COVID-19 and the resulting market forces have highlighted the need for flexibility.
External forces have always affected the aerospace and defense (A&D) industry, be it regulatory changes, shifting business priorities or new technology opportunities. The COVID-19 crisis has thrown an extreme stress test in front of A&D manufacturers, severely affecting supply and demand and triggering regulatory mandates such as the U.S. Government invoking the Defense Production Act. There have been some leading trend-setters in A&D manufacturing during the pandemic—take CAE Inc. shifting its focus from manufacturing flight simulation systems to developing an easy-to-build ventilator to help combat the crisis in Canada.
But in fact, recent IFS webinar research found that only 8 percent of A&D manufacturers have effortlessly altered production to meet changing market demands during the pandemic. So, what is it that’s holding A&D manufacturers back from adapting to change?
The same webinar also unearthed some deep-seated questions around legacy ERP software implementations identified by attendees, which included leading aerospace manufacturers, aviation organizations and industry consultants. Almost half of the respondents (46 percent) said that their current ERP platform was hindering their ability to adapt to changing market demands. With this in mind, it becomes highly relevant to take a look at the four key ERP ‘stress tests’ and scenarios facing A&D manufacturers when they look to advance their operations.
1. Unique industries need unique software
The unique nature of A&D manufacturing means organizations need tailored applications—software for managing daily retail business processes just won’t cut it in a defense supply chain. All too often, A&D manufacturers begin an implementation and discover they need costly and complex customizations to accommodate critical processes such as precision part engineering and intensive quality control. A&D manufacturers need a systems infrastructure that supports the current and future business needs of their industry—rather than dance to the tune of their software supplier.
…and not necessarily found in the cloud
Many generic ERP vendors are pushing their customers to the cloud as a prerequisite. This may be a sensible choice for other industries, but A&D manufacturers are involved in a sensitive supply chain. Failing to adhere to strict government mandates means A&D manufacturers lose out on valuable military RFPs. It’s important for A&D manufacturers to have full control over supporting enterprise software deployments—whether it’s a physically secure on-premise installation, a full SaaS-based deployment or a hybrid environment. This was reflected by IFS webinar attendees, with only 3 percent currently deploying completely cloud-based ERP.
2. A common interface doesn’t necessarily mean connected operations
IFS webinar research shows that A&D manufacturers are lagging behind on the Industry 4.0 or smart manufacturing curve. Only 20 percent of participants were actively looking to leverage 4.0 technology, identifying it as an enterprise-wide priority, while 68 percent were still researching how these initiatives can drive digital transformation.
But it’s the architecture of manufacturers’ ERP platforms that is most likely to impede this digital transformation. General purpose ERP suites commonly consist of multiple software products comprising disparate applications that are clumsily combined into what is called a common user interface. So, for A&D manufacturers with these inflexible ERP deployments it’s then a case of having to customize and add to existing implementations before they are able to gather—and mine—the terabytes of information available from sensors and intelligent assets. Only then can they unlock new insights for themselves and for the military organizations they serve. Compare this with industry-specific manufacturing ERP software built on API-driven architecture. This isn’t a problem. Data streams can be linked to the core ERP system from the start without the need for additional customizations.
3. Say goodbye to silos
Introducing data into a supporting enterprise solution is just the start—extensive analysis is then needed to gain insights into operational and business performance. A&D manufacturers need a full view of manufacturing operations and back-end business processes to make quicker, better-informed decisions. But all of this data is useless if it’s sitting in separate silos.
Solutions should visualize information to support decision-making both strategically and tactically, providing relevant insight and context. This can only happen with one unified platform which aligns with the organization’s business objectives, while integrating all of the vital programs feeding into their operations including Manufacturing Execution Systems (MES) and Customer Relationship Management (CRM).
4. Keep compliance top of mind
In A&D, compliance is essential and ‘one-size-fits-all’ ERP systems simply don’t contain the industry specificity to keep A&D manufacturers watertight for both the physical products they deliver and their digital presence. For businesses involved in regulated materials or military contracts, functionality specifically designed for export control and cybersecurity regulations such as International Traffic in Arms Regulations (ITAR) and the U.S. DoD Cybersecurity Maturity Model Certificate (CMMC) is a must.
Without a fully integrated application suite allowing data to flow between supply chain management, manufacturing, engineering and CRM, it’s difficult to know which products, parts or transactions may put A&D manufacturers in jeopardy—and this will only become more important as they evolve in the future.
Make ERP the catalyst of manufacturing change
The leading aerospace manufacturers, aviation organizations and industry consultants attending our webinar had real reservations about their ERP platforms’ ability to flex in times of need. They spoke from experience. Today, A&D manufacturers must compete with technology advancements, new business opportunities, security restrictions and disruptive market forces. Organizations must be agile. Those who can’t adapt will fall behind.
To find out more about how A&D-specific ERP solutions can improve A&D manufacturers’ ability to transform business operations, read this white paper.
Do you have questions or comments?
We’d love to hear them so please leave us a message below.
Chirs Morris
Very well researched piece of content. COVID-19 pandemic asks A&D manufacturers for a flexible and agile business model that can help them survive in the future. Thanks for sharing.