The need for digitalization in aerospace and defense

Facing rapid change and disruption

Manufacturers, contractors, and suppliers in the aerospace and defense (A&D) industry face numerous challenges as they adapt to rapid change and market disruption. For many, bottlenecks in the supply chain and the need for greater supply chain visibility are some of the most pressing issues. For others, controlling costs and increasing productivity may be the major concern.

Data insights, predictive analytics, and reliable estimates are more important than ever as manufacturers attempt to respond to changing market demands and maintain appropriate inventory levels. Supply chain bottlenecks can jeopardize essential stock levels for parts and repair, cause delays in production or service, and pose contract compliance risks.

Executing both defense contracts and commercial contracts while meeting strict security mandates is another complexity for A&D companies. The newest cybersecurity maturity model certification provides requirements that must be met.

Fortunately, organizations can turn to technology help manage the issues and turn complexity into streamlined efficiency.

The background

In the past, organizations often turned to manual legacy solutions to manage suppliers, plan for just-in-time delivery, keep costs in check, and comply with complex regulations. These tactics provide steady, predictable delivery of goods and services—until global disruption turns the industry into a chaotic rush to respond, adapt, and forge new revenue models.

Today, volatility is part of the new normal. Restrictions in travel during the COVID-19 pandemic caused major revenue losses for airlines, forcing many to reconsider their budget and investment plans. Aircraft parked in deserts waiting for buyers are still sitting idle and are at risk of becoming obsolete before becoming part of a commercial fleet. Many predict prolonged state of recovery for the commercial sector, while defense is experiencing stability or an increase in demand. Manufacturers have shifted to follow this evolution, with many pivoting their focus from commercial accounts to maintenance, retrofit and overhaul (MRO), and defense contracts. Shifts in strategies have upended supply chain requirements and caused enterprises to examine their core systems. Outdated solutions are not keeping up with needs.

New challenges

A&D companies are experiencing a growing number of challenges. For instance, enterprises looking to meet existing contractual obligations, while also expanding business models and revenue streams, often find themselves facing additional compliance and regulation mandates. Enterprises are also finding that visibility upstream and downstream in the supply chain is now more important than ever. And accurate forecasting is essential, as is the ability to enable the existing workforce to be more productive and engaged with data.

Manufacturers have streamlined processes over the years to create greater economies of scale, as well as place greater responsibility for increasingly complex design and manufacturing tasks directly on lower-tier suppliers. But this has created greater supply chain risk, as the suppliers can become critical bottlenecks for design, manufacturing, and even aftermarket service. In addition, outsourcing to lower-cost countries has exposed companies to increased logistics and transportation challenges, along with greater global trade compliance requirements

A modern ERP solution is critical

To mitigate risks and challenges, companies must modernize their ERP solutions. Enterprises need to build more collaborative relationships, actively monitor leading risk indicators, and integrate supply chain metrics into program management and enterprise strategic planning processes. The impact of the pandemic has demonstrated how important it is for A&D companies to look to data insights for competitive advantages and resilience. Rapid innovation and agility, uncompromised quality and safety, streamlined MRO, and shop floor efficiency gains can all be achieved by modernizing technology.

Too often, collecting the information needed for compliance with the many strict mandates has been a manual process, plagued by latency that significantly slows response time. The grim reality is that many A&D manufacturers and service providers operate in a reactive mode, sometimes paying fines rather than making the investment to update historical program files.

Companies that embrace modern digital solutions will be better positioned to recover from current and future challenges, while establishing a sustainable competitive advantage. 

About the author:
Edward Talerico is Infor Sr. Director, Product Management, Aerospace and Defense