rolls royce supply chain case study

Inside Rolls-Royce's supply chain

With the Rolls-Royce Phantom topping the Top 10 Luxury Car Supply Chains , Supply Chain Digital takes a closer look at the automotive company’s supply chain.

Rolls-Royce operates as a global purchasing organisation with a total supply chain spend of over £4.7bn ($6bn). With more than 950 purchasing employees worldwide, the company employs 18,000 active suppliers across a large and ever-growing number of products and parts. Rolls-Royce has purchasing employees in 10 countries across Europe, Asia and North America.

Rolls-Royce supply chain process

Invite interest

Pre-selection inspection

Select for RFP

Deselect following tender submissions

Negotiate and select

Maintain performance and delivery

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Rolls-Royce fully utilises its resources, processes and structures to offer significant benefits to its customers. The firm manages an external supply chain for nuclear components and has proven capabilities in the following areas:

Optimised supply chain design, planning and control

Supplier engagement, development and maintenance

Strategic sourcing

Supply chain relationships

Purchase execution and logistics management

Quality management

Total cost management

Total life-cycle management

With technology becoming a major part of supply chains around the world, Rolls-Royce continuously invests in modern IT solutions to support supply chain management functions. It employs web enabled sourcing software through its preferred service provider “EXOSTAR” which includes the use of e-auctions and electronic request for quotes/proposal. Rolls-Royce has implemented tools such as :

Strategic sourcing toolset - an online system facilitating the creation of commodity and supplier strategies, contract creation and negotiation, supplier performance management and supply chain spend analysis.

Raw material planning/ supply chain mapping - an integrated software package which maps the sub tier supply chain providing demand signal visibility, risk and utilisation analysis, demand simulation and key points of failure analysis.

An accessible web-based “Global Supplier Portal” which enables rapid information interactions and provides valuable supply chain quality and performance data.

The company is heavily reliant on the ability of its supply chain to deliver to Rolls-Royce standards without any delays or disruptions. Rolls-Royce invests a large proportion of time identifying and mitigating potential points of weakness in its external supply chain. The firm spends more than £7bn ($9bn) annually with its suppliers.

Did you know?

Rolls-Royce placed fourth in Supply Chain Digital's Top 10 largest sustainable supply chain's worldwide in September. Check out our in-depth look at their sustainability initiatives here!

For more information on all topics for Procurement, Supply Chain & Logistics - please take a look at the latest edition of Supply Chain Digital magazine .

Image: Rolls-Royce Press.

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Supply chain le…

Supply chain lessons from Rolls-Royce for small businesses

The article at a glance.

Supply chain issues facing a global leader in aerospace engineering may be different from those facing a small- or medium-sized enterprise, but there are clear parallels nonetheless.

Category: Insight Operations management

Framework developed around Rolls-Royce’s post pandemic supply chain issues

An Executive MBA graduate of Cambridge Judge Business School, Gunnar Droescher (EMBA 2020) is the Berlin-based Vice President of the Bombardier Programmes at Rolls-Royce, which makes jet engines for plane makers such as Boeing and Airbus as well as Gulfstream, Bombardier and Dassault. Under the supervision of Feryal Erhun, Professor of Operations and Technology Management at Cambridge Judge, Gunnar developed a new case study based around issues that Rolls-Royce faced following the pandemic regarding the component supply chain for a Rolls-Royce engine used in business jets. That case study, for teaching at business schools and elsewhere, focuses on how Rolls-Royce can prevent a recurrence of supply chain issue stemming from its configuration in a very constrained environment. This all happens against the backdrop of an ultra-competitive market where the most luxurious model of these business jets can cost $75 million.

Yet whether a product costs $75 million or $7,500, or whether a company is worth billions or very little, there are common supply-chain principles that firms should heed in preventing problems and fixing them should they occur.

How small and medium sized firms can understand and navigate supply chains

Small and medium enterprises need to consider their unique situations when it comes to supply chain management. They are more resource constrained, they may not carry as much weight in their supply chains, and they are more bound to a path dependency of their own supply chain. At the same time, they should not underestimate their power. They often operate in specialised niches, which means their customers face high switching cost and they are an important source of revenue for their suppliers.

For these smaller firms, supply chain strategy and management are thus 2 sides of the same coin and they need to feed each other with information. The integration of these 2 sides can be easily missed if emphasis is put on one side only. The consequences are often seen only when they materialise in poor business results that take long to fix.

Key questions to optimise your supply chain efficiency

Supply chain strategy, are you optimising your supply chain for cost or flexibility.

It is tempting to think that both are possible. However, in reality choice is often required – and a decision needs to be made considering the objective of the supply chain, the variability in demand, and the amount and frequency of product changes. For products with a large materials bill, components may require a cost-optimised supply chain; other products may require greater a focus on flexibility at the possible trade-off with cost.

Is your supply chain aligned, adaptable and agile?

Problems often occur if there are different incentives across the supply chain or a misaligned information flow. The ability to react to events and adapt to structural shifts in the business are also important strategic considerations..

Are you using just in time or are you deploying inventory?

While inventory ties up capital and there is a general drive to minimise this, it also helps to mitigate risk of supply variability. Therefore, this question needs to go beyond a financial calculation into understanding the risk of supply for each component.

Supply chain management

Do you have visibility of supply for all parts you need to make your product over the next 3 months.

Being able to monitor parts supply into your company and understanding the work-in-process inventory in your supply chain is key to preventing or managing delivery issues. Depending on the level of collaboration in your supply chain, this does not need to be a laborious task.

Is your demand signal stable or does it have a lot of variability?

This tends to be a key driver of supply chain issues, so it is important to understand the upstream effect of demand variability as this can usually be adjusted quickly. It is also an area where cross-functional collaboration (supply chain with marketing and sales) is paramount.

Do you understand and can you control operating cost (working capital)?

Being able to fund short-term capital requirements is often a problem for smaller businesses, which is amplified in crises. It’s important to have an in-depth understanding of the funds needed to support ongoing operations and also invest in project improvements. Being able to articulate this well will make it easier for small and medium size enterprises to obtain additional funding.

Why timeframe, business strategy and KPI alignment are crucial to success

With all of these questions, it’s important to understand what the time horizon is – as time may or may not be on your side. If your timeframe for addressing the problem is short term (6 months or fewer), ask yourself whether you have an executable choice such as deciding whether it is quicker and cheaper to fix an issue or launch an alternative. But if the timeframe is longer than 6 months, ask whether you can generate an executable choice – such as knowing the cost of fixing the problem and living with it.

Some of the questions may seem obvious. However, going through them diligently should inform a constructive discussion between the management teams in small- and medium-sized enterprises. This is only a starting point with the aim to find items that reduce resilience of the operation of such companies. The management teams should then also look at how consistent the supply chain strategy aligns with its business strategy.

On the supply chain management side, how well do the KPIs integrate with the KPIs in other areas of business, such as financial or people-related metrics? A common pitfall is the misalignment between different areas that small- and medium-sized enterprises are not protected from. While the risk at smaller enterprises may be less than in large corporations, management systems at smaller businesses are not as sophisticated – and the “we have always done it that way” mentality might be even more pronounced.

While the risk at smaller enterprises may be less than in large corporations, management systems at smaller businesses are not as sophisticated – and the “we have always done it that way” mentality might be even more pronounced.

The study: more about Gunnar Droescher’s research

The new case study on Rolls-Royce – entitled “To restructure or not to restructure? Rolls-Royce weighs its options during a supply chain crisis” – will form part of the Cambridge Judge Business School collection on the Case Centre website

An article by Gunnar forthcoming in the International Journal of Procurement Management also explores this supply-chain topic.

The article – entitled “Optimal supply chain strategies for large, complex product developments” – addresses how determining the optimal supply chain strategies is a crucial decision for complex development projects in the jet-engine and railroad rolling-stock sectors.

Based on past studies and interviews with executives in those industries, the article finds that:

design stability is a key determinant of such supply chain strategy
time-to-market factors need careful consideration in developing such strategy
the product introduction capability of suppliers is distinctively important in devising effective plans
it can be beneficial to use different supply chains for product development and serial production
the decision on sourcing should be agnostic of the life-cycle of the product

“With regards to the supply chain design, firms should approach this with the end in mind and work backwards,” the article says. “If the ultimate objective is to produce the part in a low-cost economy for example, the tools and equipment available there need to be considered in the component design phase. Often, the process is set up in one supplier and then does not fit another. This leads to delays and adds costs.

“The implication is that the selection of the long-term source should be as early as possible. However, it is important to understand how much a product is likely to change and if the tooling strategy can accommodate those changes or not.

“Product introduction capability provides the bridge between efficient product development and serial production. It is a capability in its own right, one that is quite unique.”

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An exploration of supply chain management practices in the aerospace industry and in Rolls-Royce

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Critical Success Factors for Successful Supply Chain Relationships in the High-Tech Aerospace Industry: A case study of Rolls-Royce Installations and Controls 'Units' and 'Specialised Fabrications' Commodity Groups

The primary aim of this research project is to qualitatively analyse the validity of critical success factors for successful supply chain relationships based on the author’s Distance, Power and Alignment Framework generated via a critical review of the literature. The Distance, Power and Alignment Framework is based upon the competing supply chain philosophies of lean, agile and power based configurations, and the purpose of the framework is to allow a balanced view of supply chain relationships to be developed to drive performance and achieve results as ‘one size does not fit all’. A phenomenological approach was taken in order to meet this objective, with Perry’s (1998) ‘realist’ research paradigm being adopted, allowing research methods to be both inductive and deductive by the utilisation of pluralistic grounded theory (Perry, 1998). Secondary research in the form of the author’s observations and theory is used to triangulate with a critical incident technique interview (Flanagan, 1954) with two senior executives representing the Units Commodity Group, and findings from a focus group of six participants representing the Specialised Fabrications Commodity Group. The findings suggest that though successful in determining validity of the Distance, Power and Alignment framework within the scope of the investigation, further work must be undertaken longitudinally and in different commodity groups and/or companies to confirm construct, internal and external validity (Riege, 2003). A key finding of the thesis is that not only should distance, power and alignment constructs be considered when developing supply chain relationships, but they are interdependent and a change in one can impact the effectiveness of other elements. This can used to seek competitive advantage if decision makers are aware of the linkages, or poses a risk to relationships with decisions are made in isolation. A revised Distance, Power and Alignment framework for successful supply chain relationships is presented at the end of this thesis, inducting research findings before reflections on the author’s personal journey, limitations and scope for future research.

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Study of Supply Chain Practices in the Aerospace Industry: Rolls-Royce Case Study

Supply Chain 2020

Author: Mohit Tiwari

Case Spotlight: To Restructure or Not to Restructure? Rolls-Royce Weighs Its Options During a Supply Chain Crisis

Author perspective

Who – the protagonist.

Gabriela Rodrigues, Executive Vice President of the externals and controls systems business unit at Rolls-Royce.

Rolls-Royce was a British aero engine manufacturing company that spearheaded cutting-edge technologies that delivered clean, safe and competitive solutions to meet the planet’s vital power needs.

The company was structured as four businesses: civil aerospace, defence, power systems, and new markets.

Civil aerospace was a major manufacturer of aero engines for the large commercial aircraft, regional jet, and business aviation markets, which contributed to 40% of the company’s revenue.

Gabriela was responsible for the largest operations business unit within civil aerospace, and was facing a major challenge.

Critical supply chain issues led to significant schedule and quality problems on a key component that her business unit was responsible for.

Gabriela tried to come up with a straightforward way to explain the context of the problems and offer solutions to her customers, suppliers, and senior managers, but she was struggling to find a clear way to communicate this.

It was in the middle of 2022 when Gabriela’s business unit ran into supply chain issues that threatened to derail the completion schedule of the latest multi-billion-dollar, cutting-edge business jet engine.

The externals and controls systems business unit had around 1,200 employees across Europe, North America, and Asia.

The castings were produced in the US, and then machined in China.

Gabriela faced two questions when it came to the supply chain issue: Could this problem have been spotted sooner? And what needed to be done to fix the issue as soon as possible?

Gabriela and her team did not see a quick solution to the quality issue based on the available data. However, they needed to learn from this issue to improve their future work. Specifically, they needed to review the supply chain strategy used in the product development phase to prevent Rolls-Royce from facing the same problem in the future.

AUTHOR PERSPECTIVE

On the reasons for writing the case…

Gunnar said: “A combination of having been taught cases (some better, some worse) and my own experience in supply chain management made me think that my experience in leading the supply chain team for new product introduction in Rolls-Royce’s business aviation division could make for an interesting case in the classroom that is relevant and based on recent events.”

On the case writing highlights…

Gunnar continued: “Operating in an academic setting is quite different to operating in industry. Not just thinking about the case, the problem within it and the solution, but also about how to use it to convey different concepts that may be unfamiliar to the audience was a challenge. Working with Feryal provided me with that academic perspective. We spent a lot of time discussing upfront how to structure the case, how it can be taught and how to structure the teaching note.”

On teaching the case…

He added: “It has been really positive as students get engaged easily, people from non-operations backgrounds, like financial services, offer great insights in addition to those with some operations backgrounds. However, having students in class that do have an operations background can lead to a really deep conversation on various aspects of the case.”

On how students react to the case…

He commented: “Jet engines is quite a niche sector in many ways and it is always positively surprising to see the curiosity of the students with regards to that sector and the associated supply chain challenges. They are really engaged and offer good insights from other industries.

“Furthermore, Rolls-Royce is a known brand, one that almost everyone recognises. Nonetheless, people connect it with different things, such as jet engines, the business model in the aftermarket (taking revenue per engine flying hour) or even still with the cars (which Rolls-Royce plc has not been involved with in a long time). These connections always make for an interesting conversation.”

On case writing tips…

Gunnar explained: “Focus on one or only a few key issues and then apply different concepts to that. It is easy to get carried away by a lot of detail, things that distract managers in reality, but would be detrimental if added to a teaching case. Keep in mind that the purpose of the teaching case is to address certain concepts and subjects, not to accurately reflect real life.”

Final word…

Gunnar concluded: “Writing a case and being engaged in the teaching is a really rewarding experience. Not just because of the interesting exchange with the students, but it also helps to reflect on the problem in a structured way and with some distance to the actual problem.”

The authors

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Energy Institute

Enabling supply chain resilience and security with Rolls-Royce

A new project launched in collaboration between the University of Sheffield and Rolls-Royce aims to help industry and government track and compare facility-level supply chain resilience.

Professor Lenny Koh from the Energy Institute, and Peter Ralph from Rolls-Royce

Project FPSCRS (Future Proof Supply Chain Resilience and Security), funded and supported by the Economic and Social Research Council (ESRC) and Rolls-Royce, will establish a resilience index scorecard system, hosted via a secure online tool, to provide a quantitative scale of resilience measurement and capture qualitative insights.

The tool, co-developed by Rolls-Royce and researchers from the Management School at the University’s Faculty of Social Science, enables high value manufacturing industries such as civil aerospace, automotive, and rail to benchmark their supply chain resilience, and manage and respond to risk and security issues.

Created with input from industry leaders, the tool will allow the government and advanced manufacturing industry to measure and reduce uncertainty and risk, minimise vulnerability and threat, and improve supply chain security and resilience.

A policy brief will be generated in consultation with key partners and stakeholders in the supply chain and within government departments for green economy recovery post-Covid-19, focusing on supply chain resilience and security.

The brief aims to bring transformational industry and policy impact economically, environmentally and socially for UK businesses and global supply chains.

Professor Lenny Koh , Director of AREC and Co-Head of Energy Institute, and academic lead of FPSCRS, said: “Through this co-creation with Rolls-Royce, Project FPSCRS advances the understanding of supply chain resilience and security in the advanced manufacturing industry. Novel measures and models will be developed, along with the tool and policy brief, using multiple methodologies. This research will help solve the pressing challenges of disruptions via improved risk mitigation and business continuity.”

Peter Ralph, Head of Security and Resilience, Rolls-Royce, and the industry lead of FPSCRS, said: “This research forms our underpinning basis and decision making in shaping our resilience and security strategy and framework. The involvement of all 4 businesses within Rolls-Royce validates the agility and replicability towards a resilience standard which has national and global relevance. The impact of this future-proofing of our supply chain resilience and security is global and significant at industry and government levels.”

Paul O’Rourke, Group Security Director, Rolls-Royce, commented: “Rolls-Royce’s capability to safeguard customers’ delivery, and lead and future proof our organisation and supply chain against disruptions ranging from security of critical materials supply to the flexibility of our manufacturing and test facilities, is a top priority from management. "The dynamic geopolitical, economic and environmental externalities in the industry such as the Russia-Ukraine war, Covid-19 and climate change affect resource resiliency. This research plays a key role in changing mindset and informing policy on putting resilience and security-critical factors in decision making in industry and government.”

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11 The Governance of Innovation: The Case of Rolls-Royce plc

Published: September 2004
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This chapter highlights the regulatory power of a ‘soft’ mechanism, namely communities of expertise. It draws on an in-depth case study of the evolution of governance at Rolls-Royce. The study demonstrates how a strong and stable community of engineers, with extensive rights in resource allocation decision-making, has been central in sustaining growth, accumulation of experience and technical excellence, throughout the long history of the firm, a history marked by frequent changes in ownership structures and board composition. In other words, an informally governed horizontal organization, oriented to technical objectives and somehow decoupled from the financial objectives and structure of the firm, turned out to be compatible, if not complementary, with a variety of proprietary arrangements.

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What is the supply chain of the Rolls-Royce Pearl 15 engine?

Watch to see supply chain programme manager Holger Reichert explain how Rolls-Royce gets the resources and materials to craft the Pearl 15, part of its Intelligent Engines vision.

The Pearl 15 is the first member of a new engine family for the generation of business jets. The Pearl 15 combines exceptional aerospace design with innovative technologies enabling the Bombardier Global 5500 & 6500 aircraft to fly farther, faster, cleaner and quieter.

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COVID-19: Coordinating production of medical ventilators for the UK

What Accenture Did
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When the UK stood in the face of a rapidly escalating COVID-19 outbreak and thousands of people were being admitted to hospitals daily, the British Government feared an impending shortage of machines vital for treating critically ill patients. So, the UK Prime Minister called on industry to manufacture new ventilators to help meet the unprecedented demand.

Responding to the call for assistance, the High Value Manufacturing Catapult CEO, Dick Elsy, pulled numerous leading aerospace, automotive and engineering businesses - including Smiths Group, Penlon, Rolls-Royce, GKN Aerospace, McLaren, DHL and Accenture – together to form the VentilatorChallengeUK consortium.

Pooling skills and cross-industry expertise, the consortium evaluated ventilator designs, choosing ones by Smiths Group and Penlon to produce and deliver to hospitals nationwide.

What Accenture did

Given our long-standing relationship with Rolls-Royce and close collaboration with companies involved with UK Made Smarter, Accenture was asked to oversee and support execution of the supply chain for the Smiths Group ventilators.

Managing the ordering process, our teams are helping to source & stock the right amount of product at the various assembly locations. Rolls-Royce identified more than 100 suppliers, providing the 292 unique parts, and our role is to precisely coordinate the order and shipment of some 3.4million parts.

Working with Avanade, our joint venture with Microsoft, we deployed and now support an Enterprise Resource Planning system (ERP), Dynamics365, and implemented a Procure-to-Pay accounts cycle. With the supply chain control tower, enabled by PowerBI and E2Open software, Accenture provides oversight and governance from start to finish.

Repurpose your supply chain for resilience

People and culture.

Addressing a potentially critical shortage in supply of ventilators in the UK during the COVID-19 pandemic, VentilatorChallengeUK is a direct response to a global humanitarian health crisis. Given the urgency, Accenture dedicated a team to help resolve the UK’s ventilator supply shortage. We are ensuring all actions are completed swiftly and are upholding efficient practices including making all payments in a timely manner.

Every morning and evening, we report into Government COVID-19 meetings to update them on the supply chain and production progress. Plus, co-lead twice daily governance meets with the consortium members.

RELATED: VentilatorChallengeUK Consortium

Value delivered

Just two days after being asked for assistance, Accenture started issuing new purchase orders. Within ten days, Accenture and Avanade had designed the supply chain processes, establishing protocols for the flow of information, product and payments across more than 100 organisations globally. And after five weeks, we had 100% of the parts needed to build the first batch of ventilators.

We quickly set-up a system that orchestrates the movement of all 3.4 million parts to the three different manufacturing locations where they are being assembled. With the control tower, we monitor and manage the process end-to-end, with new digital dashboards showing real-time metrics and providing visibility. A ventilator was built in 47 days through the new additional supply chain team, and the consortium is now working at full speed to deliver the units to the UK’s National Health Service (NHS) as soon as possible.

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Friday 8 December 2023 12:14 PM

Rolls-Royce supports Cranfield University contract for Team Tempest Supply Chain study

As part of its work with Team Tempest, MBDA is announcing a new partnership with Cranfield University, supported by Rolls-Royce, to develop a solution to validate supply chain maturity.

"The right level of supply chain maturity is key for the industrial partners in Team Tempest," said Mark Harrison, Senior Procurement Executive at MBDA . "Research by Rolls-Royce identified that Cranfield University was working on assessing Supply Chain Readiness in the commercial sector, similar to the way we currently assess Technology Readiness Levels (TRL) and Manufacturing Readiness Levels (MRL). So we agreed a contract where the idea of Supply Chain Readiness Levels could be developed and made suitable and appropriate for application in a defence procurement supply chain environment.”

“To enable advanced engineering systems and complex programmes to be developed successfully, there must be a viable means of delivery including a fit for purpose supply chain design,” says Professor Aris Matopoulos from the Centre for Logistics, Procurement and Supply Chain Management at Cranfield University. “The proposed solution builds on the idea that the supply chain cannot be an afterthought in future defence programmes. Developing the product (i.e. technology) and the process (i.e. manufacturing) needs to go hand in hand with the supply chain.”

Supply Chain Executive for Rolls-Royce Dr Paul Hacker added: “Any successful new product development requires the concurrent design of the product, the manufacturing process as well as the supply chain. Currently, we lack sufficient detail and metrics for the state of readiness of a supply chain. With the support of Cranfield University’s research – which Rolls-Royce are pleased to have identified – we aim to fill this information gap and universally apply findings to programmes in any industrial sector.”

The initial study will be carried out over six month period.

The aim is to develop a new digital toolset that will provide a greater level of granularity on the state of readiness of a supply chain across the programme lifecycle, enabling earlier intervention in future potential supply chain risks.

This digital toolset would be agnostic and therefore, if successful, could be used at any point in any defence equipment programme in the future.

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Rolls-Royce Sees Supply Chain Issues Lasting Into 2023

Based in Paris, Helen Massy-Beresford covers European and Middle Eastern airlines, the European Commission’s air transport policy and the air cargo industry for Aviation Week & Space Technology and Aviation Daily.

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Major Changes in Industry

The nature of the aerospace industry has relatively high barriers to entry as the cost for entry is high and requires specific skills and expertise. Nonetheless, the industry has been experiencing growth as the demand for flights increases resulting in the rise of aircraft manufacturing. Several factors have contributed to uncertainty in the aerospace industry including: oil prices, continued regionalization, environmental concerns, and expensive maintenance costs. The regionalization of airlines is leading the industry to seek lower operational costs and quicker turnaround times. Additionally, societal demands have influenced change within the aerospace industry by demanding quieter engines. With customer demand high and the emergence of new digital and robotic technologies, the industry is beginning to undergo a disruptive period , which is changing the way companies such as Rolls Royce are doing business.

Major New Technologies

The advent of technological advancements in engine design and production, materials, data analysis , robotics, and after-market services is enabling the changes within the aerospace industry. Rolls Royce is a market leader in aircraft engine design, production, and full lifecycle services. Therefore, it is influenced by technological changes to advance both its products and processes to meet customer demands .

All industries are being affected by the development of greater efficiency in electric and hybrid engines. The promise of efficient, quiet, and powerful electric motors, batteries, and power distribution systems is breaking down a dominant design within the aerospace industry, the gas turbine engine. As gas turbines ushered out the turbojet and rotary engine before it, electric and hybrid engines are more efficient and are developing quickly for smaller aircraft which will likely become a disrupting innovation in the near future.

Additive manufacturing is another technology changing the aerospace industry. This technology employs lasers to fuse alloys together to assemble new designs from metal dust. This is being used today across the industry to aid in the production of complex parts for manufacturing jet engines, such as turbine fan blades and fuel nozzles. Additive printing also can be used to make previously complex parts out of a single piece of metal which enables lighter, less complex parts, which leads to greater fuel efficiency. By incorporating this technology into current designs and process, the companies can be more efficient in the way they manufacture the engines and develop more complex fan blade shapes to produce more efficient airflow which was previously unavailable with the previous dominant design, machine milling.

Improved fuel efficiency and lower emissions is one of the demands in the industry. This is one area where we’ll continue to see a shift with the emergence of new technology and innovation, as we do today in other industries. Just as the auto industry is experiencing shifts in producing more fuel-efficient vehicles, we’ll also see this in the aerospace industry. This shift is already beginning to occur today with the development of engines that are more fuel efficient and are designed to reduce CO2 emissions. In addition, the engines are also being designed to reduce noise. Rolls Royce has a goal to reduce CO2 emissions by 75%, noise by 65% and fuel usage by 30%.

One of technological shifts that is occurring is the change in how companies are using data. The emergence of artificial intelligence is allowing companies in the aerospace manufacturing business to change their business model and the way they do business. Rolls Royce recently introduced their R 2 Labs , which is dedicated to improving their design, manufacturing and operational efficiencies by applying artificial intelligence and machine learning approaches to the vast amount of data they have collected.

The use of automated and intelligent robotics is a major new technology across many industries. Robotics are best known for their use in manufacturing, but new concepts are being developed to perform inspections and repair of delicate aircraft engines. Furthermore, the use of robotics allows machines to get to places humans previously could not without taking the engine apart. This innovation will allow swift inspections and turnaround times for defective engines, thereby increasing reliability and decreasing maintenance time.

The industry is also being transformed by offering more than just the product, which is the jet engine, but offering services that come with the product. This is one of the ways the players in the market are keeping sustainable growth. Rolls Royce introduced a program called CorporateCare which is an engine maintenance program offered to customers. This benefits customers by passing the handling of engine maintenance on to Rolls Royce. Rolls Royce also benefits from this program as it is able to leverage the data it obtains from this service for it’s engine health monitoring service.

Main Market Demands and How Technology Affects Them

The aerospace market is primarily influenced by growing customer demand for flights, low-cost, and reliable service. Airlines struggle to provide high levels of on-time service because of the constraints of the current dominant designs. The airlines are thus leading the aerospace industry to explore how to provide more fuel efficient engines to reduce variable operating costs. The two main drivers of engine fuel efficiency are the weight of the engine and the amount of fuel it uses to create thrust. The cost of oil has been difficult to predict and recent price fluctuations are another reason for airlines to hedge against price variability with more fuel efficient engines. As described above, new engine designs, additive manufacturing, data analytics, and better maintenance enable lighter engine production and greater efficiency.

Another market demand related to cost is the lifecycle management of aircraft engines. As engines become more complex, more highly skilled labor is required to maintain and repair them. Additionally, the pace of change is quickening so engine mechanics have a more difficult time keeping up. After-market support services have been around for decades but new technologies in analytics and digital customer support are enabling predictive maintenance recommendations and virtual support services to improve costs and decrease maintenance down time. As previously stated, the development of advanced robotics is also contributing to decreased maintenance time and greater engine reliability.

The societal demands on the market are also driving changes. Environmental concerns dictate that companies be accountable for the creation of carbon dioxide (CO2) and nitrous oxide (NOx). Both of these by products of oil burning engines has been related to global warming and have created a market interest in the minimization of their production. Additionally, more people are concerned with the noise of aircraft, particularly as their arrive and depart airports in major metropolitan areas. The market demands that airlines minimize noise by using quieter engines or climbing and descending quickly from airports which requires greater thrust. Aerospace companies are therefore driven to incrementally improve existing engines’ noise profile whilst improving new designs to further minimize aircraft engine noise. New cowlings and reconfigured compression turbines are incremental design improvements, while electric engines are the gold standard for quiet operation. One needs only to stand next to a Tesla to understand the quiet advantages of electric engines.

How to Become a Market Leader

For aerospace companies to become market leaders, they will have to master both the incremental and revolutionary innovations that the market demands. Lower costs, greater reliability, lower emissions, and quieter operation are keys to mastering this market. Meeting lower costs involves lower engine and maintenance costs, more efficient engine operations, and improved designs to minimize emissions and noise.

Rolls Royce has taken important steps to explicitly improve efficiency and reduce noise. According to Rolls Royce, they seek to achieve 30% reductions in fuel oil usage and 65% noise reduction or 15db noise loss. The incremental design improvements in their Trent high-bypass gas turbine engine series takes advantage of three-shaft architecture, high efficiency core compression, higher pressure ratios, and advanced materials to withstand higher temperatures for longer times. Three-shaft and core compression advances create higher airflow bypass ratios which increases fuel efficiency by pushing more airflow through the engine at lower speeds. Higher pressure ratios and advanced materials cause more heat energy to be converted to thrust more efficiently thus reducing fuel use. Combine all of these technologies with additive manufacturing to create lighter turbine fan blades and assemblies to reduce overall engine weight causing even greater efficiency.

Revolutionary innovations are in earlier stages of development. However, Rolls Royce is working to develop its E-Fan X electric turbofan engines, ACCEL electric high performance engines, and hybrid electric vertical takeoff and landing (EVTOL) aircraft for commuters. These technologies seek to overthrow the fuel oil gas turbine dominant design for lighter, more efficient, and lower emission electric and hybrid-electric engines. These technologies also help Rolls Royce meet its environmental goals of reducing CO2 emissions by 75%, NOx by 90%, and noise by 65%. Due to the high demand or the rewards these innovations promise, Rolls Royce has partnered with European aerospace giant Airbus to develop these innovations in conjunction with new, more efficient passenger aircraft body designs. Additionally, since the dominant design of aircraft bodies and power distribution systems is based on fuel oil power, innovation in electric power designs will have downstream effects on aircraft design and production, making collaboration with aircraft producers all the more important.

The full lifecycle maintenance of Rolls Royce aircraft engines is another critical element to dominating the aerospace power market. Advanced analytics with artificial intelligence and machine learning are being used to improve operational efficiencies and development cycles. Furthermore, innovative robotics designs are in development to reduce maintenance time and reduce costs. Among these technologies are:

FLARE – a snake-like robot in two parts that enters the side of the aircraft engine to repair expensive ceramic coatings and perform interior patches reducing time and cost.
Swarm – small, beetle-like robots used to automate interior scanning of engines to detect damage in a collaborative pact.
Cobra – another snake-like robot used to detect engine problems with an attached laser to conduct repairs.
Blisk Repair innovation – 3D modeling of expensive bladed disks used to compress air in engines and laser technology to rebuild the blades in place without having to replace the entire disk.

Process Innovation

Data analytics and innovation are core to their business. They have integrated data across all aspects of their business from design, manufacturing and how they interact with their customers. They’ve adopted an agile approach where teams run 90-day sprints to explore new ideas and determine which ideas are worth pursuing.

In a video clip of Rolls Royce’s Scrum Master, Steve Rawlinson he speaks to the agile approach Rolls Royce uses and the culture change this brings. He describes the culture as being one where employees are engaged, open to change and willing to learn from each other. This fosters a collaborative and innovative environment that better enables them to adapt as technology changes and allows them to be more competitive in the market . The agile approach allows them flexibility and the ability to get feedback more quickly from customers, which is an important component to how they do business.

Another key component of their innovation process is drawing from the ideas of external sources such as smaller businesses and universities. Rolls Royce has developed research centers across the world through partnerships with universities. This enables them to draw knowledge from external resources and technology experts in the field. Rolls Royce also partners with many companies which further contributes to their knowledge base. In an article on their website, Caroline Gorski, Director of Global Ecosystem and Partnership, states that by the end of 2018 they planned to have “500 innovative businesses around the world on our books”. Rolls Royce’s absorptive capacity is a strength of their innovation process that propels them forward and provides them with a competitive advantage .

4Ps Approach to Innovation Strategy

Building a capability to organize and manage innovation is a great achievement, but one also needs to consider where and how innovation can be used to strategic advantage . Innovation can take many forms but they can be reduced to four directions of change: product, process, position and paradigm innovation. Product and process innovation were mentioned earlier, but Rolls-Royce made changes to its underlying mental model which frames what the organization does and how it creates revenue.

The cumulative effect of advances in engine technology meant that by the 1990s when the first of the current generation of engines like Rolls-Royce Trent entered service, they not only exhibited a level of performance in terms of thrust and fuel efficiency that was a substantial improvement on 30 years earlier, their durability was also vastly improved compared to first generation turbofans. The extent of this improvement was reflected in the demand for spares to replace worn and damaged components. Even in the early 1980s a jet engine would consume a quantity of spares equivalent to the original value of the engine in about eight years, but engines like the new Rolls- Royce Trent that entered service at the end of the 1990s consumed this quantity of spares, not in eight years, but 25 years. For the engine makers this represented a very big drop in demand for spares and therefore their revenues. Faced with this, Rolls-Royce began to revise and re-shape its business strategy to be “ customer centric ” instead of “product-centric.” This aimed to extract greater value from one of the company’s most important assets, namely its installed engine base. Manufacturers were no longer looking simply to develop and extend their geographical coverage, but also the commercial scope of their after-sales activity.

Rolls-Royce has maintained its position as the market leader in business aviation engines through its trademarked CorporateCare (TotalCare) – the industry’s most comprehensive and cost effective engine maintenance program. Although Rolls-Royce engines are sold to the aircraft owner, the CorporateCare service packages means the Rolls-Royce retains responsibility for ensuring the product performs to customer requirements. The power-by-the-hour charging mechanism (revenues generated per engine flight hour) keeps incentives aligned by rewarding Rolls-Royce when the product is working as needed, and penalizing it when it is not. This mechanism and alignment between the OEM and its customers encourages continuous improvement and collaboration. This also drives the extension of asset lifetime while optimizing and reducing repair and maintenance costs. This results in reduced waste, increased resource efficiency, and enhances the asset’s value over its lifetime.

Advancements in technology, specifically digital electronics have been a powerful enabling factor facilitating the implementation of service strategies. This provided original equipment manufacturers (OEMs) like Rolls-Royce with a competitive advantage relative to conventional service providers, by enabling them to acquire new knowledge management capabilities. These technological advances allowed new service-focused offerings, enable the manufacturer to gather data on the use and performance of their products. In 2012 Rolls-Royce introduced its automatic Engine Health Monitoring data downloads for aircraft (G650, 550, 450). As such, there is an ongoing focus for the company to reduce the need for manual downloads, while also improving its overall data acquisition from in-service aircraft.

Airlines face a number of risks and uncertainties in managing and operating their engine assets, with knock-on consequences for their operating costs and aircraft performance. One of the reasons Rolls-Royce is able to develop and deliver these services and offer them through the CorporateCare model is the intimate knowledge it has of its own engines and how they perform throughout their lifetime (obtained via engine health monitoring and MRO services). Through this, Rolls-Royce is able to offer customers support and services for better operational decision-making and efficiency. The value generated for airline operators from this service model are predictability of MRO-related costs, high operation efficiency, avoided disruptions, higher value of engine asset, and the ability to focus on their own resources and core business.

Customers become more sophisticated so their expectations rise and they demand solutions rather than mere products. The power-by-the-hour service model drives recurring revenues primarily by charging customers on the basis of hours flown by each engine it serves. Over the lifetime of a typical engine program, this translates into a volume of revenues which is approximately four times as large as that of the initial engine (original equipment) sale.

High Involvement Innovation

John Bessant introduces four levels of innovation in his book “High Involvement Innovation.” The four level framework to define the evolution of high involvement innovation through various levels of development.

Level 1 – Little or random innovation involvement. People solve problems in an ad hoc and there is no structure around the activity. The innovation yields short term benefits but no strategic impact.
Level 2 – The first attempt to formalize the innovation process is made. Including a process to identify and solve problems and a reward system . They system may have facilitators but is often concentrated at the local level. The innovations have minimal impact on larger organizational goals . Without a specific set of targets the process is easy to abandon.
Level 3 – Includes level 2 and the innovation ties into the strategic goals of the organization and has a significant impact on the bottom line through new products , process improvements , etc. A limit of level 3 is predefined limits and definition by management.
Level 4 – Includes level 3 but the differentiator is empowering groups and individuals to innovate and experiment on their own. It fits with the idea of ‘internally directed’ innovation and “fast learning.” It is often associated with professional research scientists or engineers.

Rolls Royce operates on a 20 year innovation timeline. They break it down into 3 key milestones; five, ten and twenty year horizons. The five year technology is about innovations that are currently controlled and are currently being added into the products. Ten year technology is valid, leading edge technology that will impact the next generation of products. Twenty year technology is emerging and unknown but needs to be continuously searched for and monitored.

In 2015, CEO Warren East, described innovation as “the life blood of a successful company.” To support and foster innovation Rolls Royce has several systems to promote and track ideas for innovation; intranet sites, innovation portals, support forums, and innovation ambassadors. The company also provides time and resources to encourage and enable employees to get out of their day to day work and work on other areas of the business. The knowledge generated in the innovation platforms is then shared across projects and teams to ensure that useful ideas are not wasted and innovations can spread freely between teams.

Rolls Royce is clearly at level 4, ‘proactive/empowered high involvement innovation’ on Bessants scale. The organization, research and development , and tracking of their innovations meets all the criteria for level 3. Level 4 is met by management’s commitment to making innovation a part of the larger strategy, coupled with their resources and time for people across the company to experiment and transfer ideas and knowledge.

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Rolls-Royce share price suffers a harsh reversal: here’s why

The Rolls Royce stock price has suffered a reversal in the past few days.
Airbus delivered a mixed forward outlook citing Rolls-Royce engine issues.
Rolls-Royce and other industrial companies are still having supply chain issues.

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The stock has pulled back after Airbus, the biggest aircraft manufacturer in the world, published a mixed financial estimate. In it, the company said that it will deliver about 770 new aircraft this year, lower than what it guided before.

It also noted that Rolls-Royce engines for the A320neo planes were behind schedule, a move that has pushed its stock price to 133 euros, its lowest level since December last year. It has tumbled by more than 25% from the highest point this year.

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Rolls-Royce has grown to become one of the biggest engine providers in the industry, where it competes with the likes of General Electric and Pratt & Whitney.

Still, despite the ongoing retreat, its stock has been one of the best performers in London. It has soared by more than 1,300% from its lowest point in 2020. Also, the stock has surged by more than 50% this year, beating most industrial companies like GE and Safran.

The company has done well because of the management’s focus on profitability and its updated guidance. Under Tufan Erginbilgiç, the company hopes to grow its operating profit from last year’s £1.6 billion to between £2.5 billion and £2.8 billion. Its operating margin is expected to move to between 13% and 15% in the mid-term.

Like other industrial companies, Rolls-Royce Holdings has gone through major supply chain issues after the Covid-19 pandemic. In its last presentation to investors, the company noted that its civil aerospace business was making :

“Strong progress improving onerous contracts offset by the impacts of supply chain challenges.”

Still, it is unclear whether these challenges will impact Rolls-Royce’s business because of how it works. Unlike other manufacturers, the company makes most of its money from the long-term contracts to airlines like Etihad, Lufthansa, and Emirates. As I have written before , I believe that Rolls-Royce stock price has more room to climb to 500p in the near term. Most analysts are also bullish on the shares.

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(PDF) Critical Success Factors for Successful Supply Chain
Rolls Royce A Case Study by Wahid311
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Apresentacao Case Study Rolls Royce Final _ English version Jan 2016
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COMMENTS

PDF Supply Chain Management
www.rolls-royce.com SERVICE OFFERING NUCLEAR INNOVATION & TECHNOLOGY Rolls-Royce operates a global purchasing organisation with a Supply Chain total spend exceeding £4.7 billion. Rolls-Royce has 950 purchasing employees globally and employs 18,000 active suppliers, across a large and growing number of products and parts.
Inside Rolls-Royce's supply chain
Rolls-Royce operates as a global purchasing organisation with a total supply chain spend of over £4.7bn ($6bn). With more than 950 purchasing employees worldwide, the company employs 18,000 active suppliers across a large and ever-growing number of products and parts. Rolls-Royce has purchasing employees in 10 countries across Europe, Asia and ...
Supply chain lessons from Rolls-Royce for small businesses
That case study, for teaching at business schools and elsewhere, focuses on how Rolls-Royce can prevent a recurrence of supply chain issue stemming from its configuration in a very constrained environment. This all happens against the backdrop of an ultra-competitive market where the most luxurious model of these business jets can cost $75 million.
An exploration of supply chain management practices in the aerospace
The thesis also presents more specific case study examples that track the implementation and results of major supply chain management initiatives. ... a tier one supplier in the aerospace industry, such as Rolls- Royce, and by examining how those factors have affected Rolls-Royce's supply chain management strategies and practices. Description. ...
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Critical Success Factors for Successful Supply Chain Relationships in the High-Tech Aerospace Industry: A case study of Rolls-Royce Installations and Controls 'Units' and 'Specialised Fabrications' Commodity Groups
Study of Supply Chain Practices in the Aerospace Industry: Rolls-Royce
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Case Spotlight: To Restructure or Not to Restructure? Rolls-Royce
On the reasons for writing the case… Gunnar said: "A combination of having been taught cases (some better, some worse) and my own experience in supply chain management made me think that my experience in leading the supply chain team for new product introduction in Rolls-Royce's business aviation division could make for an interesting case in the classroom that is relevant and based on ...
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e manufacturer and presents a focused study of Rolls-Royce's supply chain management practices..In particular, the thesis involves a deeper exploration of the aircraft engine manufacturing business segment of Rolls-Royce and strives to understand the company's supply chain management practices, by examining the role o.
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A case study of Rolls-Royce Installations and Controls ... global footprint, the Rolls-Royce supply chain is called upon to supply goods and services as part. of the wider value c hain.
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Paul O'Rourke, Group Security Director, Rolls-Royce, commented: "Rolls-Royce's capability to safeguard customers' delivery, and lead and future proof our organisation and supply chain against disruptions ranging from security of critical materials supply to the flexibility of our manufacturing and test facilities, is a top priority from ...
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Supply Chain Management. ... The case of Rolls-Royce, therefore, offers a unique opportunity for an analysis of how a high-tech company sustained the innovation process over a number of decades, notwithstanding dramatic changes in corporate ownership. ... Forecast studies showed that sales of Rolls-Royce's existing engines would fall from £58 ...
Rolls-Royce
Watch to see Supply Chain Programme Manager Holger Reichert explain how we get the resources and materials to craft the Pearl 15, part of our Intelligent Eng...
The Rolls-Royce Value Chain
View. Download scientific diagram | The Rolls-Royce Value Chain from publication: Critical Success Factors for Successful Supply Chain Relationships in the High-Tech Aerospace Industry | Abstract ...
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The Pearl 15 combines exceptional aerospace design with innovative technologies enabling the Bombardier Global 5500 & 6500 aircraft to fly farther, faster, cleaner and quieter. Michael Tyrrell. Rolls-Royce. Watch to see supply chain programme manager Holger Reichert explain how Rolls-Royce gets the resources and materials to craft the Pearl 15 ...
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Rolls-Royce identified more than 100 suppliers, providing the 292 unique parts, and our role is to precisely coordinate the order and shipment of some 3.4million parts. Working with Avanade, our joint venture with Microsoft, we deployed and now support an Enterprise Resource Planning system (ERP), Dynamics365, and implemented a Procure-to-Pay ...
Rolls-Royce supports Cranfield University contract for Team Tempest
"The right level of supply chain maturity is key for the industrial partners in Team Tempest," said Mark Harrison, Senior Procurement Executive at MBDA. "Research by Rolls-Royce identified that Cranfield University was working on assessing Supply Chain Readiness in the commercial sector, similar to the way we currently assess Technology Readiness Levels (TRL) and Manufacturing Readiness Levels ...
Power-by-the-hour: The role of technology in reshaping business
streams, down the supply chain. The authors noted that this factor was less signiﬁcant than the. other three. W ard and Graves (2007) ... Case study: Rolls-Royce plc. 4.1. Jet engine technology.
Rolls-Royce SMR supply chain programme launched
Rolls-Royce SMR supply chain programme launched. Rolls-Royce SMR supply chain programme launched 20th June 2024. More than 130 delegates, with hundreds more joining virtually, attended Rolls-Royce SMR's first Supplier Conference in Sheffield yesterday to discuss their vital role deploying a global fleet of Small Modular Reactor (SMR) power ...
Rolls-Royce Sees Supply Chain Issues Lasting Into 2023
Rolls-Royce said it expected the challenges linked to the war in Ukraine, inflationary pressures and supply chain constraints to continue into next year, as it reported a net loss for the first ...
Supply Chain Planning and Management at Rolls Royce
Supply chain management is commonly described as: activities are designed, planned, operated, controlled and monitored in the supply chain to achieve creating values, building a competitive infrastructure, synchronizing supply with demand and so on. Planning, as part of SCM, indicates activities aimed at allocating, deploying or consuming ...
Rolls Royce Case Studies with downloads and lesson plans
Competing within a changing world. No business today operates in a complete vacuum unaffected by market forces. By their very nature business activities are competitive. Within a dynamic, rapidly... Learn about Rolls Royce with real-life examples within their case studies constructed around the key elements of the business curriculum.
Case Study of Rolls Royce: Innovating for the Future
Rolls Royce has a goal to reduce CO2 emissions by 75%, noise by 65% and fuel usage by 30%. One of technological shifts that is occurring is the change in how companies are using data. The emergence of artificial intelligence is allowing companies in the aerospace manufacturing business to change their business model and the way they do business ...
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Rolls-Royce share price suffers a harsh reversal: here's why
Like other industrial companies, Rolls-Royce Holdings has gone through major supply chain issues after the Covid-19 pandemic. In its last presentation to investors, the company noted that its ...
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