Weaving the Digital Yarn – Aerospace Manufacturing and Design
The Aerospace and Defense (A&D) industry is at a critical juncture. Faced with record revenue losses due to COVID 19-related disruptions, many commercial aviation companies are changing direction, seeking new opportunities and launching new business models in hopes of recouping lost revenue. Agility, however, requires a modern information technology (IT) infrastructure, with end-to-end visibility and access to data insights so businesses can vigilantly monitor contracts, compliance and commitments. Technology makes this pivot possible – and profitable. Weaving a digital thread across the enterprise can provide the connectivity needed to adapt to today’s changing demands.
State of the industry
While the defense industry and maintenance, repair and overhaul (MRO) companies have weathered the pandemic with only moderate bruises, commercial aviation has suffered debilitating blows. The International Air Transport Association, the industry’s leading trade body, predicts a net loss of $11.6 billion for 2022. $8 billion in 2021.
A full recovery may seem like a big challenge, but small pockets of opportunity can be uncovered. The number of cargo flights is increasing as businesses around the world respond to supply chain disruptions and look to air routes to replenish inventory. Reports show that air cargo demand grew by 7.9% in 2021 (compared to 2019 levels) and is on track to grow a further 13.2% in 2022. FreightWaves reports that 76.3 million tonnes goods, materials, equipment and foodstuffs will be shipped. by air this year.
Charter flights are also seeing a surge in business, with some companies offering private charter services or member clubs reporting double the business. However, as more and more companies rush to enter this market, the increased availability is leading to unexpected price drops.
From these few examples alone, the volatility of the industry is clearly visible. Companies must adjust go-to-market strategies, supply chain partners, operational priorities, inventory investment and pricing as the market moves in unprecedented patterns. There aren’t historical situations quite like this pandemic that can be used as an economic model, providing guidance on the best path 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 – the digital wire – for critical information to make informed strategic decisions. In a complex global marketplace, decisions cannot be made in isolation. Several factors affect the bottom line, including the availability of parts and components; workforce skills; capital to invest in fleet, hangars, equipment; and mergers or acquisitions (M&A) of other companies to enter a new market.
A cloud-based enterprise resource planning (ERP) solution provides a single view of the entire business and can go beyond the enterprise to connect with partners, suppliers, and customers . Real-time data is consistent and easy to access, capturing all relevant product data, historical records, complex part relationships and service history.
By connecting the various revenue streams and cost centers – sometimes scattered across different regions and currencies – the leadership build strategy can be sure to analyze cash flow, calculate asset reliability and project the demand. As the industry focuses on high-value assets, decisions have multi-billion dollar ramifications. Errors at this level are not easy to absorb, no matter how mature and capital rich the company is. This is why a holistic view of influencing factors is crucial when making strategic decisions at the corporate level. An error in the calculation of cash flow can jeopardize the essentials, such as the payroll.
Business managers and operational teams also benefit from the visibility made possible by an interconnected digital thread. Here are some examples:
R&D and engineering teams can gain a better understanding of customer feedback, product life, where and when product failures occur, and the cost ramifications of the materials they specify. With access to data, product developers can dive into historical product trends and use predictive analytics to forecast compliance and costs.
Collaboration. Connecting the business to a single system also connects the workforce. Whether thinking about a product innovation or troubleshooting a repair, users can easily share diagrams, videos, CAD drawings and financial reports without leaving system security and automatic backups. Keeping conversations within systems protects intellectual property (IP), documents details, and creates a line of thought for colleagues to follow.
Performance indicators. Safety, cost, quality, delivery times and compliance are just some of the factors to track and measure. Analyzing return on investment (ROI) and profitability is not 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 explore multiple levels of factors are key to getting a clear picture of performance.
A&D companies need to accurately forecast customer demand and revenue. The company must also have a realistic view of the components and parts needed for manufacturing and MRO operations. Just-in-time delivery, when properly timed, supports healthy cash flow and eliminates capital tied up in reserve inventory.
Parts are often high value, bulky, cumbersome to store and quickly become obsolete. Some parts also have strict reuse requirements and require tracking of miles driven by serial number. All this leads to the complexity of the inventory system. Full visibility is essential for intelligent planning of purchases, supply chain agreements and allocation of parts to MRO needs. Modern analytics with built-in artificial intelligence (AI) ensure inventory record accuracy and reliability.
Compliance. A&D is heavily regulated and fines for not following regulations can be hefty. There is no room for loose quality control or inconsistent tracking of program details. A digital thread connecting programs, costs, contracts, agreements and reports simplifies compliance. Access to data and confidence that the data is correct saves time and reduces risk.
Maintenance. After-sales service involves tracking aircraft maintenance history as well as flight hours for parts and components that might be borrowed from other aircraft or ground inventory. All aircraft services performed 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 makes it possible to link operational logistics to inventory, costs and labor.
The A&D industry is centered on highly complex and advanced aircraft, taking advantage of the latest technologies and innovations. But many companies’ internal processes are surprisingly outdated. System-wide upgrades and migration to the cloud are disruptive, but in a good way. And doing nothing will be even more disruptive as the organization struggles to keep pace with the new demands of a changing global economy. Businesses that want to remain resilient need the benefits of connectivity and visibility – capabilities that a digital thread brings.