Abstract

Dynamic Technologies (DT) is a India-based aerospace manufacturing company which is supplying sub-systems to a Tier 1 aerospace vendor. Owing to superior performance the aerospace OEM offered to directly source the entire system from DT. As a supplier to the Tier 1 vendor, DT was engaged primarily in labor-intensive assembly operations. However, as a direct supplier to the OEM, it will also involve complex precision manufacturing. The question is whether DT will be able to conduct this critical operation in-house or depend on a European company which was engaged in the precision manufacturing when DT was supplying to the Tier 1 vendor. There were other complexities, such as, the vendors for special grade metals were not available in India and these have to be sourced from Europe. The CEO of the company was grappling with two options suggested by his deputies and the inherent risks involved. Can he come up something different?

Learning Objective

Assessing the advantage and risks of going up the value which involves complex manufacturing operations versus depending on a European supplier which had the capabilities. Students identify and assess different business models and inherent benefits and risks. It also involves cross-cultural interactions (European and an Indian company). In addition, the changes that are happening in the high-tech aerospace sector can be qualitatively discussed. As the market for civilian aircraft is shifting towards Asia, how should global aerospace OEMs change the structure of the supply chain?