The aerospace supply chain is complex. Various supply networks, at different levels, provide key equipment and materials needed for the production of end products. These supply networks are generally classified into three: Tier 1, Tier 2, and Tier 3.
All the tiers are key factors in the supply chain to aerospace manufacturers or OEMs and facilitate the readiness of American defense agencies such as the military. In this article, we'll take a closer look at each of the supply chain tiers. But first, let's examine the importance of supply chain tiers in the aerospace industry.
Why Supply Chain Tiers are Crucial
Original Equipment Manufacturers, better known as OEMs, manufacture aircraft and other components such as missiles and spaceships. Aerospace OEMs provide supply services to the military and other private airline and jet companies such as Beechcraft, Cessna, Gulfstream, and American Delta.
Manufacturing an aircraft requires adhering to numerous industry safety standards. All the components must satisfy rigorous conditions and work together even though different companies manufactured the parts. For example, an Airbus A380 is made up of about four million individual parts produced by 1,500 companies from 30 countries worldwide.
For an A380 to be built, the total quantity of Tier 1, 2, and 3 supplies are up in the thousands. The manufacturers depend on the supply chain for components, electronics, finishing, hardware, switches, and much more.
The tier supply chain is the backbone of the US. Aerospace and aviation industry. To supply to the aerospace markets and US defense agencies, companies need to be approved by ITAR or The International Traffic in Arms Regulations.
ITAR comprises governmental rules and regulations that govern all things related to exports. These rules include policies and customs connected with unlawful exports, imports, and trades between different countries and also prohibits a US company from exchanging technical ITAR data with employees locally hired, unless they gain authorization from the US State Department.
Each manufacturer, exporter, and agent of defense commodities connected with technical data and protection services, as outlined by the United States Munitions List, are required to sign up in order to take part in the supply chain.
Furthermore, the organizations that deliver equipment to the aerospace supply chain are mandated to register for a minimum of one AS standard AS 9100, AS 9110, or AS 9120.
Now, let's look at the earlier-mentioned three tiers of an aerospace supply chain.
Tier 1
Companies under the first tier supply chain are usually producers of major parts or systems who acquire their components or sub-units from the Tier 2 supply chain. The components of Tier 1 producers are the last systems that are delivered to OEM.
The companies supply directly to the aerospace industry, making it the most essential and feasible in the supply chain. Tier 1 companies produce a vast array of vital end products such as engines, wings, fuselage, control systems, landing gear, and electronic warfare systems.
Tier 1 organizations are the key components of the supply chain. They ensure that the overall system is administered effectively and efficiently, adhering to all the government policies and regulations. They shape and power the entire supply chain network.
Which OEM does tier 1 supply to?
The major aircraft categories that tier 1 companies supply include:
Commercial Aircrafts:
Airbus
Boeing
Comac
Irkut
Embraher
Business Aircraft:
Bombardier
Textron
Dassault Aviation
Gulfstream
Helicopter:
Textron (Bell Helicopter)
Lockheed Martin company
MD Helicopter
How do Tier 1 Suppliers Help OEMs?
Tier 1 companies are responsible for the design of new aircraft. They define engine measurements, expected properties, and the shaping of the overall aerodynamic property of the new aircraft. Other Tier 1 companies work hand in hand with OEM during the designing period.
Depending on the intricacy of the supply chain system, Tier 1 companies supply directly to OEMs. They utilize the design of subsystems to other organizations and also deals with Tier 2 or system producers.
Tier 2
Tier 2 companies are in charge of the assemblage of parts and subsystems used by Tier 1 companies. They are as important as tier 1 companies. Tier 2 companies acquire parts from tier 3 and forward their end product to tier 1, making them very essential to the aerospace industry.
Tier 2 companies are usually restricted in what they are qualified to produce. They are mostly lesser in size and capacity as compared to Tier 1 companies. However, that does not derail the capabilities and operations of the companies. They ensure that there's a free flow in the supply chain from Tier 3 all the way to Tier 1 manufacturers.
These companies are very important when it comes to stepping up the rate of output. Another thing worth mentioning is that tier 2 companies are required to be stern and thorough in relation to safety and standard agreements. If something isn't right, they cannot put the blame on tier 1 companies.
Tier 2 companies provide important parts that stretch from flight controls to missile nose cones and airframe structures to transmissions and Airfoils and tires.
Tier 3
Tier 3 companies are responsible for the production and shipment of parts and components to Tier 2 companies in order to produce important components and subsystems. Tier 3 companies are usually large organizations in the aerospace fraternity.
Tier 3 companies produce many components and software that play an all-important role in the manufacturing of aircraft. Some examples of Tier 3 components include high strength fasteners and pins, instrumentation fittings and tubing, high strength fasteners and pins, hydraulic fittings, and hose.
Building Strategic Partnerships
For manufacturing success, OEMs must look towards the adoption of digital technologies, risk-sharing partnerships, cross-sourcing, multiple sourcing, and making room for local players that understand supply chain management.
Finding the right company to meet your supply needs is what sets you apart from yourself and your competitors. It can help to streamline your business processes and boost productivity. OEMs have to be intentional about building long-term strategic partnerships with suppliers at all tiers. Consider the various tiers and pick suppliers that excel at that level.
