Aircraft maker turns to sourcing software for new military planes

Continuing a staged rollout that began 19 months ago, Airbus SAS in the coming weeks will expand its use of Web-based software to support all the steps involved in sourcing goods and services for a new military transport plane.

The Toulouse, France-based aircraft manufacturer will use its Sup@irWorld online sourcing system to drive procurement activities ranging from identifying potential suppliers for the A400m program to awarding contracts, said Frederic Geoffrion, project manager for the software. "That's a clear message to suppliers that Sup@irWorld is not a toy," Geoffrion said last month.

Airbus last May signed a contract to make 180 of the A400m planes, at an average selling price of $100 million each, for use by seven European nations. Geoffrion said suppliers will bid for contracts on millions of parts and systems needed by Airbus, which is due to have the first A400m ready to fly in 2008.

Custom Apps

The Sup@irWorld system is based on a customized version of Ariba's sourcing applications, said Geoffrion. Limited use of the system began in May 2002, and an updated version was added last June. Airbus last month announced plans to use the software to support sourcing processes throughout its operations. The A400m project is the first in which sourcing will be fully automated, Geoffrion said.

He noted that more than 1,000 buyers at Airbus have used the technology on various programs and that bids from 1,500-plus suppliers have been processed through the system. Sup@irWorld is being used to replace a paper-based approach and has already produced cost savings, Geoffrion said. He wouldn't divulge any specific figures but said the system lets Airbus solicit bids from many more suppliers than it could before, generating increased competition and lower prices.

That's important, because Airbus "is confronted with a difficult market, and we have to fight everywhere to take the costs down," Geoffrion said.

Andy Kyte, a London-based analyst at Gartner, said Airbus "is further down the track" than most manufacturers in developing Web-based sourcing systems. He estimated that the company has spent more than $2 million to buy and customize Ariba's software. But successful rollouts of sourcing tools can produce a return on investment in less than a year, he said.

Kyte, who has been following the Airbus implementation for months, said Sup@irWorld has been used to automate some of the sourcing operations for the A380 double-decker aircraft, a 530-seat plane that's in the third year of an eight-year development program with an expected total cost of $12 billion.

Kyte added that roughly 20% of the top 2,000 companies worldwide already use Web-based applications to manage some of their sourcing activities, and he predicted that the figure will grow to about 50% within two years.

Ariba competes with a variety of ERP and supply chain software vendors that sell sourcing technology as part of their products. But Kyte said Ariba offers a broader set of tools than its rivals and has a strong presence in Europe.

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