The aviation industry faces significant supply chain disruption as demand across the world picks up to pre-pandemic levels just at the time when shipping and manufacturing bottlenecks are at their worst.
Private aviation levels have surpassed 2019 levels in 2021. But with the global supply chain facing all kinds of pressures, from supply issues to labour shortages, aerospace companies are reporting mounting pressure on their supply chain.
Aerospace supply chain disruptions come in many shapes and sizes. Companies need to deal with suppliers and customers across geographies at a time of heightened global risk, thanks to COVID.
Luckily, we aren’t seeing the level of supply chain problems facing the auto industry. However, there’s no escaping the fact that a huge surge in post-pandemic activity is putting the industry under strain.
There has been a surge in short-haul and private business flights, while demand for travel is putting pressure on commercial airliners to scale up quickly.
All this comes at a time when we’re seeing a shortage of semiconductor chips and plastics, and the cost of raw materials like steel and aluminium is shooting up.
On average, manufacturers are reporting price rises of 27-44% for raw materials used in aerospace fasteners.
We expect this disruption to continue for the foreseeable. With large commercial airliners at least 2 years away from hitting peak production again, these issues are going to around for the long-haul!
Manging through a supply chain disruption
With a supply chain spanning numerous countries and political jurisdictions, there is simply a huge number of things that can go wrong.
Supply chains are incredibly complex ecosystems with various different tiers of suppliers.
Original equipment manufacturers (OEMs) such as ourselves; maintenance, repair and overhaul (MRO) providers; and end customers, which can include airliners and armed forces.
With so many interruptive forces influencing the supply chain, our forward-thinking customers are looking toward adoption of digital technologies, vertical integration, and localization for an edge.
An effective supply chain strategy will not only help you improve efficiency, control costs and mitigate risks, but will enable you to deliver extra value to your customers.
We believe that there are 6 aspects for developing and maintaining an adaptable supply chain strong enough to withstand such a crisis.
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Adoption of innovative digital technologies
The adoption of new technologies is changing the aerospace industry.
Connected devices, simulations, 3D printing technology and even drones in warehouses all have their parts for optimising the entirety of the supply chain.
Digitally driven new operational models such as joint innovation centres and flexible production sites are driving the evolution of the aerospace ecosystem.
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Vertical integration
To gain more control over the supply chain, leading aerospace and defence players adopt vertical integration.
This allows them to both reduce operation costs by cutting out supplier margin and provides them with the agility to scale quickly in response to demand, which can shift dramatically due to any number of external factors.
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Risk-sharing partnerships
Leading companies engage in collaborative agreements through which development and production are executed by a risk-and-revenue-sharing arrangement between the OEMs and its suppliers.
Such arrangements are not limited to production and manufacturing stages, but also include aftermarket activities.
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Network security
Given that all parts of the A&D supply chain are vulnerable to cyber-attacks, large A&D players should not only focus on building a robust cybersecurity framework for their own systems and networks, but also ensure that their key suppliers are protected.
OSINT tools, for example, can be used to gain real-time data about emerging supply chain disruptions which allow companies to quickly establish preventative measures.
On top of this, they enable companies to detect data breaches early through dark and deep web monitoring.
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Building an alternative supplier network
By signing contracts with multiple suppliers companies can mitigate the risks that come with trusting a single supplier.
This allows companies to quickly source materials or parts even if the preferred supplier is unable to fulfil the request.
Multiple sourcing then significantly minimizes the risk of supply disruptions.
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Operations planning
With a global supply chain companies need to be able to make decisions fast. Which means they need up to date, real-time data as well as predictive data with multiple layers of granularity that incorporates supply and demand.
In the case of crises somewhere along their supply chain, a company that has advanced operational planning will be able to pivot and adapt fast which will prove imperative when mitigating potential damages that might occur due to supply chain disruptions.
Diversify your supply chain
By spreading the risk across multiple suppliers, you reduce dependency on a single supplier which allows you to adapt quickly, thus avoiding supply chain disruption.
Vertical integration gives you more control over the supply chain and can help cut costs, whilst adopting innovative technologies can optimise the supply chain whilst simultaneously minimising threats.
The marrying of protective and preventative measures alongside extraneous planning, if managed well, creates a comprehensive system that is strong against many potential aerospace supply chain disruptions.
That being said no system is perfect which is why we always remain vigilant and look for new and innovative ways to improve.
Are you experiencing supply chain issues? To speak to a member of our expert team, get in touch today
We have been supplying aerospace fasteners to the aviation industry since 1958, we carry vast amounts of stock, and we are members of the ADS SC21 Programme.