The aerospace and defense (A&D) industry stands at a critical juncture. Facing record-breaking revenue losses from COVID 19-related disruption, many commercial aviation enterprises are shifting direction, seeking new opportunities, and launching new business models in hope of recovering lost revenue. Agility, however, requires a modern information technology (IT) infrastructure, one with end-to-end visibility and access to data insights so companies can vigilantly watch contracts, compliance, and commitments. Technology makes this pivot possible – and profitable. Weaving a digital thread throughout the enterprise can provide the connectivity necessary to adapt to today’s changing demands.
State of the industry
While the defense industry and companies in maintenance, repair, and overhaul (MRO) have weathered the pandemic with only moderate bruises, commercial aviation has experienced debilitating blows. The International Air Transport Association, the industry’s main trade body, predicts a net loss of $11.6 billion for 2022. While that’s a startling number, it seems minor compared to the $51.8 billion loss in 2021.A full recovery may seem a big challenge, but small pockets of opportunities can be uncovered. The number of cargo flights is increasing, as enterprises worldwide respond to supply chain disruption and turn to air routes to restock inventory. Reports show demand for air cargo rose by 7.9% in 2021 (compared to 2019 levels) and is on track to grow by another 13.2% during 2022. FreightWaves reports that 76.3 million tons of merchandise, materials, equipment, and food products will be shipped by air this year.
Charter flights are also seeing an uptick in business, with some companies that offer private charter services or membership clubs reporting double the business. As more enterprises rush to enter this market, though, the added availability is causing unexpected drops in pricing.
Just from these few examples, the industry’s volatility is clearly visible. Enterprises must adjust go-to-market strategies, supply chain partners, operational priorities, investment in inventory, and pricing as the marketplace shifts in unprecedented patterns. There are no historical situations quite like this pandemic that can be used as an economic model, providing guidance on the best route to recovery, so agile, data-centric software is now more critical than ever.
A digital thread
The industry needs tools to stay on track. Cloud-based solutions that provide end-to-end connectivity and visibility provide the conduit – digital thread – for critical information to make well-informed strategic decisions. In a complex global market, decisions can’t be made in isolation. Multiple factors impact the bottom line, including the availability of parts and components; workforce skills; capital for investing in the fleet, hangars, equipment; and mergers or acquisitions (M&A) of other enterprises to break into a new market.
A cloud-based enterprise resource planning (ERP) solution provides a single view of the entire enterprise and can reach beyond the company to connect with partners, suppliers, and customers. The real-time data is consistent and easy to access, capturing all relevant product data, historical records, complex relationships of parts, and service history.
By connecting the various revenue streams and cost centers – sometimes scattered across regions and different currencies – the leadership setting strategy can be confident in analyzing cash flow, calculating asset reliability, and projecting demand. As the industry focuses on high-value assets, decisions have multi-billion-dollar cost ramifications. Mistakes at this level aren’t easy to absorb, no matter how mature and capital-rich the enterprise may be. This is why a holistic view of influencing factors is crucial when making strategic decisions at the corporate level. An error calculating cash flow can jeopardize essentials, such as workforce payroll.
Line-of-business managers and operational teams also benefit from the visibility an interconnecting digital thread makes possible. Here are some examples:
Innovation.R&D and engineering teams can gain a better understanding of customer feedback, the product lifespan, where or when product failures occur, and the cost ramifications of the materials they specify. With access to data, product developers can delve into historical product trends and use predictive analytics to forecast compliance and costs.
Collaboration. Connecting the enterprise with a single system also connects the workforce. Whether it’s brainstorming a product innovation or trouble-shooting a repair, users can easily share diagrams, videos, CAD drawings, and financial reports without leaving the system’s security and automatic back-ups. Keeping conversations within the systems protects intellectual property (IP), documenting details and creating a thought trail colleagues can follow.
Performance metrics. Safety, costs, quality, on-time delivery, and compliance are just some of the factors to be tracked and measured. Analyzing return-on-investment (ROI) and profitability isn’t always easy. Delaying a flight to replace a red-flagged part could impact on-time departure rates, but it could also save lives. Advanced analytics and the ability to drill into multiple levels of factors is essential for obtaining a clear picture of performance.
Forecasting.A&D enterprises must accurately forecast customer demand and revenue. The company must also have a realistic view of components and parts needed for manufacturing and MRO operations. Just-in-time delivery, when well synchronized, supports a healthy cash flow and eliminates capital tied up in reserve stock.
Parts are often high-value, large, cumbersome to store, and quickly become obsolete. Some parts also have strict requirements on re-use and require tracking miles-flown by serial number. This all leads to complexity for the inventory system. Full visibility is essential for intelligent planning of procurement, supply chain agreements, and allocating parts to MRO needs. Modern analytics with built artificial intelligence (AI) drive accuracy of inventory records and reliability.
Compliance. A&D is heavily regulated, and fines for not meeting regulations can be hefty. There’s no room for slack quality control or inconsistent tracking of program details. A digital thread connecting programs, costs, contracts, agreements, and reporting simplifies compliance. Access to data and confidence that the data is correct saves time and reduces risk.
Maintenance. After-market service involves tracking as-serviced history of the aircraft as well as flight hours for parts and components that might be borrowed from other grounded aircraft or inventory. All aircraft services conducted must be recorded and the data accessible for future reference. Only an advanced cloud-based ERP solution can track and monitor the details. The digital thread helps tie the operational logistics to inventory, costs, and the workforce.
Summary
The A&D industry centers around highly complex and advanced aircraft, leveraging the latest technology and innovations. But the internal processes for many companies are surprisingly outdated. Upgrades and system-wide migration to the cloud is disruptive, but in a good way. And, doing nothing will be even more disruptive as the organization struggles to keep pace with the newest demands of a changing global economy. Enterprises that want to remain resilient need the benefits of connectivity and visibility – capabilities a digital thread brings.
Explore the April 2022 Issue
Check out more from this issue and find your next story to read.
Latest from Aerospace Manufacturing and Design
- Learn to navigate the challenges of contracting with the Department of Defense
- Leaders in Manufacturing Roundtable
- ASTRO America, FSU launch National Manufacturing Accelerator
- Sandvik Coromant's QS Micro holding system
- IMTS 2024 Booth Tour: ZOLLER
- View a demonstration of Mazak's VARIAXIS i-700 NEO
- Riyadh Air orders 60 Airbus A321neo family aircraft
- Nidec Drives’ Control Techniques KI-Keypad Plus
