Aerospace Virtual Enterprise Formation
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How can the complex supply chain for an aero engine respond to a request for quotation from an airline in just a week? This is the presentation that accompanied our ICE 2006 conference paper on aero industry virtual enterprises, legal issues and the "seven day proposal". One output from the EU Sixth Framework Integrated Project, VIVACE (Value Improvement through a VIRTUAL Aerospace Collaborative Enterprise). Uses the ‘Da Vinci’ theme from Keynote Theme Park.
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Aerospace Virtual Enterprise Formation
- 1. Streamlining the Formation of Virtual Enterprises in the Aerospace Industry Richard Farr, David Buxton, Bart MacCarthy University of Nottingham Catarina Bovik Volvo Aero Corporation
- 2. Contents VIVACERICHARD FARR • An introduction to VIVACE • Aims of this work • Aerospace issues • The virtual enterprise • Functional requirements • In search of trust • Concurrent engineering...? • Conclusions
- 3. •Value Improvement through a Virtual Aeronautical Collaborative Enterprise •Funded under the European Commission’s sixth framework scheme •Project aims: • Halve the time to market for new products • Increase integration in the supply chain • Maintain a steady fall in the cost of travel VIVACERICHARD FARR
- 4. Airframe Engine Information technology Extended Jet engine enterprise Life Cycle Modelling Whole Engine Development European Cycle Program Supply Chain Workflow Simulation VIVACERICHARD FARR
- 5. •Define and develop the process to produce a customised value proposal from an extended enterprise in seven days •Develop a functional requirement specification for the seven day proposal •Evaluate solutions to the seven day proposal, including knowledge-based engineering support, costing models and information management Aims of this work VIVACERICHARD FARR
- 6. •Very complex products •High initial investments •Very long product life-cycle •Very complex business models •National interest VIVACERICHARD FARR
- 7. •The shift from product-centric to holistic ‘functional product’ offerings •New competitors •New markets •Environmental issues •Fuel price increases VIVACERICHARD FARR
- 8. The Virtual Enterprise... •Deploys expertise where it is needed •Spreads the development cost •Shares risks among the partners •Allows a customer-specific response •Virtual enterprises take time to form! VIVACERICHARD FARR
- 9. The Seven-day Proposal •Not a whole new product! •The same engine, but a customised solution, addressing the airline’s requirements. •Response to the request for proposal (RFP) within seven days. •Ambitious targets show commitment! VIVACERICHARD FARR
- 10. The Aero Engine Product and Service Mix •Ownership? Leasing? Power-by-the-hour? •Maintenance, repair and overhaul •Spare parts, spare engines •Financial services •Guarantees •...etc. VIVACERICHARD FARR
- 11. UNIVERSITY OF NOTTINGHAMRICHARD FARR It’s amazing what you can achieve in seven days!The Creation of Adam, fresco painting byMichelangelo
- 12. Functional requirements of a seven-day proposal •An investigation of the working procedure for collaborative programmes •Industrial partners: Volvo Aero Corporation and Rolls-Royce •Identification of “who does what, when” •Configuration of a support system •Process organised into seven ‘silos’... VIVACERICHARD FARR
- 13. Seven ‘Silos’... VIVACERICHARD FARR •Company Internal •Partners •Suppliers •Customer •Customer solution •Business case •Legal •Information: data sharing and control •Virtual Enterprise Business Model •Trust
- 14. Trust is the key! •There is no unit of measure for trust •Cultural differences can affect perception •Years to build; moments to ruin •What about trustworthiness when things aren’t going to plan? •Is protection under law a substitute for trust? VIVACERICHARD FARR
- 15. Legal issues •The virtual enterprise has no legal identity (ie no collective responsibility) •Where does the virtual enterprise reside, for tax purposes? •The law assumes an adversarial relationship •Getting approval for legal documents can increase cost and lead time •Legal mechanisms that protect the parties may delay virtual enterprise formation, and inhibit creativity VIVACERICHARD FARR
- 16. Tools to support the seven-day proposal •Capturing and reusing knowledge •Modelling the business environment •Simulating the flow of cash within the proposed value chain •Simulating the delivery of services •Improving the interfaces between partners, and between functionsRICHARD FARR VIVACE
- 17. Concurrent Engineering has been seen to reduce time-to- market.. VIVACE Can we apply similar principles to the development of the enterprise? RICHARD FARR
- 18. Concurrent Engineering •Merge functions to reduce the number of components •Focus upon quality and continuous improvement •Modular system architecture •The re-use of proven elements •Adoption of standard interfaces •Why consider only the product? VIVACERICHARD FARR
- 19. Concurrent Engineering •Fewer partners, but more significant contributions •Focus upon quality and continuous improvement •Modular approach to partner selection •Repeat business •Standardised communications and logistics, where possibleWhy consider only the product? VIVACERICHARD FARR
- 20. Conclusions •Improved responsiveness in enterprise formation is a powerful basis for competition •Trust remains the key; the law does not yet support the virtual enterprise adequately •Business models work best where success is positively correlated across the whole partnership VIVACERICHARD FARR
- 22. Further articles from Richard Farr at: http://capacify.wordpress.com Associated conference paper: Farr R, Buxton D, Bovik C and MacCarthy B (2006) “Streamlinin the Formation of Virtual Enterprises in the Aerospace Industry”, Proceedings of the 12th International Conference on Concurren Enterprising (ICE 2006), 26–28 June 2006, Milan, Italy Supporting slides follow.
- 23. Simulation approach • Anylogic; a Java-based simulation language • Accommodates discrete event, system dynamics and agent-based approaches in a single environment VIVACERICHARD FARR
- 24. Simulation approach •Demand; the business environment for new aero engines •Airlines, and engine usage patterns •The product and service value chain VIVACERICHARD FARR
- 27. Results from simulation... VIVACERICHARD FARR • TotalCare sales • Balance $