Seven Opportunities in the Intersection of Aerospace & Defence with Supply Chain and Logistics

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The Aerospace & Defence industry is a complex and highly regulated sector that demands precision and efficiency.

From designing, prototyping, and then manufacturing aircraft and weapon systems to ensuring that the right aggregates and spares are in the right place at the right time, it’s crucial to have a well-oiled supply chain and logistics operation.

Unlocking the full potential of the Aerospace & Defence industries requires innovative thinking, including in design, development, testing and certification, and a focus on supply chain and logistics.

As a Business Oriented Leader with over 30 years of Leadership experience in, Supply Chain & Logistics in Aerospace & Defence, Infrastructure, Retail, Information Systems, and Ports & Economic Zones, I have seen the power of intersecting industries to create new opportunities for growth and efficiency.

Let’s look at some operations-related opportunities in the intersection of the Aerospace Sector with Supply Chain & Logistics, which Startups and transformation initiatives in existing businesses can exploit to deliver growth and efficiency to the stakeholders.

Do we have a mutual client-solution provider relationship between the Aerospace, and Supply Chain & Logistics Sectors?

Interestingly, the Aerospace and supply chain logistics sectors are clients of each other. The Aerospace sector requires reliable and efficient logistics to support the transportation and storage of input materials, aggregates, sub-assemblies, and services from suppliers to end-users. On the other hand, the supply chain logistics sector partially relies on the aerospace sector for aircraft and drones to move cargo globally. Let’s look at some examples from the aerospace sector that reveal the interdependence between the two industries:

• FedEx Express, one of the largest global delivery companies, operates a fleet of more than 480 aircraft, including the Boeing 757 and 767. FedEx uses Boeing, Airbus and other aircraft to transport packages to over 220 countries and territories worldwide, offering itself to Boeing and Airbus as a consistent and reliable client.
• DHL, a leading global logistics company, operates a fleet of over 200 aircraft, including the A300, A310, and A330. DHL relies on aircraft manufacturers like Airbus to provide efficient and reliable air transportation, while aerospace majors like Airbus benefit from DHL as a consistent client.
• UPS operates a fleet of more than 250 aircraft to support its global logistics network, including the 747–400 and 767–300. UPS relies on aircraft manufacturers like Boeing to provide efficient and reliable air transportation, while aerospace majors Boeing benefit from UPS as a consistent client.
• Amazon Prime Air’s delivery service operates a fleet of over 75 Boeing aircraft to transport packages. Amazon relies on Boeing to provide efficient and reliable air transportation, while Boeing benefits from Amazon as a consistent client.

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So what are the opportunities and benefits of exploring synergies between the Aerospace sector with supply chain and logistics?

The synergy between the Aerospace, Supply Chain and Logistics sectors is essential for driving several benefits, including innovation, improving efficiency, security, sustainability, and competitiveness. The increased demand for commercial and military aircraft has pressured the aerospace industry to meet delivery schedules and lower costs.

#1

Increased innovation: Collaboration between the Aerospace industries and supply chain and logistics experts can drive innovation and lead to the development of new solutions. The Aerospace sector is increasingly turning to digitalization to enhance its supply chain and logistics operations. According to a McKinsey article, digital can help Aerospace become more resilient, efficient, and innovative, including in the supply chain & logistics area.

Advanced analytics and Big Data allow companies to make better decisions and respond faster to changing market conditions. Using blockchain in the Aerospace sector can provide a secure and transparent way to track parts and materials, reduce fraud and counterfeiting, and improve supply chain visibility. Technologies like 3D printing and digital twins enable businesses to streamline processes, reduce lead times, and increase efficiency. The use of digital twins in aircraft design and manufacturing can provide real-time insights into production processes and reduce the need for physical prototypes, which can be time-consuming, costly, and stretch the supply chain. For example, Raytheon has partnered with IBM to leverage Artificial Intelligence, Cryptography and Quantum Technologies for intelligent solutions, including its supply chain visibility and decision-making processes, among other things.

#2

Improved efficiency: By working together, the Aerospace and Supply Chain & Logistics industries and their business units can optimize their processes and reduce waste, leading to increased efficiency and cost savings. We can see an example of this synergy in using lean principles and practices in the Aerospace sector to streamline their supply chain and logistics operations. Aerospace majors like Airbus and Boeing have long adopted lean principles in their production processes, resulting in significant cost savings and improved quality. These practices, extended to the supply chain and logistics partners, are opportunities to help improve operational efficiency for the aircraft manufacturer and their partners.

Similarly, companies in the aerospace and defence sector can benefit from the expertise and resources of supply chain and logistics companies, leading to cost savings and increased efficiency.

#3

Improved delivery times: By partnering with supply chain & logistics companies, Aerospace companies can improve delivery times and meet tight deadlines for major assemblies and aggregates. For example, Lockheed Martin has collaborated with several logistics companies to improve its critical components’ supply chain processes and delivery times.

#4

Improved risk management: Having better visibility and control of the supply chain helps reduce the impact of disruptions and improve overall security. For example, Northrop Grumman has implemented new risk management processes to enhance the security of its supply chain operations.

#5

Improved accuracy and quality: Supply chain and logistics companies leveraging information systems and technology can help Aerospace companies improve the accuracy and quality of their deliveries for major assemblies and aggregates, reducing the risk of errors and delays.

#6

Increased competitiveness: By partnering with supply chain and logistics companies, Aerospace companies can increase their competitiveness and expand into new markets. Developing new technologies and innovations in supply chain and logistics processes can contribute to growth and competitiveness in the Aerospace industry. For example, General Electric has partnered with Amazon Web Services to increase its competitiveness in the Aerospace sector, which also benefits its supply chain decision support. Furthermore, the collaboration between the Aerospace Supply Chain & Logistics Sectors can better support the economic growth and skill development of the talent in both sectors. For example, the cooperation between the Aerospace industries and the logistics sector has created new job opportunities in supply chain risk management, drone logistics, and transport optimization for both partners. Both partners can thus enhance their talent attractiveness.

#7

Increased sustainability: The Aerospace sector is becoming more environmentally sustainable. Aerospace companies are reducing their carbon footprint and improving energy efficiency in their supply chain and logistics operations. The thrust towards sustainability opportunity is good for the planet and its bottom line, as reducing waste and energy consumption can result in significant cost savings.

By partnering with supply chain and logistics companies, Aerospace companies can increase the sustainability of their operations, reducing their environmental impact and improving their reputation. For example, DHL is working with Boeing and Airbus on using sustainable fuel and more fuel-efficient aircraft/routes to reduce carbon emissions. These industries can contribute to a more sustainable future by optimizing resources and reducing waste.

What could be the following steps to explore synergies between the A&D and the Supply Chain & Logistics sectors?

The Aerospace sector requires complex supply chains and logistics networks to ensure the timely transfer of input materials, aggregates, sub-assemblies, and services from suppliers to end-users.

To explore synergies, both must prioritize collaboration, technology, and sustainability and work together to drive innovation and efficiency.

The Aerospace sector must prioritize supply chain innovation and work closely with logistics partners to support a resilient yet efficient supply chain. This opportunity could include implementing Strategies for Navigating the Challenges of Supply Chain and Logistics Infrastructure.

The supply chain and logistics sector must be proactive in understanding the unique needs of the Aerospace industry and work to develop solutions that meet those needs. This opportunity may also include investing in supply chain-related hard and soft infrastructure, skills and technology to improve efficiency and security.

Collaboration and Partnerships: Both sectors must work together to identify areas for improvement and cooperation. This opportunity may include sharing data and insights, co-developing solutions, and engaging in joint initiatives to drive innovation. These industries can also share resources, knowledge, and expertise by working together to create new solutions and drive innovation. One example of this type of opportunity is the “Supply Chain and Logistics Partnership Program”, launched by the Aerospace Industries Association (AIA) in 2020. This program is designed to bring together Aerospace companies with supply chain and logistics experts to collaborate on new solutions and drive innovation in the industry.

Embracing technology: Both sectors must embrace technology and digital solutions to drive efficiency, security, and sustainability. This opportunity may include implementing automation, data analytics, and leveraging emerging technologies such as artificial intelligence and the Internet of Things. For example, blockchain technology can help increase transparency and security in supply chain operations, while AI can help optimize inventory management and reduce waste.

Sustainability: To leverage the growing trend towards a circular economy and sustainability in the Aerospace industries, supply chain and logistics initiatives can focus on driving these initiatives forward. By reducing waste, optimizing resources, and promoting sustainable practices, these industries can improve their bottom line and contribute to a more sustainable future.

Both sectors must prioritize sustainability and work together to reduce waste and optimize resources. This opportunity may include implementing green initiatives, such as reducing emissions and using renewable energy and working to create a more sustainable supply chain.

Closing thoughts:

The intersection of Aerospace with supply chain and logistics presents a wealth of opportunities for innovation, growth, efficiency, and sustainability for startups and existing companies looking to enhance the operations and competitiveness of the stakeholders.

By leveraging new technologies, collaborating with partners, and investing in supply chain and logistics capabilities, startups and existing companies can deliver/achieve significant cost savings, increase efficiency, and build resilience.

The future of the Aerospace industry depends on a solid and effective supply chain, and companies that recognize this will be well-positioned for success. Startups and existing companies that invest in supply chain and logistics infrastructure and capabilities for the Aerospace sector, adopt new technologies, and collaborate, will be well-positioned for success in this rapidly changing and competitive environment.

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