Risk Sharing Partnership (RSP) in Aerospace: The RSP 2.0 Model

Prof. Dr. Stephan M. Wagner, Stephan Baur, ETH Zürich

Summary

The demand for large commercial and regional aircraft is expected to grow in the next decades. Despite this promising development on the market, supplier firms in this industry face several challenges, some driven by the risk-sharing partnership (RSP) contracts that have been implemented largely for recent aircraft programs such as A350XWB and B787. This article discusses the RSP concept and presents the risks which are shared between the buyer (e.g. aircraft/engine OEM) and the supplier firm in this type of contract within the framework of a new product development (NPD) project. We then discuss a challenge that supplier firms have encountered in recent RSP contracts and, based on this, suggest a potential improvement which could lead to an RSP 2.0 model. On the one hand, this is relevant for established buyer firms and for their suppliers which would like to set up RSP contracts in the frame of incremental innovation or second/multiple sourcing strategies and on the other hand for supplier firms which would like to engage with emerging players in a NPD project governed by this type of collaborative relationship.

For the full article:

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