The future of the aerospace & defense industry is soaring. Deloitte’s 2018 Global Aerospace and Defense Industry Outlook forecasts:
- 1% growth in revenue for the global A&D industry
- 8% growth in revenue for the commercial aircraft sector
- 6% growth in revenue for the defense sector
All that growth creates challenges. According to Deloitte, at the end of 2017, the commercial aircraft backlog was at an all-time high—approximately 14,000 units. This represents 9.5 years of current annual production rate.
It’s not enough to meet production goals. A&D manufacturers need to meet quality regulations, among them AS9145. This regulation, published by SAE International, in 2016 “specifies requirements in a structured framework to plan and complete actions of the product realization cycle which are necessary to ensure quality product(s) are delivered on time, while satisfying cost performance targets.” The standard, which establishes requirements for advanced product quality planning (APQP) and production part approval process (PPAP) in new product development, is just beginning to be adopted by A&D manufacturers.
Cost containment is another major issue. Product development costs are astronomical and continuing to rise. Over the past 20 years, new aircraft and system development costs have doubled in real terms—from hundreds of millions for major components to $5 billion for engines and $25 billion or more for aircraft, according to McKinsey & Company. Airframe engineering and design, manufacturing labor, and tooling account for roughly 70% of total development costs.
Cost, growing demand, and a massive production backlog can make it difficult to build in quality from the ground up. So how do A&D manufacturers meet quality goals while keeping costs under control?
Build a smarter, more collaborative supply chain
To overcome these challenges, A&D manufacturers need to create smarter supply chains—supply chains that are highly interconnected and deeply collaborative. With an interconnected, collaborative supply chain, A&D manufacturers can view their own parts inventory and the inventory of their suppliers in real-time, to avoid nasty surprises and possible production shutdowns.
A cloud-based portal gives A&D companies the tool they need to create this smarter, more collaborative supply chain. A cloud-based portal creates a single system of record for collecting and normalizing data and then pushing it down to transactional systems. Everyone along the supply chain has access to all the information they need to make smart decisions that improve quality, keep the production line running, and identify opportunities to reduce costs. As an added bonus, this type of collaboration helps strengthen relationships between A&D manufacturers and parts suppliers, which helps to further improve quality and create an environment where innovation grows.
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