What do we mean by the digital transformation of the aerospace supply chain? And, how can we maximise our opportunities whilst minimising our threats?
The Aerospace and Defense (A&D) industry is known for its ambitious early adoption of technological advancements, one example being stealth composites. Much of this advancement has been driven by customer demand.
Recently there has been a demand for more economical and fuel efficient aircraft, which derives from a consumer desire to pay less in a world where the cost of living is increasing yet the desire to fly to new places keeps rising.
To offer competitive prices for commercial flights then, planes have to fly more efficiently. For this reason, both Boeing and Airbus hit all-time annual highs in 2017 for units delivered, with Boeing delivering just over 730, and Airbus hitting the 700 mark.
Provisional data suggests that this upwards trend will continue through 2018.
This technological advancement means aircraft models have decreasing life spans, as operators try to upgrade their systems to allow them to offer continuously competitive consumer prices, whilst at the same time increasing their profits.
Add to this a very competitive commercial airline industry with over 800 airlines worldwide, with commercial fleets expected to grow by 109 percent over the next 15 years, and the freighter fleet to expand by 77 percent.
With this expected growth you would expect A&D companies throughout the supply chain to be taking full advantage of digital initiatives to increase productivity and efficiency, such as advanced analytics, cloud services, the Internet of Things, and other cutting-edge digital technologies that companies in other industries, like retail banking, have been benefiting from for years.
However, they have been uncharacteristically slow despite the fact that “digital technologies can boost A&D companies’ revenue by 5 to 15 percent and lower their costs by 5 to 10 percent” all whilst making the company more agile, allowing them to deal with greater fluctuations in demand than ever before.
And suppliers really need that flexibility, that ability scale up and down in order to quickly work around errors. Things like parts shortages, defective products, or out of sequence activity which can throw the whole supply chain out of kilter, resulting in increased production costs and delays.
The chain also faces traditional adversaries like natural disasters or geopolitical events which can’t be prepared for but may need a quick and dramatic reaction.
One current prominent geopolitical event is the Trump trade war where tariffs are being levied on a vast number of aviation related parts as well as “a 25% tariff on aircraft weighing between 33,000 pounds and 99,000 pounds. In other words, it’s a 25% tax on Boeing’s best selling plane, the 737.”
This is going to hurt a lot of companies bottom lines, and how they adapt and develop to deal with these extra costs will be important to the industries overall health.
How the Supply Chain could Benefit from Digitisation
There are numerous ways for new digital technologies to be applied to the aerospace industry. Below, we outline five possibilities that could help streamline the aerospace supply chain to deal with this continuously increasing demand.
Predictive analytics and demand forecasting
Too much stock costs money that you may never see a return on, and takes up space to house. But not enough stock can lead to disruption of the supply chain which could mean costly delays for yourself and for companies down the line.
This could result in losing clients and costing you far more money than simply having too much stock. So being able to accurately predict and forecast minimises wastage, and streamlines the supply process. It would also show where and how to scale up or down to save costs and increase profit.
End to end connectivity
Being looped into the whole process seamlessly will minimise supply chain disruptions and help with predictive forecasting and unforeseen supply demands.
Real time planning
Unexpected things come along all the time. With real time planning you won’t be caught unawares by sudden changes in the supply chain timeline. It would also help in offering a seamless service to customers giving an edge over the competition.
Advanced digital solutions now exist for large warehouses which reduces human error, saves time and money.
Automated/Electronic Ordering Processes
Making the ordering of product easier and faster will not only help sell products but also help maintain customer relations.
This is just a selection of the vast array of possibilities that A&D companies in the supply chain could really benefit from, by taking full advantage of current digital technologies. On top of this there are other areas to consider, all of which in some ways interlink.
For example, there could be real time health monitoring on aircraft, or even predictive maintenance which could be linked into a digitised supply chain.
What this would mean is as soon as, or even just before a part might need replacing, the part has already been ordered. This vastly reduces maintenance and repair time.
So why aren’t A&D companies taking full advantage of the current digital Era?
You may have already guessed the answer. With such vast possibility it can be difficult to focus. What do you do first? What’s most important? In a lot of companies there are also rigid organisational structures that would need overhauling. This is always a dangerous task as, especially at the beginning, it invites new teething problems.
What can be done?
Whether you’re a B2B or B2C, a company should always be aiming to offer the best service to their customers. This ethos will help maintain customer relations, and help gain new customers, but increasing technology means people have higher expectations than ever from the organisations they deal with.
Think about what would make your customers’ lives easier, and then think about the digital advancements that would need to be made to make that a reality. This will keep you competitive as a company. It will also help you identify priorities, which leads us to the second point.
Don’t try and instigate too many new digital initiatives all at once. Not only will that make it harder to achieve, but the loss of focus will lead to errors that could be costly down the line. Better a rigid and clunky old fashioned system that works, than initiating a dozen new fast digital organisational systems that fail.
Use Third Party Providers
Developing the organisational changes that go with using new digital systems is hard enough without having to develop the IT infrastructure and solutions from scratch. That’s not saying developing a technology from scratch should never be done, but don’t be afraid to outsource to trustworthy third party vendors.
This will reduce development time, and come paired with comprehensive support to reduce initial issues with integrating systems into the day to day running of the company.
Be on the Lookout for Digital Talent
Having the right person in charge of any digital initiative will reduce the stress and difficulty of the transition. So when it comes to hiring new staff keep in mind a future of full digital integration.
To find out more about JP Aero and how we play a leading role in the aerospace supply chain with our range of aerospace, industrial, vintage and historic and bespoke aircraft fasteners contact us today on +44 (0)208 504 8833 or get in touch via email: firstname.lastname@example.org.
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