EADS’ revenues, and volumes increase every year in
line with the Group’s revenue growth. The supply chain
is therefore critical to Group performance, especially as
top tier suppliers are given more responsibility on large
programmes.
The Group progressed towards the mid-term goals of the
Future EADS programme, aimed at greater integration,
as well as the Vision 2020 goal of lifting the proportion of
procurement from outside Europe to 40%. By extending
the supplier base outside Europe, EADS aims to benefit
from cost advantages, to reduce its exposure to
euro/dollar exchange rate fluctuations and to benefit,
through an increased local presence, from business
opportunities in growth markets.
Integration
EADS General Procurement (EGP), the shared services
organisation covering suppliers for a wide range of
common items, from professional services to IT, became
fully operational during the year 2010. Charged with
extracting synergies and costs from the €8 billion general
procurement spend, it overachieved 2010 targets and is
on schedule to meet its targets through to 2012.
The two specialist Aerostructures and Systems &
Equipment procurement boards, established in 2009,
began to fulfil their mandates. They held several
meetings with common suppliers, aiming to strengthen
and coordinate supply chain relationships. Board
Members exchanged best practices, discussed supplier
performance and agreed common approaches towards
the supply chain.
Joint procurement of raw materials continued to deliver
synergies, as lead buyers negotiated contracts on behalf
of the whole Group. Purchasing of commodities is
increasingly covered by common EADS strategies.
Stronger ties with US
aerospace suppliers
To strengthen EADS’
procurement activities
in the United States,
the Group established
a US Sourcing Office at
Airbus Americas’ Virginia
headquarters in early 2011.
EADS already spends
more than US$ 11billion
each year in the United
States, supporting more
than 200,000 US jobs.
The US sourcing volume
will increase further with the
ramp up of the A350 XWB
programme. The new team
will bring closer contact with
the existing US supply chain,
and open opportunities for
additional procurement.
A US sourcing strategy
will be mapped out,
leading to procurement
marketing, supplier
screening, surveillance
and development.
The office opening is an
important step in fulfilling
the Vision 2020 strategy
of expanding EADS’
international footprint,
to gain access to new
markets and technology
resources, as well as multi-
currency based sourcing.
Global sourcing
The Global Sourcing Network was strengthened, most
notably through preparation of a US sourcing office at Airbus
Americas’ headquarters in Virginia. It joins the established
offices in China and India.
Development of the Global Sourcing Network is preparing
the ground for growth in international procurement. In 2010,
26% of EADS external procurement by value was from North
America and 3% from the rest of the world, with 71% from
Europe. Procurement from countries such as China and
India has risen from a low base over five years, and will grow
significantly as production within new programmes at Airbus
and other Divisions is ramped up.
Responsible procurement
Efforts to encourage ethical practices in the supply chain
took a step forward when leading suppliers were sent the
new EADS Supplier Code of Conduct. The Group aims to
ensure that suppliers commit to its core values regarding
human rights, labour, environmental and
anti-corruption practices.