Mar 11, 2021

Capgemini: CP&R supply chains must adapt or risk failure

Supplychain
AI
ML
riskmanagement
Rhys Thomas
3 min
New Capgemini research reveals the extent to which consumer products and retail supply chains will need to evolve over the next three years
New Capgemini research reveals the extent to which consumer products and retail supply chains will need to evolve over the next three years...

Supply chains in the consumer product and retail (CP&R) sector are heading for Copernican change, according to new research which discovered less than a third of organisations believe their supply chain is agile enough to remain competitive. 

The new report from Capgemini Research Institute paints a grave image of inflexibility and supply chains stretched to breaking point following the upset of the past 12 months and the lingering, pernicious impact of the COVID-19 outbreak.

Two thirds of CP&R organisations said their strategy will change significantly in the next three years in response to the pandemic, with resiliency rising to the top of the agenda. Nearly all (85% of CP and 88% of retail organisations) said they had felt the pinch of the virus, with more than two thirds estimating that it took a quarter of a year to bounce back from the outbreak's initial disruptions. 

Three-step overhaul

The result is an extensive turn around plan that, for many, will focus on three key points: 

  • Demand sensing

Capgemini found that two thirds of organisations will segment their supply chain to better respond to fluctuating demand. More than half (54%) will invest in and implement the latest digital technology, including artificial intelligence (AI) and machine learning (ML) to reach their goals. 

  • Traceability becomes critical

COVID-19 snapped supply chains that were too rigid to react. Injecting greater traceability from end-to-end in the value chain will allow organisations to make better informed and swifter decisions in response to increases and decreases in demand - 75% of consumer products companies questioned said this had been a major pain point for them in 2020. To improve visibility, around 60% of organisations plan to step up their investments in digitisation of the supply chain, the most popular areas being automation (47%), robotics (42%) and artificial intelligence (42%). 

  • Global to hyper-local

The pre-pandemic trend of overseas and widespread supply chains will be reeled in over the coming years. The vast majority (72% of consumer product organizations and 58% of retailers) intend to look closer to home for suppliers and are actively investing in localising their manufacturing base or near shoring production. 

In total, 65% of CP&R organisations are investing in regional and local programmes. The UK (83%) and India (79%) will see the biggest shift in this area, while organisations based in China are far less likely to be locally driven (42%). 

"Agility and resilience to adapt”

Lindsey Mazza, Lead Consultant for the Global Consumer Products and Retail Group at Capgemini, says that investment now will pay dividends in the future, especially should supply chains face a disruptive and sudden event on the same scale as the coronavirus outbreak. 

“Consumer products and retail organisations recognise that further disruption could be just around the corner, and they need to have the agility and resilience to adapt within their supply chain,” Mazza says. “The pandemic was a learning. Organisations realise that new technologies can enable much-needed agility – from improving demand predictions, to boosting fulfilment to quicker last mile deliveries. By investing now, organisations put themselves in good stead to support consumers in their time of need – whenever that may be.”

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Aug 3, 2021

Airbus Expanding Local Supply Chain in China

Airbus
Supplychain
China
Manufacturing
2 min
Airbus is building a “vertical integration supply chain” in China, according to reports, strengthening foothold in fastest growing aviation market

The reshaping of Airbus’ global supply chain during the pandemic will shift greater focus to China, the world’s fastest growing aviation market, according to China Daily.

Yang Xiaoyu, the company’s Head of Flyable Procurement in China and East Asia, says Airbus is building a “vertical integration supply chain” to source parts and materials, assemble, and deliver aircraft locally. 

Yang Xiaoyu says the strategy will “lower costs of transportation and raise efficiency”, adding that Airbus will also work collaboratively with local Chinese suppliers to bring them “in line with global standards of Airbus”, strengthening its ties and capabilities across the territory. 

China on Track to World’s Largest Aviation Market 

 

Further expansion into China is unsurprising given the nation’s continuing emergence as the world’s economic superpower. It is steadily becoming the world’s biggest aviation market, and is a strategic territory to Airbus for deliveries and global production. 

China already accounts for around a quarter of Airbus’s global commercial aircraft production, with more than 1,700 Airbus commercial jetliners in service in China as of the end of 2018. Even under the pandemic Airbus delivered 99 plane to China in 2020 and 64 in the first half of 2021, despite on-going disruption and widespread downturn in aviation.

China Central to Airbus Supply Chain Expansion 

 

The country is also a strategic hotspot in Airbus’ global supply chain. The European aerospace giant established a final assembly line (FAL) in Tianjin, a port city in northeastern China, in 2008. It was the first to be built outside the borders of its four founding European countries - France, Germany, Spain and the UK. 

It expanded the site to include a wide-body completion and delivery centre in 2017. In July 2021, the production site delivered the first Airbus A350 to China Eastern Airlines. George Xu, Airbus Executive Vice President and Airbus China CEO, said: “This is a new milestone in the long-term cooperation between China and Airbus, which further demonstrates Airbus’ commitment to the country.”

Credit: Airbus

 

As of the end of June 2021, China Eastern Airlines operated an Airbus fleet of 413 aircraft, including 349 A320 Family aircraft, 55 A330 Family aircraft and nine A350 aircraft.

Today Airbus has around 200 Chinese suppliers. These include a composite manufacturing centre in Harbin, as well as engineering, customer support and training centres located in Beijing. 

 

Top image: Airbus / The first A350 delivered from China to China Eastern Airlines 

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