Streamlining the Supply Chain via Collaboration
ERP software can improve efficiency up and down the supply chain by putting all stakeholders on the same page
By Edward Talerico
Industry Director for Aerospace and Defense
Pressure is looming for the A&D industry. The challenge to stay competitive and cost effective is a growing concern for manufacturers; suppliers; and maintenance, repair and overhaul (MRO) contractors. Reliability alone is no longer enough; companies must manage projects efficiently and ensure a constant flow of innovation while providing value-added services to their customers. This new reality makes it more important that key personnel remain engaged in priority projects and have collaboration throughout an increasingly complex supply chain. The new manufacturing landscape contains a growing IT component and the companies that embrace collaboration tools are becoming best equipped to face the challenges ahead.
The A&D industry is undergoing a major market transformation. Balancing a demand shift in the face of growing budget cuts and stricter compliance can create a messy situation for operations planning. A surplus of fleet inventory and an emphasis on MRO to keep aircraft in the air for prolonged lifecycles add to the changing landscape. With the increased globalization of competition, volatility of pricing and rising cost of energy—the high asset, intricate world of A&D manufacturing is reaching the pinnacle of complexity. The best way to circumvent supply-chain pitfalls and ensure constant speed of innovation is through robust collaboration.
According to a recent report from Pierfrancesco Manenti of IDC Manufacturing Insights, the industry is already gearing up for this challenge. In a recent poll of A&D executives, IDC found that the industry is focusing on long-term, balanced strategies for growth, including controlling costs, increasing value-added services and simplifying the supply chain. One interpretation of this research is that collaboration can be achieved by investing in modern ERP software to bolster the IT infrastructure and maximize operational performance.
Communication and Collaboration
Collaboration plays an important role in all forms of manufacturing, not just A&D. Group problem solving, troubleshooting and idea generation serve as many top manufacturers’ most successful sources for generating new opportunities. Today, as manufacturers struggle with shortages of highly-skilled personnel while simultaneously attempting to grow without expanding head count, the value of shared dialog and effective collaboration is greater than ever. Workers may need to share tasks, mentor recruits or take on entirely new roles. In these cases, communication within the workforce increases in importance.
The qualities that lead to success in manufacturing revolve around rapid mastery of highly-sophisticated processes combining human judgment, precision engineering and financial accuracy—all united in a highly-synchronized framework focused on business goals. The most important collaborative functions include the engineering and design process, business process integration, real-time financial reporting and analytics and fully-connected manufacturing execution capabilities. A competitive manufacturing company needs constant optimization to retain peak performance and support long-term success.
For the A&D industry, the benefits of collaboration are particularly important. Service, innovation and the supply chain—the target areas for IT improvement cited in the IDC research—all benefit from enabling personnel to communicate in real-time, share data easily and connect contextual facts to service orders, customer requests, configuration schematics and as-assembled unit details.
A manufacturing organization is like a living organism, complete with its own institutional knowledge and memory. Much of that knowledge and memory walks out the door at the end of every shift as thousands of baby boomers retire every day. While much of that knowledge gets passed along informally over time, informal information sharing has limits. Just as in the well-known “telephone game” where a whispered message changes completely from the first telling to the fifth or sixth, your key institutional knowledge can stray greatly from its original meaning if it’s not structured and stored.
The details found in the A&D industry are too essential to be lost in a casual dialog. They need to be captured, stored and leveraged as part of the knowledge base for future reference. Collaboration tools, built especially for business applications and integrated into the ERP system allow that.
Let’s look at each of the target areas cited in the IDC research and see how collaboration tools impact the process.
“More than 80% of our aerospace respondents want to sustain growth by selling more added-value services on products,” said Manenti. “Attempting to create a competitive edge in respect to aggressive competition, aerospace and defense firms have sought to provide their clients with repair, maintenance and overhaul services. The end goal is to create a more engaged relationship with their clients and improve customer fulfillment.”
With collaboration tools, meaningful, fact-based dialog with customers is made easy and convenient. Even complex data can be shared through online portals integrated to the ERP solutions. Technicians working in the field can escalate critical-part needs to the purchasing department or warehouse and inquire about status of accounts, warranties or compliance issues—with immediate response. This real-time dialogue saves time and enables the technician to provide faster resolution of service without waiting for reports, meetings or a manager to respond. The entire team can coordinate answers to act quickly to escalate issues, prioritize activities and coordinate strategies to fulfill customer needs quickly and efficiently. In the A&D industry, MRO decisions cannot be made in isolated vacuums, since maintenance requirements, customer demands, systems, components, budgets and contract agreements are complex and interwoven. Connectivity with team members and customers through collaboration speeds decisions, productivity and completion of tasks is essential—leading to greater customer satisfaction.
Product innovation is a major focus for the A&D Industry, as it is for any high-tech industry which depends on new product introductions to fulfill customer expectations and continually create demand for “new-and-improved” offerings to drive sales. Innovation that leads to more fuel-efficient aircraft, operating at lower cost per seat-mile keeps fleet owners purchasing new inventory, despite downturns in consumer travel.
“Product innovation is key in this industry,” noted Manenti, “where winning products are those that offer maximum reliability, low cost of ownership, and performance. Nearly 70% of aerospace and defense organizations plan to invest in product innovation over the next three years.”
Design engineering, the foundation of product innovation, benefits dramatically from collaboration tools. In today’s global workplace, collaboration tools make it easier for key stakeholders to participate in conversations—from brainstorming new ideas to problem-solving specific obstacles. Ideas—even advanced concepts involving virtual schematics and lengthy formulas, can be shared across the globe in real time and saved as part of the knowledge base and project development history. Conversations aren’t lost to texts, phone calls, hallway chatter or consumer-grade social media. In an industry where security, propriety solutions and intellectual property are critical, ideas have value and must be protected with the power of the full ERP.
Top manufacturing executives recognize the value of effective collaboration in product innovation. In a recent study, The Aberdeen Group found that 43% of manufacturers surveyed expect improved collaboration to yield shorter time-to-market for new products. In addition, 29% aim for a better innovation process through collaboration.
Simplifying the supply chain is yet another driver forcing A&D managers to enhance the IT infrastructure, according to IDC research. “With the increasing supply-chain complexity and elongation in the aerospace and defense industry, more than 90% of respondents are focusing their cost containment initiatives primarily outside the four walls of their enterprise,” said Manenti. “Their key strategy is primarily focused on reducing the number of suppliers and shortening and optimizing the supply chain.” Again, collaboration is an effective tactic for streamlining activities with the the supply chain, including global partners, subcontractors, distributors and government agencies involved in overseeing compliance and safety issues.
Efficient vendor partnerships can make or break any business. The high value of mission-critical assets and specialized technology makes the vendor relationship in A&D especially important. Just-in-time inventory methods and overnight global delivery schedules require that the channels of communication with vendors remain open and active at all times. ERP tools, like web-enabled vendor self-service portals, help make this connectivity possible, allowing manufacturers and vendors to progress toward common goals.
Choosing the Right Collaboration Tools
In addition to examining the areas in which collaboration tools will benefit A&D manufacturers, companies considering an IT infrastructure transformation need to also review the type of collaboration tools to use. First glimpses into the tools available may point managers to the popular social-media platforms. Unfortunately, consumer-oriented social platforms lack the depth and power suitable to today’s complex, fast-moving manufacturing environment. The qualities that lead to success in manufacturing revolve around rapid mastery of highly-sophisticated processes combining human judgment, precision engineering and financial accuracy, all united in a highly-synchronized framework focused on business goals. The most important collaborative functions include the engineering and design process, business process integration, real-time financial reporting and analytics and fully connected manufacturing execution capabilities.
Above all, consumer social media specializes in fundamentally insignificant information. If social media information gets lost, corrupted, distorted or misdirected, nobody gets hurt or loses money. In manufacturing, risks are real and mistakes cost dearly. Social media’s typically cavalier attitude toward accuracy, security and continuity can’t be tolerated in A&D.
There’s no substitute for having the right collaborative tool to match A&D requirements. The collaboration process needs to be integral to the overall workflow—not an afterthought. The kind of collaboration system that’s most likely to help A&D companies succeed offers a combination of breadth and power so that the entire process is supported, while retaining enough flexibility to allow the business to respond to new situations.
Pulling it All Together
The A&D industry will benefit from a robust collaboration architecture, incorporating deeper business functions. An integrated approach to including collaboration in the company strategy for performance improvement is important. Collaboration is an operational and workforce productivity concept which needs to be included in every step of the overall strategy for controlling costs and meeting customer needs. Collaboration technologies give manufacturers, suppliers and contractors a path to the next level of teamwork, and combines human ingenuity, powerful analysis and the means to execute strategy rapidly enough to succeed in a rapidly changing business environment. ✈
This article was first published in the 2013 edition of the Aerospace and Defense Manufacturing Yearbook.