4. SUSTAINABLE SUPPLY CHAINS
Large aerospace companies rely on suppliers for up to 80% of the finished product. So, achieving a sustainable aviation industry must involve creating a sustainable supply chain. The supply chain presents two challenges. The first is the need to recalibrate it with new suppliers, as companies design and build the next generation of green aircraft. The second is to ensure suppliers, new and old, are as sustainable as possible.
Start with the first challenge. Building electric, SAF, and hydrogen planes will need new suppliers for new engine parts and fuels, as well as new storage in the case of hydrogen. It may need new suppliers of greener materials, and suppliers to recycle parts. If it does not build this supply chain, it will miss milestones on the net zero transition, and fall behind competitors.
Hydrogen provides a particularly thorny example of the challenges of integrating new suppliers. Hydrogen is straightforward to produce, but capacity to produce green hydrogen is limited, so aerospace manufacturers pursuing hydrogen will need to find ways to encourage scale up and secure supplies.
The more technical challenge is storage; in transit, at the airport and – especially – on the plane. Hydrogen has different properties to kerosene and needs to be stored at higher pressures and very low temperatures, so tank designs will need to overcome thermal management challenges handle this, even as planes experience external temperatures from 50 degrees centigrade at some airports to -50 at cruising altitude (we discuss these challenges further here). Existing kerosene tank specialists may not be able to easily pivot, whilst hydrogen specialists may not be familiar with the strict rules of aviation.
Aerospace will therefore need to work closely with new suppliers to solve problems. They will need to identify those with the technical capabilities to deliver. And they will need to work closely to explain the specific constraints of aerospace – the design, the tests it must undergo, and the data needed to get approval from the regulators who govern global airspace.This world may be new to many suppliers. Aerospace will need to take time to explain the rules and provide the suppliers with all the information they need to do a good job – including specifications, measurement approaches, tolerances, data standards and so on. And they will need to setup systems to ensure quality and consistency throughout the supply chain.
A good model is the Advanced Product Quality Planning (APQP) framework, a set of processes widely used in automotive for designing and communicating specifications to all stakeholders. Capgemini is sufficiently impressed by this approach that we have developed a set of methodologies based on APQP to support aerospace customers to onboard and manage suppliers. This must all be kept as simple as possible. Because aerospace is complex and highly regulated, there can be a tendency to design systems so complex that no one will use them unless they have to. In a finite world where many suppliers will have a choice of customers, there is a need to shift from systems designed around the complexity of the product, to systems built for user experience (whilst of course ensuring technical and safety criteria are met).
This point about finite supplies and suppliers is an important one, and a key challenge to overcome. It is no good having a efficient onboarding and management process if there is no supplier to onboard.Depending on how supply and demand evolve, green hydrogen may be in short supply and high demand, at least in the short term, though recent progress here gives cause for optimism that hydrogen will be a common commodity by the time hydrogen planes take off en masse.
In the meantime, aluminium, as well as lithium and other battery materials are also at bottlenecks. For aluminium and batteries, aerospace competes with automotive, which has higher production volumes and can tempt suppliers with higher volume orders. Furthermore, suppliers with a choice may be put off working with aerospace because of the complexity of regulations, and the reputational risk if a plane using their product goes wrong mid-flight.
Aerospace needs to recognise and plan for this challenge. There are no easy solutions. For immediate needs, they may consider long-term commitments to suppliers in the hope of jumping the queue. Though this comes with its own risks: if a better alternative comes along or demand for planes drops, they may be left with a year’s supply of material they can’t use.
For longer term requirements like hydrogen, there will need to work collaboratively with energy companies, electrolyser companies, other hydrogen users, regulators and governments to ensure adequate supply chains are built. Plenty is happening in this space, but it needs to move fast, so everyone needs to work together towards a shared goal. Aerospace could also create more confidence amongst suppliers and investors by being more vocal about its future needs, and publicly committing to transition roadmaps with clarity on the suppliers they will need. Aerospace has always been a collaborative industry. It will need to build on this heritage and get used to communicating its needs to a wider range of suppliers and stakeholders to ensure its future needs are met.
Whether suppliers are new or old, there is a need to ensure they are as sustainable as possible. A hydrogen engine that is made by pumping CO2 into air and pollutants into rivers may not win over the flight shamers, even if the engine itself addresses the bulk of the problem. To be truly green, aviation therefore needs to audit its supply chains emissions (known as upstream Scope 3 emissions), select sustainable suppliers, and support/incentivise suppliers to go greener.The basis of this is proper emissions accounting. But this is hard because there are lots of suppliers - Airbus has over 8,000 direct and 18,000 indirect suppliers in over 100 countries – and they are a mixed group, from major global companies, to specialist SMEs with no knowledge of how to track emissions.
Some may be three or four steps down the supply chain. And there is no industry standard approach to emissions accounting, so even when suppliers are tracking emissions, there is no guarantee their approach will work for you.
The big picture need is for the industry to come together and agree what platform and standards they will use. An industry-led project in automotive, Catena-X, provides a good model for sharing data across a supply chain. Aerospace needs its own such initiatives.Shorter term, there is a need to do something that works for your ecosystem. Setting clear and reasonable rules for what suppliers should report, how they should report it, and providing a cloud-based platform for them to report into is a good start. Setting consistent policies for data collection and formats in your own organisation is also a wise move if it has not already been done. If suppliers are unable to meet your requirements, a variety of solutions could help, from software that can translate supplier data formats into your system’s format, to deploying sensors at supplier sites, to workshops and training. If real-world data is not available, the International Aerospace Environmental Group (IAEG) has an easy-to-use Excel-based Scope 3 emissions calculator which enables initial assessments.
Having clear data on your supply chain lets you make informed Scope 3 emissions-reduction decisions. For example, you may find that a local supplier is greener overall due to reduced transport, even if their process is less green. Such outcomes often come as a surprise, which is why a rigorous data-driven approach is so important, both to making decisions and proving their effectiveness to customers and investors.
You can then set informed continuous improvement policies to drive down supply chain emissions. These may include targets, green procurement processes, and incentives or support for suppliers. You can focus efforts on the highest emitters to deliver the biggest bang for your buck. As suppliers report more comprehensive data, you can incorporate more diverse and evidence-based strategies. But you can only do this well if you have the data that tells you what you are looking at.
