Airbus Inks Multi-Million Dollar RFID Software ContractAirbus Inks Multi-Million Dollar RFID Software Contract

Airbus announced Thursday that is has inked a multimillion-dollar, multiyear software deal to use RFID technology to track parts and tools used in the manufacturing and maintenance of its airplanes. The deal comes on the heels of Boeing's latest delay to its hot-selling, next-generation 787 Dreamliner aircraft, which Boeing blames in part on supply chain problems.

Airbus had its own problems with delays before successfully getting its new marquee plane -- the two-decker, 525-seat A380 -- to market. The new software deal with IBM and OATSystems, which the vendors tout as the biggest private-sector RFID deal ever, shows Airbus' long-term commitment to RFID following three years of testing.

RFID will become "as everyday as bar coding" in the aviation industry, predicts Carlo Nizam, head of value chain visibility and RFID at Airbus, "as more people come to accept accurate information is not a luxury, but a necessity."

Airbus has been testing, and in some cases has implemented, process-improvement projects involving RFID to track parts inside warehouses, as they move from one region to another, and as they're built into aircrafts, as well as to track how and where tools are used. The new RFID software infrastructure -- based on IBM's WebSphere and Tivoli system monitoring software, and OATSystems' RFID data management and asset-tracking software -- will let Airbus employees and systems exchange information collected by RFID readers. The infrastructure also will integrate RFID data with business systems such as Airbus' core SAP R/3 ERP system, Nizam said.

The software also will manage data from bar codes, which remain an important part of Airbus' supply chain. RFID tags can hold more information and don't require a line-of-sight reader, but they typically cost more than $1 a tag. So Airbus will use them on rolling cages, pallets, cases, and high-cost parts.

Airbus expects greater RFID capability to help ongoing supply chain process improvements, saving money by reducing time searching for parts that never arrived at the assembly line, reducing inventory, and improving productivity.

Airbus already uses RFID in Europe, with plans to extend it to warehouses in the United States, China, and the Middle East. Airbus is assessing a few pilot projects with suppliers tagging parts before shipping them, and the new software makes it possible to extend parts tracking "from the supplier side to Airbus, if that's what makes sense," said Cornelius Bronder, Airbus' VP of resources planning. Wal-Mart and other retailers have struggled to wring value from extending RFID to the supplier network.

Better supply chain visibility is just one piece of the complex process of building planes. The stakes were cast starkly yesterday when Boeing, which has its own extensive RFID tests, said its first 787 Dreamliner would be delivered in the third quarter of 2009 instead of the first, because of supplier delays, unanticipated rework, and longer testing. Airlines that ordered the plane are pressing for compensation for the delays.

To close its RFID deal, Airbus had to navigate a still highly fragmented RFID industry. "There's been hundreds of vendors, each tells you a different story, with different architectures and different payoffs," Bronder said. To sort it out, Airbus assigned a 25-person team of IT, business, and process analysts for about two years to develop a company-wide RFID approach.