Sales and Distribution

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SubmittedBy:
Isha Patil
Roll No.13810036
2015 Batch
DoMS IIT ROORKEE
Date : 4/15/2015
PRODUCT AND BRAND DEVELOPMENT - AIRBUS

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CONTENTS
1. About Airbus..............................................................................................................................3
2. Supply Chain Visibility..............................................................................................................4
3. Model of Focus – RFID.............................................................................................................4
3.1. How does RFID Work?......................................................................................................4
3.2. Advantages and Limitations of RFID.................................................................................4
3.2.1. Application Areas.....................................................................................................5
3.2.2 RFID versus bar code................................................................................................5
3.3. RFID Implementation in Avionics......................................................................................6
4. How Airbus utilizes RFID........................................................................................................7
4.1. Benefits of utilizing RFID to Airbus...................................................................................9
4.1.1Visibility......................................................................................................................9
4.1.2 Process Benefits....................................................................................................10
4.1.3 Business Benefits..................................................................................................10
5. Critical Analysis..........................................................................................................................11
5.1. Involvement of Suppliers in RFID implementation.............................................................11
5.2. RFID tags should be used on which aircraft parts...............................................................12
5.3. ROI of using RFID for Airbus.............................................................................................12
5.4. Establishing common industry standards for RFID
5.5 . Challenging issues in the RFID technology
5.5.1. High Cost..............................................................................................................13
5.5.2. Standardization Issues...........................................................................................13
5.5.3. Potential Data Interference and Overload Issues...................................................14
5.5.4. Environmental factors............................................................................................14
5.5.5. Resistance to Change from Barcode System..........................................................15
5.5.6. Supply Chain Partners Issues.................................................................................15
6. Learning Points..........................................................................................................................16
7. Conclusion.................................................................................................................................16
8. Sources.......................................................................................................................................17

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1. About Airbus
Airbus SAS is an aircraft manufacturing division of Airbus Group(formerly European Aeronautic
Defence and Space Company). Based in Blagnac, France, a suburb of Toulouse, with production and
manufacturing facilities mainly in France,Germany, Spain and the United Kingdom, the company
produced 626 airliners in 2013.
Airbus began as a consortium of aerospace manufacturers, Airbus Industries. Consolidation of
European defence and aerospace companies in 1999 and 2000 allowed the establishment of a
simplified joint-stock company in 2001, owned by EADS (80%) and BAE Systems (20%). After a
protracted sales process BAE sold its shareholding to EADS on 13 October 2006.
Airbus employs around 63,000 people at sixteen sites in four countries: France, Germany, Spain and
the United Kingdom. Final assembly production is based at Toulouse, France; Hamburg,
Germany; Seville, Spain; and, since 2009 as a joint-venture, Tianjin,China. Airbus has subsidiaries in
the United States, Japan,China and India.
The company produces and markets the first commercially viable fly-by-wire airliner, the Airbus
A320, and the world's largest passenger airliner, the A380.
Airbus recently introduced a 'maintenance, repair and overhaul' (MRO) strategy supporting RFID
adoption for "value chain visibility," by tracing both flyable and non-flyable components over their
total lifecycle. The increasingly competitive global market, and the need to reduce costs and
streamline business processes in order to remain competitive has driven the firm to adopt RFID.
Airbus views RFID as aninfrastructure that can be deployed across many areas of its business, each of
which delivers value not just to the company, but also to its suppliers and customers. RFID acts as
their "business radar to let (them) see what's going on faster and in realtime so (they) can make the
right decisions faster.
In 2001, the Airbus company, the biggest aircraft manufacturer in Europe, consolidated its four
national companies from Spain, France, Germany and England to Airbus SAS (Société par Actions
Simplifiée) due to inherent conflicts of interest among one another. But there were still different
methods of communication, contracts and requisitions with 75 percent externalsuppliers. Also, the
competitive pressure and large-scale projects to create new types of aircrafts like the A380 and A350
provided reasons to improve the whole supply chain management. Therefore,in 2001 Airbus
spearheaded the "Sup@irworld" program to enhance their delivery punctuality, quality management
as well as to reduce their inventories for better buying process coordination. Other reasons were to
achieve better response to difficult market conditions, reduce costs, and increase visibility. The
Sup@airworld project uses a web-based platform which can be accessed via the Internet for easy
connectivity and integration. One sub-domain of Sup@irworld is the introduction of an e-supply-
chain to unify all suppliers' communication channels to enable an efficient collaboration between all
supply chain owners. It covers processes like expressing needs,invoice status, transport tracking and
despatch advice, which is an electronic delivery note from a supplier to its customer. To enlarge its
visible horizon and accelerate the reaction speed in case of wrong deliveries from the supplier, Airbus
introduced the RFID-technology.

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n short, branding is what people say about your company when you’re not in the room.
Whether that message correctly communicates your image is where “branding” comes in and
it's all about what you want people to think of your company. Perception is reality.
Entrepreneurs need to strike a balance between perfecting the image and impression of a
company and developing its infrastructure and product. Branding efforts employ the use of
marketing, public relations and promotion to achieve the right image, which should match the
desired positioning laid out in the business plan.
Is there a more misunderstood expression in the corporate world than “You need to spend
money to make money”? Inexperienced entrepreneurs often use this line as an excuse for
excessive spending, interpreting it to mean “if you’re spending money, then you’re making
money.” In fact, the opposite is true.
There’s no one-size-fits-all solution to budgeting at a startup. Sure, there are benchmarks to
watch and baseline needs to address.
The most important place to spend money is on developing a quality product, but that doesn’t
mean ignoring branding. Without it, a quality product could easily go unnoticed.
Roger Michael, founder of the I AM ROCKSTAR agency and a brand ambassador in London
for my company, InList, knows branding’s power. “Perception and image are key
components of a business’s future expansion,” he told me. “But they have to be targeted
according to the profile of the business. Effectiveness and efficiency is what we’re aiming for
-- not a slapdash percentage or chunk of capital.”
The following are three key areas that an entrepreneur can’t afford to skimp on when it comes
to creating a branding budget:
1. The name.
The wrong name can kill a company virtually before it has even launched. Spend hours of
brainstorming and gather feedback from customers and colleagues to determine whether the
name is conveying the intended message. Make sure the proposed name isn’t being used by
another entreprise and that you can get the related URL.
Today the Coca-Cola name is the second-most understood term in the world as Mark
Pendergrast pointed out in his book For God, Country & Coca-Cola. That's power.
2. A brand identity.
Fashioning a brand identity for a company includes shaping a logo and a style guide, which
will dictate the design of its website, business cards and letterhead. You'll want the business
to be taken seriously, so when designing imagine what a client’s, investor’s or customer’s
first impression would be.
Two years ago, I created an app, InList, without giving much thought to branding. The result
was a complete failure. I invested in high-quality designers to redesign the company from the

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ground up and this changed everything and resulted in significant numbers of membership
applications and investor interest.
3. A social media presence.
There's no need to sink a lot of money into social media initially, but it's important to have
points of reference to let investors and customers see what the company is all about. A social-
media presence lends some legitimacy. If the content is engaging, it can serve as a gateway
for new customers.
Pet Flow, for example, has cultivated Facebook traffic. The pet-food delivery startup curated
the web’s cute and funny animal photos and videos.
So how much should be set aside for branding?
If your company needs to turn a profit early, the advertising budget should be based on a
percentage of sales and gross profit.
But if your primary goal is building a user base, explore a cost-per-user model. That way, you
can track spending and determine whether the branding is effective.
And evaluate referral sources. The more targeted your advertising is, the more effective it
will be. Track the customer-referral sources to determine which avenues are scoring new
clients and which are wasting money. Closely monitor what’s spent on branding to determine
whether it’s effective and adjust accordingly.
Of course, it’s necessary to spend money to make money, but be sure to spend it in the right
places.

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2. Supply Chain Visibility
Supply chain management has never been more challenging today, where companies have to be
proactive and constantly develop plans to eliminate disruptions from their supply chain. The success
of an organization hinges on the company's ability to deliver their products regardless of the situation.
Visibility is essentially the trackability of products or components throughout their flow from the
manufacturer to the final destination. It is about making available data that can be analyzed to make
recommendations and generate strategies to improve a supply chain. Visibility has several benefits.
For one, companies can cut down on inventory as they are better able to react to demand. Visibility is
also increasingly becoming a competitive advantage for companies over competitors who are less able
to plan for an impending situation, such as in times of natural disasters. This is because visibility
enables companies to be flexible in dealing with situations.
3. Model ofFocus – RFID
One rapidly evolving technology that creates visibility in the supply chain is RFID. The strategic
application of RFID technology to business problems and leveraging its data has the potential to
optimize critical processes,enhance business intelligence, and improve collaboration across
industries. Also, supply chains today are vulnerable to security threats and uncertainties, and many
experts believe that RFID provides a solution to this problem.
The advent of RFID technology allows large amounts of data to be stored in tags that are attached to
components, providing the opportunity to transform the way information about products, equipment,
and even people is gathered and analyzed in real time. RFID technology can be used to provide
visibility in the supply chain and production line, reduce risks in employee health and safety,as well
as verify plant maintenance. Thus, the potentials of RFID are enormous and many industries can
benefit from RFID.
3.1 Howdoes RFIDWork?
RFID is basically a tagging system used to provide electronic identity to objects, using wireless to
gather and analyze information about the item. The RFID environment consists of four elements:
RFID chips that contain portable memory and are attached to objects; RFID readers that read the
chips; RFID middleware that coordinates many RFID readers; and Applications that uses RFID data
and are needed to perform functions such as tracking inventory and placing orders. TAn antenna
sends radio waves and generates voltage in the inductor of the passive transponder or triggers the
active transponder to send data.

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3.2 Advantages and Limitations ofRFID
Below is a summary of the solutions that RFID can provide:
• Inventory management and reductions
• Greater visibility in the supply chain network
• Potential to share useful data and collaborate with supply chain partners
• Better production control through more accurate matching of supply and demand
• Lower repair and maintenance costs• Improved data quality across many supply chain links
The limitations are summarized as follows:
• High costs, as compared to bar codes
• The need to engage in process reengineering and restructuring
• Limitations of RFID systems for global applications due to various frequency ranges
• Lack of standardization
• Interference from residual radio frequency sources
• Interference with reading tags from environmental factors like metal and water
3.2.1. Application Areas
Scanning: RFID enables the opportunity to scan physical objects more efficiently and effectively. It is
possible to scan many objects simultaneously and it can withstand hostile environments.
Tracking: RFID can improve shipment and inventory management of parts, devices and containers by
reporting real-time information about the production status, thus avoiding inaccurate data tracks and
wrong status information.
Tracing: RFID technology can improve the traceability of products and help to reduce costs of a
production failure. Since every step in the production process is monitored and stored, it is possible to
detect errors in the production through RFID. The company may be protected from lawsuits for its
products if a malfunction occurs- material or immaterial damages. Therefore,data records may prove
that the product was manufactured correctly.
Metadata Management: It is possible with RFID chips to store metadata about relevant and important
processes on the physical object. Therefore information would not get mixed up or lost accidentally.
Label Management: Currently in the supply chain process different customers want different barcode
solutions to label and transport their objects. Differences occur in coding scheme,label format or

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information on the label. These differences may reduce the supply chain performance and increase the
costs for the process unnecessarily, since label printing requires specialized printers and are currently
done centrally in order to limit the number of expensive printers. RFID can replace this old-fashioned
method, because it is possible to store customer-specific information in the chip. Everything can be
organized with one chip and the overall efficiency of the supply chain process would be enhanced.
Inter-Enterprise Collaboration: Due to these potentials RFID can improve the communication and
coordination between companies, since every company along the supply chain can share the
information on the RFID chip and benefit from this technology. The whole supply chain becomes
much more visible.
3.2.2 RFID versus bar code
The useful features of RFID as compared to bar codes are as follows:
• A reader can scan multiple tags, as many as 1000 at a time
• The goods being scanned do not have to be manually oriented toward the reader for it to work
• RFID radio frequency can usually penetrate an item's packaging and determine the contents
• Tags embedded in the package cannot be scraped or rubbed off or damaged
• Information on the tags can be written again to store further information
• There is information flexibility, whereby information on the tags can change as the goods move
across the supply chain network
• Ability to read the data contained in the chip without line of sight
There is a conflict in the supply chain arena between proponents who believe that RFID tags will
replace barcoding - a technology of nearly 30 years - and opponents who believe that the investment
does not provide a significant return on investment, given that barcodes are still much cheaper than
tags. The main argument against the use of RFID is the current near-universal use of barcoding.
Others contend that RFID and barcodes will coexist for severalyears,given their respective
advantages.
3.3 RFID Implementation in Avionics
The supply chain for parts,tools and similar products is recognized as an area offering promise for
efficiency enhancements and cost savings, and RFID can be used to significantly improve efficiency
within supply chains and the associated administration and information flow.
The business environment in the avionics industry is set to see the following trends:

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• Rising revenue growth from the launch of new aircrafts such as A380, A350 and B787, and the
growth of low-cost airlines.
Passenger demand is forecasted to double by 2020.
• Aerospace companies face competitive pressure to eliminate waste by creating corporate-wide lean
enterprise programmes.
• Industry investors want to see greater Return On Investment (ROI) from their R&D investments.
• Companies are increasingly collaborating on programmes.
• The need for strict safety has driven the industry to look at ways to uniquely identify parts and
assemblies
In light of the future trends, aerospace manufacturers need to improve their operations performance
and effectiveness in areas such as control systems,tracking, quality, maintenance, and visibility.
Furthermore, as aerospace companies outsource more of their manufacturing processes,there is
greater need for real-time visibility, speed,and accuracy in dealing with demand fluctuations and
supply chain disruptions. The ability to make right decisions on short notice to coordinate a complex
array of activities among various partners is of great importance. This has a major influence on a
company's productivity, profitability, and the ability to stay competitive.
Bearing in mind the challenges offered by the avionics industry and the need for companies to meet
these challenges to stay competitive and profitable, we can see how RFID will aid companies in their
objectives:
• Improve airline configuration control
• Reduce ownership costs of rogue parts (faulty aircraft components), helping to minimize airline
inventories as well
• Provide reliable part traceability
• Reduce internal processing and cycle time
• Enhance accuracy of information exchanged between manufacturers and suppliers
4. HowAirbus utilizes RFID
The usage of RFID technology by Airbus is summarized below:
• Minimize unplanned maintenance and detect malfunction early
• Manage and reduce airline parts inventories
• Establish audit trails for each uniquely identified object
• Ensure that the correct part is being used in the right place

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• Mechanics can access document,task, and parts data, and locate and track approved spare parts in
real time
• Identify and track tool location, usage history, and repair requirements
• Improve safety and security by authenticating components
Airbus introduced the RFID-technology to increase their overall supply chain transparency and
visibility to improve their general reactivity. Its goal is to "error-proof and automate" its supply chain
and manufacturing operations to reduce aircraft production and maintenance costs.
There are three phases in Airbus's rollout of RFID:
First phase: Supply chain logistics and distribution, which focuses on tracking supplies and reusable
shipping containers through the supply chain to warehouses and assembly facilities. Through
complete automated data entry, Airbus reduced the physical handling time, thus reducing inventory
handling costs and increasing labour productivity.
Second phase: Focuses on Airbus' global transport, manufacturing and assembly operations, such as
tracking aircraft parts across manufacturing facilities, automating work order confirmations, and
streamlining the "track and trace" process for parts.
Third phase: Extends RFID into in-service and support operations, with the aim to benefit Airbus's
customers.
In an industry where safety is paramount and where there are thousands of airplanes each with
millions of individual parts to be managed, Airbus needs a large supply of readily-available inventory.
Tracking individual parts becomes a tumultuous task. Furthermore, the precise nature of aircraft
construction and the extreme conditions under which the airplane will fly means that the parts must be
built to exact specifications. Components need to be easily traceable with a full transparency of the
product life – cycle and allow for verifying of information online at all times from a central database.
Airbus utilizes the RFID technology in two ways. First, their own suppliers equip their supply goods
for RFID- tags, instead of old - fashioned barcodes, to increase the whole supply chain transparency
and to allow automatic analysis of error. Because 75 percent of Airbus' suppliers are based all around
the world, its monitoring process for parts, components and other assets becomes very challenging.
With RFID, it is possible to detect automatically when there are shipment errors because when the
goods leave the suppliers' warehouse,they are already equipped with RFID tags carrying important
information. At each relevant point of the supply chain, this information is read. The information
stored in the RFID tags includes the parts and serial numbers, manufacturer codes, country of origin,
date of installation and maintenance, and inspection information. This information is especially useful
in the maintenance process because the service history can be stored on the tag as it goes through
different stages of its life cycle. If a shipment is at the wrong place or contains the wrong parts, the
system alarms employees to fix this problem without interrupting the production process.
In 2008, Airbus began equipping in-cabin items on its A330 and A340 such as life jackets and seats.
Thus, the configuration – management process could speed up and be streamlined. The configuration
– management includes an attestation, where an employee has to confirm the requirements with what
is physically installed. The collection of information became much faster with RFID.

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Secondly, Airbus uses RFID in aircraft tool management by equipping all its tools and toolboxes with
RFID tags containing history, shipping, routing, and customs information. (Holloway, 2006) It was
found that tools managed with RFID had a higher effective availability, required less paperwork and
had lower error rates,leading to greatly reduced administration. Airbus also leases its own tools for
the highly-sensitive aircraft maintenance to other maintenance companies or airlines. In 1997, Airbus
pioneered the use of RFID in its tools business. The motivation was to provide a better and quicker
service to customers by improving the efficiency of administration.
The Airbus "Spares and Support Service", located in Hamburg (Germany) with about 400 employees,
is responsible for this maintenance-cycle. To reduce the administrative and logistic effort for the
whole cycle, they equip their own tools with RFID tags. The tags are used to track the items as they
are sent out to the centres and returned. Thus they can increase the flexibility of the whole leasing
process,optimize their inventory management, identification of individual parts and recording of data.
The process-cycle tool-leasing-sending can be monitored precisely by Airbus, the customer and the
repair-shops. If the system detects a failure or the need to maintain the tools, an automatic alert from
the system to the customer would be sent to the "Calibration and Repair Shop". With this system, the
company or customer is able to send defective tools directly to the Airbus' reparation shop and not to
the Airbus' tool shop.
Airbus's own tool usage and tracking is also optimized by RFID in its manufacturing facility. They
can reduce the "book-in" and "book-out" time for tools. With this process, Airbus will have more
accurate information on how often a tool is borrowed and the number of cycles a tool is being used.
Based on this information, they can improve the calibration process.
After using RFID, the maintenance-cycle can be optimized as a result of having RFID-tags with all
the necessary information for accurate location and identification. Currently, Airbus is expanding its
use of RFID to parts tagged by suppliers. This will help them to customize cabins for customers, and
enable clients to collect data regarding items within a cabin, such as oxygen canisters, quickly and
effectively.
4.1 Benefits ofutilizing RFID to Airbus
4.1.1 Visibility
With RFID, Airbus achieved strategic benefits like real-time visibility, getting automatic updates of
events in the value chain and an unprecedented high level of information. After the introduction of the
RFID technology, Airbus is able to enhance its communication and quality of management and
therefore to gain business improvements. By providing absolute transparency and real-time automated
visibility of the whole supply chain, RFID technology can reduce the time required to solve service-
related problems, and the use of RFID tags can aid in detecting problems in aircraft before they occur.
Mechanics can check the parts' journey through the supply chain, its service history and its original
manufacturing source. The information flow between participants in the supply chain becomes easier
and faster.
RFID helped to remove the need for manual-based processes and to re-design them more efficiently.
RFID technology also helped to speed up and streamline the configuration-management processes,
whereby the installed aircraft parts are checked to confirm that they match the design requirements.

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For the in-cabin items, the company could collect information about them using RFID much faster
than it did previously using paper.
Another benefit is ease of ensuring product authenticity. Product authenticity is very crucial in the
aerospace business. As an airplane manufacturer, Airbus is responsible for every part fitted onto an
aircraft. It cannot afford to allow parts that have not passed through rigorous tests to be used on an
aircraft. However,one issue faced by Airbus is that in remote locations, maintaining an aircraft and
ensuring that the parts fitted are certified become very problematic. With up to 70% of a mechanic's
time spent on locating parts, the process is strewn with inefficiency. Another issue is the volume of
parts needed on each aircraft,multiplied by a total of more than 20,000 aircrafts - the amount of
inventory is massive. The difficulty in dealing with parts is that sometimes it can be hard to tell the
difference between different parts, and Airbus cannot afford to take risks because it is responsible for
the aircraft. It is estimated that the use of counterfeits previously costs Airbus over $8b in replacement
costs.
4.1.2 ProcessBenefits
Airbus now has more efficient automated processes,which means that the cycle times are shorter and
less inventory is needed. An increased accuracy and control of business operations cause less non-
conformities. More automation means less manual intervention and an improved labour productivity.
Other benefits are a speed-up of process and quality management due to accurate information. Airbus
achieved a higher quality level of information through an automatic collection of data. There is now a
faster and optimized information flow among all members in the supply chain whereby they can track
the life cycle of a tool accurately. The sharing of information between partners is now one of the most
important supply chain processes,because the integrity of information is critical for the uninterrupted
flow of goods.
A major benefit of RFID technology is a simplified administration and parts repair management,
where the repair and flight history of the component are made readily-available electronically. The
microchip ensures the accuracy and availability of important information and also allows for a
comprehensive tracking system. Maintenance of service records electronically is expected to
significantly increase safety and service levels, reducing the time required for aircraft inspection.
4.1.3 Business Benefits
The business benefits are: a reduction in inventory, capital assets and stock reconciliations, and an
increased labour productivity and supplier monitoring. With an improved supplier-forecasting Airbus
achieves improved supplier delivery performance. Thus they can reduce their costs of production,
maintenance and inventory. The results are leaner and more competitive business processes. For
instance, Airbus reduced its incorrect deliveries by eight percent and also improved the flow of
materials.

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With regards to Airbus' tools-leasing, in 2006 Airbus saved 100,000€ compared to the 180,000€
investment costs, and reduced the repair cycle by 6.5 days, thereby improving their inventory
management. 6,000 tools are already equipped with RFID-tags and approximately 2,000 to 5,000
parts could require RFID tags.
The numerous benefits of utilizing RFID technology to Airbus have already been discussed above.
However,one should note that these information benefits are medium-term because it takes time for
the system to collect all the records that are required to perform an analysis. Analyzing the
information is helpful for planning in the areas of maintenance, material, personnel, and finance.
5. Critical Analysis
5.1.Involvement ofSuppliers in RFID implementation
Airbus distributed RFID requirements to suppliers worldwide for parts of its A350 aircraft. While the
requirements would not impact all suppliers, it will affect all those who provide parts involved in a
repair cycle. According to Carlo K. Nizam, Airbus's head of value chain visibility, about 2,000 to
5,000 parts could require RFID part marking by suppliers by 2011 or earlier.
Airbus is also working closely with its suppliers to help them meet the requirements. It specified some
criteria in the requirements document to help their suppliers assess which parts to tag, either with
RFID or contact memory buttons. To help suppliers choose the proper memory size, Airbus provided
information on the amount of memory required for a range of maintenance cycles.
Airbus bought tags from MAINtag and recommended to the majority of their external suppliers that
they do the same,so that all parts will have the same standards of technology. However,Airbus stated
that their suppliers have full freedom to choose their suppliers, and that their recommendation is an
option that could simplify procurement processes for their suppliers.
5.2. RFID tags should be used on which aircraft parts
There are different requirements for permanent parts marking, depending on the part and its
environment. For instance, RFID tags, which are more robust to harsh environments, would be
employed in pressurized areas of the aircraft, while contact memory buttons would be used in
unpressurized sections. Aircraft manufacturers generally tag parts that are of high value or require
frequent replacement. RFID tags can be attached to materials for their distribution to the stations,
warehouses,or maintenance bases. Data such as what components were sent,received, or in transit,
their description, part number, and serial number can be recorded and maintained. RFID tags can also
be assigned to tools used for the disassembly process in order to track who is using the tool and the
duration.
Airbus's company-wide programme is categorized into flyable and nonflyable applications.
Nonflyable applications refer to the supply chain and logistics tracking processes. Based on positive
results of its pilot programmes, Airbus has decided to deploy RFID across these applications. Flyable

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applications refer to in-service operational parts that are subject to regulations. A350 XWB was the
first aircraft in the Airbus fleet to use RFID on flyable parts. The programme deployed RFID tags on
flyable parts, allowing improved aircraft configuration management and line maintenance, repair shop
optimization, warehouse logistics, payload tracking and life-limited parts monitoring.
Airbus purchased 8-kilobyte tags which will be used to track flyable aircraft parts and components, as
well as store data. The high – memory tags are to be placed mainly on repairable parts with the aim of
giving immediate access to parts that need servicing. This will enable Airbus, aircraft owners and
aircraft repair companies to improve their maintenance and warehouse logistics processes. Also, it is
very important for Airbus to have robust RFID – chips as they are used under extreme temperatures
such as during take – off and landing as well as during the flight where there are subzero
temperatures.
Airbus' A380 superjumbo airplane will have passive RFID chips on removable parts, which are
replaceable units with short life cycles, says Jens Heitmann, senior manager of systems
standardization, process,and methods at Airbus. That means tags will be affixed to passenger seats,
which have a five-year life cycle, and brakes, which are usually changed every 1,000 landings, as well
as thousands of other parts. Airbus will continue to use text and bar codes to keep track of parts data,
but RFID chips can be more quickly accessed with handheld scanners,Heitmann says. "We could use
RFID to do routine checks before a flight, for example, making sure a life jacket is under each seat."
5.3. ROI ofusing RFID for Airbus
The airlines and aerospace industry has traditionally been a low margin industry, characterised by
high investment and relatively low ROI. The adoption of RFID is increasingly being seen as an
enabler of higher ROI in the industry. Nizam did not disclose how much Airbus is spending on the
project, but noted that the company will be saving in the order of "millions of euros per year", with
the savings coming from avoiding work disruptions caused unavailability of the right components,
improved productivity, automated data entry and reducing inventory.
From the industrial tests conducted, Airbus determined a net Return on Investment period of less than
12 months. It was found that short-term returns can be gained through labour cost reductions, better
asset management,inventory shrinkage, less out-of-stock costs, and customer service improvements.
5.4. Establishing common industry standards for RFID
Airbus and Boeing are collaborating to create joint industry-standards for RFID on commercial
airplane parts. For instance in 2004, the two companies hosted a series of workshops and forums
worldwide, inviting all the world's airlines, parts suppliers, regulatory agencies,and third-party
maintenance shops, so that all of them can work together to establish common standards and enable
technology that can benefit the whole industry. Both firms recognized the need for an industry
standard for capturing data automatically based on the standardization of RFID in Air Transport
Association (ATA) Spec2000. The Spec2000 is a comprehensive set of e-business specifications,

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products, and services for the aviation parts industry. There needs to be an industry-wide commitment
to invest in and integrate RFID into the supply chain, otherwise, RFID technology would not be able
to take off freely.
5.5. Challenging issues in the RFID technology
RFID has faced resistance and pushback due to various concerns outlined below.
5.5.1. High Costs
According to an RFID industry expert, one reason for RFID's slow pace in entering companies' supply
chain is the high costs. Because the initial cost of implementing RFID is very high in many industries,
it is difficult to establish justifiable ROI. The chip prices depend on functionality and are between 5
euro cents to severalEuros. RFID readers are between a few hundred to several thousend Euros.
However the cost of changing to RFID infrastructure includes not only the tags, but also the learning
curve, labour costs, software and systems integration costs, process redesign and organizational
impacts. Every decision to implement is a custom project and often requires expensive purchase of
new software,hardware,and re-engineering of their process operations. Hence,companies struggle to
determine whether they will meet their ROI targets to cover the expense of deploying RFID. This is
especially so for the aerospace industry which takes decisions of adopting new technologies very
seriously in view of the critical nature of their products and the significant investment required for
RFID implementation. Airbus's willingness to take this big step may actually encourage other
companies to consider adopting RFID, if evidence of positive results can be seen.
However,it is believed that the costs of both active and passive systems should come down
significantly as the technology matures. Experts also foresee that RFID eventually will remove the
human component in much of the supply chain, especially in parts management and tracking and in
maintenance and repair.
5.5.2. Standardization Issues
Several experts say that RFID is a costly solution that still lacks standardization. It can be very
challenging to manage multiple readers and hardware,especially across many facilities. Global
standards defining how RFID devices communicate with higher – level systems are still evolving,
making it necessary for system components to allow for inexpensive upgrade as the standards shift
over time.
Airbus is actively addressing the standardization issue as it leads the international standardization
activities through participation at steering boards and industry conferences. Airbus also participates in
the ATA Spec 2000 Chapter 9 Task Force, Permanent Bar Code Parts Identification and actively
holds discussions with customers, suppliers and other aircraft manufacturers.

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Its main objectives are:
• Define harmonized identification information
• Develop tag data standards
• Define passive and active RFID usage in close cooperation with authorities
• Develop an agreed standard for data exchange between different parties while considering existing
aviation standards
5.5.3. Potential Data Interference and Overload Issues
Another challenge is regarding the development of usage policies for active and passive RFID
technology on aircraft. Some concerns raised are:whether multiple passive RFID devices can cause
interference to aircraft systems, whether a strong and undesired signal can activate all devices
simultaneously, and the corresponding effects on aircraft systems. Hence,there is a need to ensure
that RFID equipment does not interfere with aircraft systems. The goal of the policy is to allow the
installation of active and passive RFID tags on a variety of aircraft parts and equipment.
Another concern is about the potential for data overload, because an RFID reader will continuously
scan each tag severaltimes as long as the tag remains in its read range. The large data volume can
overwhelm the network. However this problem can be solved by programming readers to eliminate
duplicate information or building data-filtering function into the RFID system. In addition, in cramped
places where scanning areas may overlap, data noise can result, whereby a reader may read the wrong
target. Other problems could be unreadable, damaged, or missing tags. Such potential issues should be
taken into account.
5.5.4. Environmental factors
Environmental factors such as temperature,presence of liquids or metals, such as foil packaging and
liquid detergents, can affect the ability of readers to work reliably. It is crucial to ensure that the RFID
tags are robust enough to tolerate the extreme temperatures caused by flying. However,it is believed
that as the RFID technology advances,such issues will be overcome easily.
5.5.5. Resistance to Change from Barcode System
Barcode systems have been used for many years in many manufacturing facilities and distribution
centres. In many case,the established barcoding infrastructure is deemed to be efficient. There is a
resistance to change by many organizations that rely heavily on barcode scanning to track goods,
because for an organization to move from a familiar technology to a new one is a very challenging
task.

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5.5.6. Supply Chain Partners Issues
An issue involving supply chain partners is the lack of integration, for instance, when the
manufacturers' resource planning systems are not linked in real-time to shop floor systems. Another
issue is the partners' resistance to information sharing, which is necessary to achieve maximum
benefit from RFID technology. There needs to be collaboration among supply chain partners both up
and down the chain, as well as support for integration with resource planning systems that run the
company's businesses. Ideally, the information flow precedes the product's arrival, giving each
handler a forward view into the product before it arrives. At the same time, data flows backward
through the supply chain, delivering lifecycle visibility all the way back to the manufacturer. As a
result, the whole supply chain benefits from the control and the business intelligence that RFID data
provides. Manufacturers will be able to get more accurate information about their demand for parts
and they can lower their parts inventory and reduce the time taken for plane reparation. Suppliers will
be able to reduce inventory, improve efficiency of their manufacturing operations, and verify to
Airbus that the parts they get are genuine, hence reducing the amount of unapproved parts entering the
supply chain.
Airbus had started a series of RFID pilots to engage suppliers in the initiative. If all of Airbus'
suppliers would adopt RFID technology, the whole supply chain could all benefit. The RFID initiative
will not realize its full potential unless the adoption strategy includes multiple business units across
the supply chain. One of Airbus' philosophies, according to Nizam, is to develop an approach that
would maximize benefits to as many players as possible, including its suppliers.
Airbus began with "closed loop" suppliers, who send RFID-tagged reusable containers that
continuously travel back and forth between suppliers and Airbus's final assembly facility in Germany.
Airbus achieved tremendous cost savings from the reduction of the number of containers feeding the
A380 finally assembly, and hence a decrease in the time taken to enter data about the container
contents. Further savings could be realized if Airbus could get the "open" portion of its suppliers to
use RFID tags on the shipping labels of the boxes they send to Airbus. However,Nizam believes that
over time, Airbus' demonstration of the benefits of RFID would eventually convince the rest of its
suppliers to commit to RFID technology.
On the other hand, implementing forceful mandates is a good way to drive acceptance among supply
chain partners. For instance, Walmart started the ball rolling in June 2003 with a notice to its top 100
suppliers to utilize RFID at the case and pallet level by January 2005, and in August 2003, Walmart
ordered the remaining suppliers to comply by January 2006.
6. Learning Points
RFID technology provides enormous potential benefits, but implementing RFID is a huge decision
and a highly challenging undertaking. A business-wide approach is needed to realize maximum value
from this technology. Firstly, a good understanding of the range of implications and opportunities
offered by RFID is essential. Secondly, minimizing the risk of failure can be achieved by appreciating
the pitfalls involved in RFID technology selection, integration, and implementation in the supply

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chain. There needs to be conviction that RFID technology is a true enabler of business engineering
and to treat it as such. The use of such technology is a huge investment and thus other companies that
are considering using this technology need to keep a few things in mind. They need to be prepared to
follow through with this technology in the long run. Therefore it is extremely important to choose the
right partners and involve them early in the project. RFID is a process-enabling technology and it
should not be implemented just for the sake of it, instead companies should access the suitability of
the technology in relation to their business. Senior management's approval and involvement in the
implementation of the technology is crucial. In the short run they should focus on quick wins where
RFID can demonstrate immediate value and as a result, this will build up momentum to the
RFID project and raise awareness of the project. As Nizam, Airbus's head of value chain visibility
predicted, RFID will become "as everyday as bar coding" in the aviation industry as accurate
information becomes not a luxury but a necessity. Furthermore, according to analysts at Frost &
Sullivan, since the aerospace companies have many common suppliers, the market penetration for
RFID in the industry is expected to increase substantially in the coming years.
7. Conclusion
Airbus is studying the possibilities of utilizing RFID on future aircraft programmes and will continue
to lead the industry in standardizing RFID, develop new projects and promote widespread adoption of
RFID technology. The next step is the revision of the ATA Spec 2000 and general agreement from the
FAA and EASA. RFID is currently the buzzword in the world of supply chain management. But is it
simply a fad or an unstoppable business improvement? The success achieved by Airbus seems to
imply the latter. RFID undoubtedly has the potential to provide numerous benefits that are superior to
barcoding. Businesses should not view RFID as a means of complying with heavy-handed mandates
from the large organizations, but that it will be a highly-beneficial enhancement to the supply chain,
bringing a host of improvements with greater visibility. With organizations like Airbus leading the
implementation of RFID,and putting pressure on their suppliers to be compliant, many businesses
seem to be trapped in the process of testing and evaluating RFID, while a few are moving forward.
What is needed is the initiation of the learning process to determine how the technology can bring
about business improvements and how a reasonable ROI can be achieved with RFID. Despite the
current resistance to acceptance of RFID,difficulties will be overcome as the costs decrease,usage
extends, and benefits documented.

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8. Sources
http://www.airbus.com/en/corporate/people/company_structure
http://www.computerwoche.de/software/erp/567962/index.html
http://www.datamars.com/default.aspx?
http://www.supplychainer.com/50226711/challenges_of_rfid_industry_1.php
http://www.airbus.com/en/presscentre/pressreleases/pressreleases_items/09_18_03_RFID_technology
.html
www.airbus.com/store/mm_repository/pdf/.../08_fast_36_rfid.pdf