Elevated production with Dynamics 365: thyssenkrupp Aerospace provides efficient supply chain services to aircraft manufacturers and subcontractors with Materials as a Service

The challenge: Poor transparency within the value chain hampers the efficient supply of materials

Fuselage, wings, engine, tail assembly, landing gear: piece these parts together and you get an airplane. But before these various components find their way into the final product, they first make several trips around the globe. Whenever a new aircraft is planned, the project managers—based in Europe, for instance—call on suppliers that specialize in producing the different parts: the fuselage might be built by a tier 1 supplier in North America, which in turn commissions a tier 2 subcontractor in Asia to produce the necessary struts. A long and complex value chain thus emerges, along which companies such as thyssenkrupp Aerospace operate to ensure punctuality, availability, and transparency within the delivery channels. 

“Our aerospace customers produce parts that are used in aircraft construction. It’s our job to make sure they have the materials they need,” says Thomas Pingen, Head of Customers, Markets & Digitization at thyssenkrupp Aerospace. “In short, we want to supply materials to our customers—especially tier 1 and tier 2 suppliers—in a way that allows them to focus on their core processes while we coordinate everything else in line with their production.” All around the world, aircraft manufacturers and their suppliers order materials, for example aluminum and titanium, from thyssenkrupp Aerospace so they can first make individual components and ultimately build entire aircraft. Logistically, this is a Herculean task that can impact on a company’s goals. If a supplier is unable to deliver its parts on time, it can expect to face a substantial fine. “This is why the companies supplying the aircraft manufacturers play it safe: if for instance 50 fuselages are ordered, the tier 1 supplier will plan to produce walls for 55 fuselages, just to be on the safe side,” Pingen explains. “But this same supplier doesn’t manufacture the struts for these 55 fuselages. Instead, it contracts a tier 2 supplier. The tier 2 supplier also hedges its bets and orders enough material from us to produce struts for 60 fuselages.” 

This chain of orders culminates in suppliers overproducing and building up stocks that ultimately come at a greater cost. thyssenkrupp Aerospace wants to lighten the load here. The idea is to only ever deliver the amount of materials that is actually needed within the production chain, and to do this just in time—an idea that aligns perfectly with the company’s Materials as a Service strategy. 

Doing this, however, requires a huge amount of transparency, not just between thyssenkrupp Aerospace and its customers but also within the relationships between suppliers. “Ideally, we would know which tier 1 supplier commissions which tier 2 suppliers,” Pingen says. “If both of these are already our customers, we can advise accordingly and supply materials in a way that doesn’t waste resources.” But ensuring this level of knowledge and transparency all around the world called for a unified CRM system—one that had never existed before.

The solution: A globally uniform CRM system puts customer needs first

thyssenkrupp Aerospace found the perfect solution in Dynamics 365. The new CRM system was rolled out together with ITVT, a member of the Microsoft Partner Network, paving the way for Materials as a Service. “We’re able to recreate the highly complex supplier-producer relationships in Dynamics 365,” Pingen says, delighted. “The CRM system enables us to connect the dots along the value chain. For example, we can map which tier 1 supplier produces fuselages and which tier 2 suppliers deliver parts to it. This also shows us whether we already supply materials to everyone in a given production chain or whether there’s a gap.” For one thing, the system enables thyssenkrupp Aerospace to plan efficiently and gain a better understanding of what the customers need. For another, it helps identify business opportunities and target new customers. And that’s not all: the company also wanted to learn more about its customers’ strategies—a task for key account managers across all regions and countries. To do this they needed the right tool for the job—which is where things got creative.

Strategic account management with Power Apps

“The first question we ask should always be how our customer wants to develop,” Pingen says. “If we knew one of our customers wanted to expand, for example, we could speak to them about arranging more material for their production and we could store this near their production facility. By providing additional capacity, we could save our customers a lot of money.” Stakeholder management, targeted cost-cutting, planned expansion: this kind of strategic information is essential to thyssenkrupp Aerospace. This is where the key account management tool developed with ITVT—known as KAM³⁶⁵ for short—comes in: when speaking to customers, managers note down their specific goals in the KAM³⁶⁵ application created in Power Apps. These goals are automatically synchronized with Dynamics 365 and then stored in the system. Knowing what its customers need will help thyssenkrupp Aerospace put them front and center in the future and offer them a service that best fits their strategy.

Dynamics 365 and the KAM tool have brought thyssenkrupp Aerospace one giant leap closer to realizing its Materials as a Service vision. But Pingen knows that this is just the beginning. “What we’ve created thus far is a scaffold that sits around the value chain in aircraft construction and makes processes more transparent,” he says. “In the future, ERP data originating from transactions with our customers will also be built into this scaffold. This will allow us to monitor stock levels, for example, and adjust our supply offers in line with the customer’s specific needs.”