Restore, Rethink, Redesign: how aerospace and defence organisations can respond to supply chain challenges caused by COVID-19
Aerospace and defence organisations are experiencing a number of supply chain challenges brought about by the COVID-19 pandemic. But restoring operations alone won’t cut it. With the world changing and budgets set to be considerably impacted over the coming years, leaders must rethink and redesign existing approaches to go beyond short-term recovery and set a long-term strategic supply chain vision.
With 90 per cent of the world living under travel restrictions, we’ve seen an unprecedented drop in demand across aerospace. And while defence funding continues for now, it’s likely to be impacted as governments grapple with rapidly rising deficits.
Navigating these challenges will be tricky – but there is a way forward. It calls for short-term action to restore operations while setting out of a long-term strategic vision for future success. It requires a resolve to find the opportunities in complexity. And it calls for three specific actions:
Restore – repair operations
With significant disruption to manufacturing operations, including production lines being altered and reconfigured to manufacture essentials and produce medical supplies, it’s essential to begin by evaluating the impact of the crisis with a two-step approach.
Understanding your cash position is key. First, we recommend having a supply chain data control tower to provide a single source of truth of costs across sales, operations and cost management. Second, you’ll need to integrate insight from both customers and suppliers into your forecasts, ensuring collaboration across all functional domains and incorporating output from scenario planning.
These steps will enable you to define and implement an action plan to restore operations that balances demand, supply and production capacity with a close eye on cost control.
Rethink – tactical collaboration
It’s crucial that leaders continuously appraise supply chain components, with consideration of their cost, speed, dependencies, flexibility, reliability and environmental impact. Given the complex global supply chains in the aerospace and defence sector, the current crisis presents an opportunity for supply chain leaders to rethink their strategy and build the supply chains of the future. Unlocking the full potential of digital in your supply chain is absolutely critical to success, as is establishing new ways of working and simplifying product design.
As you reassess your supply chain, now is the time to start from the end customer outcome and work backwards. In the supply chains of the future, the customer will sit at the heart of a fully integrated supply chain, with products designed to meet their needs and agile ways of working enabling you to quickly respond to new demands.
With the crisis testing the resilience of extended, global supply chains, now is also the time to rethink how far your supply chain stretches, ensuring you’re able to quickly respond to new events and changing customer requirements.
Redesign – strategic reinvention
Once operations are restored, it’s time to look to your long-term supply chain direction. The future supply chain is smart, and the opportunities too considerable to ignore. Our research of over 100 global supply chain leaders across life sciences, industrial, manufacturing and automotive, consumer goods, and aerospace and defence organisations found that almost two-thirds of respondents (61 per cent) plan to implement significant improvements, aided by digital technologies, into their supply chain within the next three years.
Leaders will need to be able to identify the right technologies and then scale their use at speed. The most successful organisations are constantly scanning and piloting both emerging technologies and more industrialised solutions, using prototypes and pilots to understand their value. These activities are about learning quickly and failing fast, correcting course when needed to find the best route forward.
Your people will be as important as the tools you use. It calls for a new type of leadership where multi-disciplinary, distributed teams come together on an array of jobs. To connect your workforce to new technologies, you must be able to demonstrate how these tools can shape more interesting roles, provide greater freedom and unleash ingenuity.
With the coronavirus pandemic causing severe supply chain disruption, aerospace and defence organisations must ensure they’re robust enough to mitigate the risks. But they must also look beyond recovery to the opportunities of the smart supply chain.
By going beyond recovery, to rethink and redesign their strategy, technologies and ways of working, leaders can move from crisis management mode to competitive advantage – bringing new value to customers, enhancing risk management and better preparing their organisation for whatever the future may bring.