May 17, 2024 - 7 minutes read
Four Trends Reshaping Aerospace Supply Chain Management in 2024
The aerospace and defense (A&D) industry experienced a clear revival in the last few years. With commercial aviation finally shaking off the pandemic’s drag and surpassing pre-COVID travel volumes and defense sectors gearing up amid shifting global politics, there’s a strong push for newer, faster, and more efficient aircraft and technologies. The demand for A&D products and services is likely to continue throughout 2024, putting immense pressure on already strained aerospace supply chains.
This blog will explore the unique challenges of modern A&D supply chains, the trends currently defining the industry, and how advances in supply chain technology is providing innovative aerospace solutions.
Current challenges for aerospace supply chains
Aerospace companies are riding a wave of increased demand, with airlines and defense contractors placing orders faster than manufacturers can fulfill them. This boom has led to a massive backlog of new aircraft orders, which would take over 13 years to clear at current production rates. The surge in demand, while a positive indicator of the industry’s recovery, poses its own set of complex challenges, particularly in supply chain management.
These challenges are compounded by global supply chain disruptions, including those related to climate events and geopolitical instability. The aerospace industry, which often relies on a delicate balance of timely part deliveries and precise manufacturing schedules, has been hit hard. Key components like semiconductors, electronics, and basic raw materials like aluminum and titanium are in short supply, causing delays that ripple through production lines. The situation is further exacerbated by the competing demands of original equipment manufacturers (OEMs) needing parts for new builds and maintenance providers seeking the same components for repairs and overhauls. This competition for resources has forced many in the industry to navigate tough production trade-offs.
Adding to the complexity, the industry faces shortages of skilled labor, further straining the ability to meet production demands. The workforce challenge, coupled with material scarcities and price inflation, has created volatility in operational and financial performance across the board. As companies push forward, ongoing global supply chain fragility will test the resilience and adaptability of aerospace supply chain management strategies and drive the need for innovative solutions.
Emerging trends in aerospace supply chain management
As A&D companies grapple with increasingly complex supply chain challenges, several trends emerge. These developments help organizations move beyond addressing immediate concerns to making proactive, strategic decisions toward more resilient, efficient, and technologically advanced supply chain operations. Some important trends that are defining the future of aerospace supply chain management include:
Digital transformation
Digital technologies are revolutionizing how companies automate processes and improve decision-making. In fact, a recent Deloitte supply chain study found that 78% of respondents believe digital solutions boost visibility and transparency throughout the supply network. This push towards supply chain digitalization helps A&D companies manage regulatory demands, contract stipulations, and varied customer and product specifications.
The need for greater production throughput and cost efficiency also spurs the drive for digital transformation. As sustainability demands, product innovation, and the complexities of wartime defense influence aerospace supply chain decisions, advanced technologies like artificial intelligence, generative AI, and digital twins become crucial operational tools. These technologies are currently being used in a variety of scenarios to improve processes and enhance product development and maintenance capabilities.
However, digitalization efforts are highly dependent on quality data. For A&D companies to fully leverage AI and predictive analytics, they must first focus on centralizing and standardizing supply chain data. This ensures that the data used is accurate and consistent, which is essential for making informed decisions and accurately predicting future trends. Modernizing supply chain software is a significant step towards optimizing visibility and making the most of data-driven technologies.
Visibility and collaboration
Enhancing visibility in aerospace supply chains is critical for proactive exception management and mitigating crises. To achieve this level of visibility, is critical for organizations to integrate inbound, outbound, and third-party shipments and to create a collaborative environment between suppliers, transportation providers, internal teams, and customers. This integrated approach ensures that all partners have access to up-to-date information and can contribute to or adjust details as necessary, fostering a dynamic and responsive supply chain.
Extensive digital supply chain visibility allows firms to harness data, automation, analytics, and intelligence technologies effectively. By closely monitoring every aspect of the supply chain—from supplier performance and material flows to end-user consumption patterns—A&D companies can transition from reactive to proactive management. Furthermore, an end-to-end visibility platform empowers businesses to optimize operations, reduce costs, and increase outputs to meet growing demands.
Agility through supplier and transportation diversification
Agility in A&D supply chain management is becoming increasingly crucial. By diversifying suppliers and incorporating flexible manufacturing strategies, companies can more effectively respond to market changes and manage risks. This often involves extending manufacturing capabilities both locally and across borders, allowing businesses to adapt quickly and maintain continuity even during geopolitical shifts or trade disruptions. Additionally, diversifying transportation modes and carrier networks is essential to ensure that materials and products move efficiently through the supply chain, mitigating risks associated with delays and disruptions in specific transportation channels.
However, expanding supplier bases and transportation options requires advanced capabilities to maintain system integration and overall visibility. Managing multiple suppliers and carriers can tax supply chain teams unless they are supported by robust technology solutions that integrate diverse systems and facilitate seamless collaboration. Advanced supply chain platforms that offer comprehensive visibility and real-time data are crucial for managing these expanded networks effectively. These technologies enable companies to maintain control over more complex logistics environments, ensuring that they can respond swiftly to changes and opportunities in the supply chain environment.
Enhanced cyber security protocols
As aerospace supply chains embrace digitalization, the imperative for robust cybersecurity measures intensifies. Establishing a strong security culture and investing in cyber resilience are important for safeguarding sensitive data from potential cyberattacks. This focus extends beyond compliance and should integrate advanced security protocols into every layer of digital operations. As cyber threats evolve, so too must the strategies to counter them, requiring continuous updates and the implementation of dynamic, responsive security measures.
To mitigate these vulnerabilities effectively, A&D companies are making substantial investments in cybersecurity infrastructure and risk management measures. Additionally, as regulatory scrutiny around national security increases, aerospace firms are aligning their cybersecurity practices with these regulations to ensure the lawful and ethical management of digital technologies.
By integrating these trends and strategies, aerospace companies can address current challenges and better position themselves for future opportunities. These forward-thinking approaches ensure that A&D supply chains can withstand the ever-changing global marketplace.
Solutions for enhancing aerospace supply chain management
As aerospace companies continue to adapt to the complexities and rapid changes within the global supply chain, embracing innovative technological solutions is crucial. These solutions should not only streamline operations but also enhance security, collaboration, and risk management. An effective aerospace supply chain management platform should include several key functionalities:
- Data Centralization and Standardization – A platform that centralizes and standardizes data from disparate supply chain systems (including ERPs, TMSs, WMSs, and supplier and carrier systems) allows for more accurate forecasting and helps maintain consistency and reliability as information is shared with stakeholders.
- Comprehensive Visibility Platform – An integrated solution should track all shipments—whether inbound, outbound, or third-party—regardless of how and where they were booked. This ensures that every transportation and supply chain transaction is visible and manageable from a single hub.
- Enhanced Stakeholder Collaboration – Straightforward and accessible collaboration among suppliers, transportation providers, internal teams, and customers is essential in today’s supply chain environment. By allowing stakeholders to share information easily, the platform enhances supply chain responsiveness and agility.
- Proactive Risk Management – A modern supply chain management solution should include tools that help predict and mitigate potential disruptions before they occur. Features that allow for risk assessment, automated notifications, and immediate response can save significant resources and prevent operational downtime.
- Robust Cybersecurity Measures – With the increasing threat of cyberattacks, the platform must incorporate advanced security protocols to protect sensitive data and operations.
Implementing a solution with these critical features will equip A&D companies with the tools to overcome today’s dynamic supply chain market efficiently and securely.
Agistix: Revolutionizing aerospace supply chain management
Agistix transforms A&D supply chain management by seamlessly integrating visibility and transportation management system functions in a single solution. Their supply chain data management platform is designed to monitor, measure, and optimize every transaction and shipment, accommodating even the most complex multi-modal supply chains. With its comprehensive real-time insights, Agistix ensures that operational decisions are informed, timely, and reflective of current market dynamics. The platform’s robust functionality includes extensive integrations across ERPs, TMSs, 3PLs, and other third-party data sources, providing a singular, unified view for today’s intricate aerospace supply chains.
Sound too good to be true? See for yourself. Discover how Agistix is transforming aerospace supply chain management – contact our experts for a consultation and demo today.
