Supply chain management (SCM) is the core of the Aviation and Defense (A&D) industry. Though it comprises a complex ecosystem, an effective and efficient SCM supports its efforts to meet its strategic and financial goals. According to the data compiled by the Aerospace Industries Association (AIA), it is evident how vital the A&D industry is to the United States (AIA, 2016). The A&D industry is recognized as the third-largest US exporter, accounting for $142 billion in 2015 (AIA, 2016). This equates to 9% of all overall US exports and a commerce surplus of $81 billion. The supply chain is a significant component generating 58%, or $78 billion, of the US’s total aviation and defense export (AIA, 2016). Fifty-six percent of A&D supply chain exports in 2015 comprised parts and components, and 44% yielded final products (AIA, 2016). With customers from across the globe, the SCM of big companies is very global and diversified (A&D Edge, 2018). SCM deals with suppliers and customers from across different geographical locations, and they deal with a variety of data and systems. Therefore, the ever-evolving and vast SCM scope in A&D always challenges companies in the sector.
The challenges are multiple enterprise resource plannings (ERPs), expanded lead times, the complexity of products and engineering changes, large data requirements and cyber threats, dependence on multiple sole suppliers, and collaboration across complex SCM. The ERPs present challenges in the delivery of consistent data that can be relied upon by the companies. A&D companies also possess proper technologies that can support extensive data to enhance performance. Cyber-attacks also threaten these companies’ ability to routinely exchange confidential data on aspects concerning their products which is essential in enhancing partnerships across all parts of the SCM. This as such, presents a challenge of expanding in the future in a world that is continuously becoming technology-driven (Monczka, et al., 2016). The engineering changes present the need for upgrading product designs and customizing them to accommodate customers’ demands. Institutionalizing these changes is complicated and expensive for A&D companies. Expanded lead times expose the A&D companies to increased risk of supply shortage and make it difficult for them to respond to the market changes. Thus, since these challenges continue to cause havoc in the industry, some solutions can be initiated to address some of them.
One of these solutions is partnering with reliable suppliers to ensure quality parts reception at a fair price and delivered on time while implementing vendor-managed inventory (VMI) solutions. The VMI solutions help eliminate unnecessary costs by offering a streamlined way of managing inventory and order fulfillment (AFI, 2017). The progress of the A&D industry is also tied to the adoption of digital technologies and 3D printing. The two are of significance in facilitating innovation, fast prototyping and cost-efficiency in responding to the real-time demands of the market. To minimize disruptions such delays, the A&D companies should consider having an alternative supplier network thereby enabling multiple sourcing.
In conclusion, the world is increasingly becoming technologically driven, and everyone will be forced to incorporate technology in their operations to remain relevant and competitive in their respective industries. Thus, it is certain that future A&D businesses will be driven by smart solutions and smart customers. Therefore, A&D companies should gradually phase out the traditional products and service offerings and incorporate technology in the SCM undertakings.
References
AIA. (2016). The supply chain is an unsung hero of the US aerospace and defense economy. Web.
A&D Edge. (2018). Supply chain management in aerospace and defense. Web.
AFI. (2017). Supply chain and inventory management solutions for the defense industry.
Monczka, M. R., Handfield, B. R., Giunipero, C. L., Patterson, L. J., Guyler, J., Mooney, H. (2015). Purchasing and Supply Chain Management (6th ed.). Cengage Learning.