Airbus SAS opened a logistics company in Tianjin on Friday to provide support services for all the aircraft maker's programs in China.
Airbus (Tianjin) Logistics Co (ATL), the first such center for Airbus in Asia, will handle all the company's transportation needs, including materials and plane parts, between China and Europe.
The logistics center is situated in the Tianjin Free Trade Zone Comprehensive Bonded Area, close to other Airbus facilities, including the assembly line for the A320 aircraft.
Airbus has several areas of cooperation - involving materials purchasing and parts manufacturing and assembly - with suppliers in six cities: Harbin, Shenyang, Tianjin, Xi'an, Chengdu and Shanghai, and each supplier organizes its own supply chain.
"The fact that every supplier uses their own logistics methods to transport raw materials and deliver products means that we spend a lot of money on logistics," said Liu Qiang, operations and quality manager at ATL.
Sometimes, suppliers even transport extra raw materials because of a lack of harmonized supply chain management, Liu said.
As the number of Airbus programs increases in China, the cost of logistics is a major concern for the aircraft manufacturer.
ATL's management of suppliers' goods flow will help Airbus reduce logistical costs and increase efficiency, Liu said.
The center, which has an area of 10,000 square meters, provides storage and transportation capabilities in accordance with the demands of suppliers, he added.
"The logistics center in Tianjin has the potential to help us reduce costs by as much as 30 percent, according to our experiences in the US," said Laurence Barron, president of Airbus China.
ATL has already supplied services for Airbus' two programs in China.
One is the manufacture and assembly of wings for the A320. ATL is able to supply logistics services for 40 containers of A320 wings annually, which almost equates to the production capability of the A320 wing assembly line, Liu said.
Another program relates to the testing of wing slats manufactured by a Belgian company, which opened a factory next to ATL in earlier this month.
The logistics center will also support Airbus' latest aircraft, the A350 XWB, of which 5 percent of the airframe will be manufactured in China, Barron said.
"It will provide services for us and all our suppliers in China in the future," he said, "And ATL, which is our only logistics center in Asia, will also serve our suppliers in the whole Asian region."
However, it will take some time to ensure that all Airbus-related goods are routed through ATL, because the company cannot change some existing contracts overnight, said Barron.
According to some existing cooperation contracts, suppliers take the responsibility for logistics.
Another problem facing ATL is the reorganization of the existing goods flow, said Barron.
Airbus spends a lot of time and energy on the harmonization of transportation and management of the supply chain, which was previously owned separately by suppliers, he added.