27TH INTERNATIONAL CONGRESS OF THE AERONAUTICAL SCIENCES
THE EMERGENCE OF THE INTELLIGENT SYSTEMS SUPPORT SUPPLIER Luke Webb, A/Prof. Cees Bil RMIT University, Victoria, Australia
Keywords: Service, Support, Product, Maintenance
Abstract traditional manufacturing and product- The main argument of this paper is that aircraft orientated paradigms are slowly been manufacturers are no longer ‘simply’ superseded by a new services-dominated way of manufacturers, or even “system integrators”, thinking about aircraft programs. The paper is but are becoming solution integrators. This based on insights and observations from a PhD requires that aircraft manufacturers have an research project into the impact Through Life inherent intelligent service supplier capability Support concepts are having on aircraft residing within the organization to meet the manufacturers. need of increasingly complex, and blurred, product service systems. 2 Concept of Product-Service Systems The term “servitisation”, coined in 1988, 1 Introduction describes the process of creating value by The aerospace & defense industries are adding services to products, and has since been adopted as a competitive strategy for currently undergoing a significant, although manufacturers of many types of products (not sometimes subtle, transformation in the way it just aerospace). [5] operates, the way it is structured, and even in its The concept of “Product-Service Systems” fundamental role [1,2,3,4]. What was once a (PSS) is described as a special case of predominately product focused industry is now servitisation, whereby a product’s functionality morphing into a supplier of products & services is extended by the incorporating additional designed to give an operator a capability to services. Ultimately, the PSS concept describes perform their mission. The growth in Original the ‘sale of use’, rather than the ‘sale of Equipment Manufacturer (OEM) support product’. [6] services (such as logistics, maintenance & in- This requires that aircraft manufacturers service engineering) in recent years has been have an inherent intelligent-service-supplier remarkable, especially with the growing number capability residing within the organization to of defense customers outsourcing to OEMs & meet the need of increasingly complex and third parties the technical management of many blurred product-service systems. of their technologically advanced fleets of aircraft and advanced weapon systems. However, the mindful and accelerated 3 The Strategic Context of Support transformation of OEMs from primarily product manufacturers, to suppliers of integrated The paper is written in light of a number of solutions, poses a number of challenges. The changes in the aerospace & defense market over main argument of this paper is that aircraft the past few years. There are four main market manufacturers are no longer ‘simply’ changes that are addressed to establish the manufacturers, or even “system integrators”, but context, which in turn drive detailed internal are becoming “solution integrators”. Thus, changes.
1 L. Webb, C. BIL
First, the past few years has seen an 4 Emerging Examples of the Intelligent increased level of outsourcing of support Supplier of Support activities to third-party entities. This is in both the commercial airline and military environments. The drive to outsource is driven 4.1 Overview by a number of factors, including greater The term “intelligent supplier” is derived perceived value with the external organization, from an article that appeared in Airline Business the desire for an operator to focus on “core magazine in September 2005 investigating operations”, and to offload technically complex changes happening in the commercial airline & onerous tasks onto a party who has greater maintenance sector [7]. One of the key themes expertise in such fields. from the article is the notion that, when Second, there is a more specific trend of outsourcing, many leading airlines did not the outsourcing of these activities to the system simply want to lower the cost of a major OEM, an organization whose traditional role has maintenance visit, but were keen to partner with been in manufacture, but not support. The a unique support operation who would be an rationale for such a trend is based on a similar ‘intelligent supplier’ of support. The article, rationale for general outsourcing, although examined in more detail in the next section, sometimes the value proposition from the OEM describes a 2005 agreement between easyJet can be more attractive then an independent and SR Technics worth $1 billion over a 10 year MRO provider, for example. The third trend is period in which the airline carefully chose a the tying of revenues to aircraft/system partner whom was able to provide more than performance measures, whereby a party is just maintenance services, but a new level of effectively contracted to provide an availability- integration and support that would be an based output/outcome solution. Contracts, such industry leading arrangement. as performance-based logistics on platforms like The article makes several observations. To the F117, F/A-18E/F Super Hornet, and the C17 quote: “There is a space developing, albeit Globemaster, are examples of where the slowly, for somebody who can concentrate on ‘deliverable’ is the sustained operating the intelligence associated with a maintenance performance of a fleet. These are also examples programme … the concept sees a new kind of where there has been an outsourcing of support supplier working on behalf of a carrier using the to the OEM. There are, however, examples accumulated experience and wealth of data on where uniformed units in the armed services aircraft, engine and component support to actually provide performance-based outcomes produce a maintenance programme where the to internal military stakeholders such as a flying central theme is the constant driving down of squadron. maintenance man-hours”. The final trend is that of new industrial Cost reduction through man-hours is not policies, especially in the UK, whereby the only theme suggested by a number of Governments, being mindful of a projected leading airlines and industry consultants in the decrease in system development projects in the article. They suggest that it is the “white-collar future, are working with industrial firms to area of technical planning and engineering” as establish long-term support capabilities that opposed “actual spanner-turning” where many both sustain complex systems for military efficiencies could be found. It also argues that customers, but also sustain the necessary “the role of the intelligent supplier, which needs industrial skills and knowledge required to a large base of data and experience, cannot be operate those systems. The concept of “Through fulfilled by an airline”. Life Capability Management” is a leading initiative encapsulating that intent. 4.2 SR Technics & easyJet
Whilst not an example of an aircraft manufacturer becoming a service provider, the
2 PAPER TITLE
following example illustrates some key ‘working together’. EasyJet describes the characteristics of what an operator looks for in a arrangement as saying that there needs to be an support service partner. “openness on their [SR Technics] side … [and] In August of 2005, a “landmark agreement that we will work with them on developing for the aircraft maintenance industry” was other solutions [to improve the efficiency of signed between the independent European MRO maintenance]”. Additionally, they have said, provider SR Technics, and UK-based low cost quoting the same reference, “many [of the carrier easyJet [7]. The ten-year deal is worth efficiency] solutions haven’t even been worked about $1 billion over the life of the contract, and out yet, and it does not necessarily mean they sees SR Technics taking responsibility for the [SR Technics] will do the work themselves”. “full technical support” of easyJet’s growing A final interesting point of the contract fleet of Airbus A319 aircraft (54 aircraft at time goes back to the concept of providing capability of contract signature, and will reach a total of through outcomes, not through activities. 120 by the end of 2007). EasyJet continues to explain that in “an What is unique about the deal is that it goes important shift”, the airline will actually give beyond traditional maintenance outsourcing that SR Technics the freedom to make the decision is predominately activities centered, but it really they, as a supplier, believe is best. “While there signified the start of a TLS-like partnership are certain key agreed performance indicators between a large airline and a maintenance … how [SR Technics] achieve them is … up to provider that is based upon delivering outcomes. them”. It is likely that this arrangement will pioneer the TLS concept in the traditionally conservative 4.3 Boeing Goldcare airline industry, and be a ‘test-case’ (hopefully from which much will be learned to improve In 2006, Boeing publically announced the any TLS program, and that will be the offer of a new service to customers of its new foundation of decisions made by airlines to sign 787 aircraft [8]. Not only would airlines be able up to such an arrangement, perhaps with the to buy a new, state-of-the-art aircraft, but would likes of a Prime Integrator such as Boeing). In also have the option of having Boeing look after addition, the contract is unique in that it is a ten a significant amount of the logistics and year long partnership. Normally, maintenance maintenance effort associated with the new contracts are shorter than that (in order to avoid aircraft. Its model is fairly close to existing the risk of continued poor performance in a “Power-by-the-hour” arrangements that airlines supplier), and sometimes are ‘one-offs’. have had with engine companies (such as Rolls The contract sees SR Technics taking on a Royce), but for the first time was offered for an variety of activities including all ‘line’ and entire commercial airframe. heavy maintenance, “maintenance operations Initially, Boeing offered two streams of control” (presumably a pseudo maintenance support. The first, seemingly an extension of the control centre), as well as all component existing Boeing service for integrated materials maintenance management and logistics. The management – effectively the management of contract stipulates a delivery of outcomes, in the spare parts and inventory for an airline form of cost predictability, and aircraft customer. The second, higher-value stream was availability. In addition, the contract requires for a complete turnkey solution, where Boeing that there be a concentrated effort to see a would effectively sell “flight hours” to airlines reduction in maintenance costs associated with and would look after all maintenance, logistics, the A319 fleet (excluding the engine spares, upgrades, and other services. maintenance costs) of at least 25% (or $USD18 However, it is interesting to note that million) over the ten years. Boeing now offers four streams – everything Another interesting departure from from the fully-integrated, supply of flight-hours ‘normal’ maintenance contracts that is found in approach, to a Planning & Control service, to an this example is that of the importance of
3 L. Webb, C. BIL
Engineering Management service, and finally, depends on how well it acts with intelligence to the inventory management service. manage the aircraft fleet.
4.4 BAE Systems’ Hawk 4.5 Joint Strike Fighter The move towards an intelligent-supplier The largest aircraft development program approach is perhaps more noticeable in the occurring at the moment is clearly the Joint military environment, with many emerging Strike Fighter, but is also a stand-out example of examples of aircraft manufacturers (such as an aircraft manufacturer delivering an integrated Boeing, Lockheed Martin, and Northrop) “product-service system” [10]. One of the key moving more and more into the support services pillars of the program is be supportable, and this space. is reflected through a more-integrated approach In Australia, one current ‘stand-out’ to the long-term support arrangements for the example is the BAE Systems Hawk Mk. 127 jet aircraft. trainer aircraft [9]. In 1997, the Royal On the technological front, the advanced Australian Air Force (RAAF) selected the Hawk prognostic health management system, to replace its existing fleet of Macchi Mk. integrated into the JSF Autonomic Logistics 326’s, however, the process by which the system, is a powerful tool that enables a strong decision was arrived was rather unique. Instead support capability. However, ever since of stipulating the number of aircraft required, Lockheed Martin won the 2001 contract to the Federal Government issued a requirement develop the JSF, they have also been inline to for a minimum number of flight-training hours support the aircraft through a Performance- per year, as well as details about how the Based Logistics contract once the aircraft enters manufacturer would support the aircraft as part into service. Not only will they be developing of a turn-key solution. As part of the acquisition and supplying a product, but will also be a contract, BAE Systems established a significant service-delivery organization throughout the support presence adjacent to the RAAF’s fighter aircraft’s service life. This approach is, to an jet training operations in New South Wales, and extent, making service delivery goals a key has a contract to support the Hawk aircraft by measure in the success of the overall program, undertaking all Deeper Maintenance, logistics and in times to come, will probably be seen as management, and technical support activities. the more important metric over the current The support contract is for 25 years, renewed development and production delays. every 5-years. Initially, hands-on maintenance tasks were carried out by a sub-contractor, but were subsequently brought out by BAE 5 Analysis Systems. Interestingly, the RAAF’s only responsibilities for the aircraft are Operational 5.1 What is “intelligence”? Maintenance (oil changes, ground inspections, etc), with all other technically-intensive Before continuing on the discussion about activities being BAE Systems’ responsibility. how OEMs are changing, it’s important to The support contract is a performance- reflect on what intelligence actually is. In 1994, based arrangement, with BAE Systems required more than 50 leading cognitive experts signed a to deliver a minimum number of aircraft for a statement on some of the broad characteristics daily flying-pool. For every aircraft not of intelligence. Their definition includes that: delivered, the company is penalized financially. “Intelligence is a very general mental Thus, BAE Systems’ role, initially as a capability that, among other things, involves the manufacturer, becomes more focused on service ability to reason, plan, solve problems, think delivery, and the success of the company abstractly, comprehend complex ideas, learn quickly and learn from experience. It is not
4 PAPER TITLE
merely book learning, a narrow academic skill, become more complex, and as operators or test-taking smarts. Rather, it reflects a continue to focus more on their “core broader and deeper capability for operations”, outsourcing of support activities is comprehending our surroundings-“catching on,” only increasing. However, challenges, such as “making sense” of things, or “figuring out” trust, and partner alignment, are critical. It could what to do.” [11] be why Boeing has not yet sold any Goldcare packages to airlines thus far. 5.2 Future role of OEMs Based on the examples illustrated above, as 5.3 Customer Responses to Outsourced well as the definition of “intelligence”, it is now Support possible to pass some observations on the Whilst performance-based contracts are emergence of the intelligent supplier of aircraft still been pursued for various programs, like support services. A400M [12], there are also some examples of First, is that aircraft manufacturers are no where such arrangements are not meeting initial longer simply production houses. They are expectations. For example, from 2012 the increasingly becoming custodians of the United States Air Force will be ‘in-sourcing’ technical knowledge and capabilities needed to maintenance activity on its F22 and C17 support complex systems, with these aircraft, despite there currently been a capabilities been part of the core competence performance-based through-life support contract that enables a manufacturer to be an effective in place (via contractors Lockheed Martin and service provider. Boeing, respectively) [13]. The full details of Second, it’s a slow process. Whilst the rate the recent decision are still emerging, but initial of new service-orientated business is rising for a reasons are said to include cost/perceived value- number of aircraft manufacturers, it would for-money, and operational control. appear that the rate of internal transformation isn’t as fast. New support programs are been 6 Concluding Remarks added to existing portfolios of work, but because OEMs have a strong engineering The main argument of this paper is that culture, these activities are seen more as aircraft manufacturers are no longer ‘simply’ engineering work packages, rather than manufacturers, or even “system integrators”, but operational services. are becoming solution integrators. This requires Third, when reflecting on the definition of that aircraft manufacturers have an inherent intelligence, it can be seen how many of those intelligent service supplier capability residing attributes apply to aircraft manufacturer within the organization to meet the need of transformation efforts to become intelligent increasingly complex, and blurred, product service partners. An intelligent supplier needs to service systems. be not only an active problem solver, but also a problem identifier – even before issues become References problems. The intelligent supplier organization has the ability to reason and predict issues based [1] Webb, L. & Bil, C., “Aircraft Design for Through on available evidence. They actively learn – fast Life Support”, 7th AIAA Aviation Technology, Integration and Operations Conference, Belfast, and hard. They don’t make the same mistake Northern Ireland, 18-20 September 2007 twice. They respond rationally and orderly to [2] Sandberg, A. & Stromberg, U., “Gripen: with focus situations, using their deep knowledge to solve on availability performance and life support cost over issues. the product life cycle”, Journal of Quality in Finally, customers are increasingly Maintenance Engineering, Vol. 5 No. 4, 1999, pp. expecting better services, as well as more long- 325-334. term partnerships (especially where it can be [3] Webb, L. & Bil, C., “Performance-Based Through Life Support: A Model for the Future”, 47th AIAA shown there is a financial benefit). As aircraft
5 L. Webb, C. BIL
Aerospace Sciences Meeting, Orlando FL, USA, 5-8 Jan. 2009 [4] Ward, Y. & Graves, A., “Through-Life Management: A Catalyst for process Excellence in Customer Support and Maintenance, Repair & Overhaul (MRO)”, UK Lean Aerospace Initiative, May 2006 [5] Vandermerwe, S., and Rada, J., “Servitisation of business: adding value by adding services”, European Management Journal, Vol. 6 No. 4, 1988 [6] Baines, S., Lightfoot, H.W., Benedettini, O., Kay, J.M., “The Servitisation of Manufacturing”, Journal of Technology Management, Vol. 20 No 5, 2009 [7] Pilling, M., “Maintenance: Tightening the screw”, Airline Business, 26 September 2005, viewed 30 July 2009,
Contact Author Email Address [email protected]
Copyright Statement The authors confirm that they, and/or their company or organization, hold copyright on all of the original material included in this paper. The authors also confirm that they have obtained permission, from the copyright holder of any third party material included in this paper, to publish it as part of their paper. The authors confirm that they give permission, or have obtained permission from the copyright holder of this paper, for the publication and distribution of this paper as part of the ICAS2010 proceedings or as individual off-prints from the proceedings.
6