ConBid: Making Sense of Airbus’ Raw Material Bundling

Aerospace Supply Chains Under Pressure: ConBid’s Response

Aerospace supply chains and the associated costs are under significant pressure, with mid-tier suppliers bearing the brunt of these challenges. Positioned between demanding Original Equipment Manufacturers (OEMs) and unpredictable upstream suppliers, these mid-tier suppliers face increasing operational and financial strain.

Our recent Strategy Paper, “Aerospace Tier 1 to X: Mastering Supply Chain Optimisation”, highlights a recurring issue: mid-tier as well as tier 1 suppliers are increasingly caught in a "sandwich position". They are squeezed between rising material costs from upstream providers and mounting demands from downstream manufacturers. This dual pressure exacerbates their challenges, making effective cost management and operational efficiency more critical than ever.

Recognising these developments, particularly concerning raw materials, Airbus has launched a comprehensive raw material bundling procurement initiative known as ConBid. This initiative leverages collective bargaining power to stabilise costs and ensure a more predictable supply chain under Airbus’ leadership.

In practice, ConBid consolidates Airbus’ raw material purchasing into a single, centralised process. It aims to secure access to scarce materials, to reduce the burden of individual negotiations for suppliers, and to help reserve volumes well in advance — a necessity in a market where global availability is limited. Managing hundreds of material types across multiple tiers of the supply chain, ConBid addresses both scale and complexity.

This article outlines the key challenges, the benefits and trade-offs of ConBid, and how H&Z Management Consulting helps suppliers navigate this process with confidence.
 

Why Managing Raw Material Costs in Aerospace is Getting Harder

The aviation industry is a complex, interdependent sector that relies heavily on a robust supply chain to ensure the timely and cost-effective delivery of raw materials. Effective cost management faces several persistent challenges:

• Raw material price volatility makes accurate budgeting difficult.
• Complex multi-tier supply chains increase risk of delays and cost escalation.
• Short forecasting periods and poor-quality forecasts lead to costly inventory imbalances.
• Data inconsistencies and fragmented systems result in planning errors.

Delays or disruptions at any point can lead to increased costs, production halts, and strained relationships across the supply chain. Mid-tier suppliers are particularly exposed, bearing the impact of volatile upstream pricing while managing strict OEM cost-down requirements.

The need to secure material volumes ahead of time is critical: there is only a limited global supply. ConBid mitigates this risk by pooling demand and giving suppliers a structured route to secure their required materials.
 

Strategic View: ConBid Opportunities and Risks for Suppliers

ConBid offers both opportunity and constraint. It provides suppliers with access to scarce materials and price stability, but it also reduces autonomy and requires full transparency of material costs. Importantly, bundling does not automatically generate a price advantage—its core value lies in security of supply during shortages.

Opportunities:

Suppliers can benefit from volume leverage and price stability, as long-term agreements reduce exposure to market volatility. Aligning with Airbus processes simplifies administration and reduces the burden of individual negotiations, while access to allocated materials secures continuity of supply.

Strategic Benefits:

• Cost optimisation through volume leverage
• Price stability via annual agreements
• Supply chain simplification through alignment with Airbus processes
• Negotiation relief through centralised terms
• Material supply risk mitigation

Risks and Trade-offs:

While ConBid brings supply security, cost savings can be limited due to pass-through pricing. Suppliers become highly dependent on Airbus allocations and pricing, with complex and sometimes opaque structures creating operational pressure. There is also less flexibility for supplier or design changes, and competition in RFQs can be restricted, reducing overall purchasing power.

Key Risks:

• Limited cost savings due to pass-through pricing
• High dependency on Airbus pricing and allocations
• Complex and opaque pricing structures
• Administrative burden and exception handling
• Diminished purchasing power
• Inflexibility in supplier and design changes
• Restricted competition in RFQs

In short, ConBid delivers access and security in times of shortage, but suppliers must be prepared for complete cost transparency and the likelihood that Airbus captures most of the savings.

How H&Z Helps You Navigate ConBid Successfully

H&Z maintains an impartial, experience-based advisory role. We guide suppliers in evaluating participation, implementing effectively, and planning for future transitions or exits, without advocating for or against ConBid.

We recommend six targeted enablement initiatives designed to reduce risk, unlock savings, and manage workload efficiently:

1. Conduct a Benefit Analysis Before Entering ConBid
   Assess potential advantages, risks, cost implications, and strategic value. Exceptional stock quotes can sometimes outperform ConBid.
   Key insight: Early analysis supports informed, confident decisions.
2. Ensure Seamless Implementation Post-ConBid Enablement
   Ensure agreed prices are communicated and transferred to suppliers and customers, with Airbus approval to avoid rework.
   Key insight: Clear plans prevent delays and friction.
3. Establish a Process for Annual Verification with Airbus
   Track price effects and ensure accurate pass-through calculations.
   Key insight: Annual verification avoids savings leakage.
4. Incorporate Change Management into Sourcing Decisions
   Analyse suppliers, market trends, and cost impacts to support agile decisions.
   Key insight: Structured change management prevents missed opportunities.
5. Prepare for Airbus Pass-Through Negotiations After Supplier Changes
   Negotiate proactively to ensure savings are captured and fairly shared.
   Key insight: Well-prepared negotiations protect realised savings.
6. Plan Exit Strategies for Leaving ConBid
   Exiting requires contractual and operational planning to maintain flexibility.
   Key insight: Plan for an exit — ConBid is not forever.

Unlocking ConBid’s Full Value

ConBid is a specialised, low-visibility initiative that can significantly impact supplier cost structures and operational efficiency. Without expert enablement, its benefits can be diluted by operational complexity, lost savings, or strategic inflexibility.

Public information on ConBid has historically been limited, so specialist insight remains particularly valuable for suppliers navigating this environment.

By combining structured analysis, proactive planning, and ongoing verification, H&Z helps suppliers realise ConBid’s full value — while protecting optionality for the future.