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Understanding Stretched Links, Stressed Chains in A&D

Kip Hanson
By Kip Hanson Contributing Editor, SME Media

The past two years have stressed supply chains to the breaking point: The ongoing trade war with China. The grounding of a skyscraper-sized cargo ship in the Suez Canal. Weather-related port closures ranging from the Yangtze River to the Port of New Orleans. Cyber-attacks and shortages of shipping containers. And most disruptive of all, a global pandemic that has shut down schools and businesses, canceled trade shows and is anything but over.

The digital twin and other Industry 4.0 technologies give manufacturers increased visibility into the supply chain, procurement options and engineering requirements.
(Provided by Siemens Digital Industries Software)

Such events have had a profound impact on businesses and consumers, jeopardizing goods delivery and hurting manufacturers across the globe. A recent New York Times article reported that Toyota will cut global car production by 40 percent due to a shortage of computer chips. Machinery builders in England, clothing producers in Portland and board game manufacturers in Miami Beach all face similar problems. Ironically, the article goes on to state that the industry’s Lean and Just In Time (JIT) practices are partly to blame

Forbes magazine paints a similarly bleak picture, citing “shortages of key manufacturing components, order backlogs, delivery delays, and a spike in transportation costs and consumer prices.” Unless the situation is resolved soon, said the author—a one-time adviser to the Federal Reserve Bank of New York—the consequences for the global economy may be dire.

It should come as no surprise, then, that this situation would be especially troublesome to the aerospace industry and its Tier suppliers. After all, Boeing will tell you that a 737 aircraft—said to be the best-selling commercial jetliner in history—is built of more than 600,000 components. Among them are 67 kilometers (42 miles) of wire, 189 liters (50 gallons) of paint and several hundred thousand rivets and fasteners. These and many other components must be sourced from a supply chain thousands of suppliers long—the smallest break in which can halt an assembly line for days, weeks or months.

Don’t Forget Labor

“Perhaps the biggest obstacle we’ve seen in the global supply chain over the past year and a half has been lead-time unpredictability,” said Jeremy Tancredi, a partner in operations excellence/supply chain at West Monroe, a Chicago-based business and technology consulting firm. “Part of this was caused by the shutdowns early on in the pandemic, which in turn led to shortages of materials and supplies. And as any manufacturer knows, when raw materials arrive late or not at all, it becomes quite difficult to maintain the required production output.”

Modern commercial airliners contain hundreds of thousands of components. A break in the supply chain for any of these can easily impact aircraft production.

Dennis McRae, a senior partner specializing in consumer and industrial products at West Monroe’s Minneapolis office, noted that the problem goes deeper than material shortages. “Many of the domestic supply chain challenges we’re seeing are due to the skilled labor shortage,” he said. “Just finding people to work in manufacturing and distribution right now is very tough, a factor that ultimately trickles down to consumers wishing to purchase these company’s goods.”

One of the ways that West Monroe helps its clients reduce and hopefully eliminate these problems is via a technology that’s received a great deal of attention recently: the Industrial Internet of Things, or IIoT. As McRae explained, practically all of the equipment and machinery in use today can share operational information with its owners. Unfortunately, most of this data on availability, efficiency, and looming maintenance needs goes unheeded, leading to less than optimal utilization. 

“Only a very small percentage of the industry’s available IIoT data is used for performance analyses,” McRae said. “The result is that manufacturing companies of all kinds are missing out on opportunities for improved overall equipment effectiveness and greater production floor efficiencies.”

Embracing the Convergence

What does the IIoT have to do with supply chain disruption? Plenty. Since the skilled labor shortage will likely endure long after the pandemic and international trade war are behind us, manufacturers and distributors must embrace whatever technologies are available in hopes of streamlining, mistake-proofing, and above all, automating their business processes wherever possible. The IIoT and Industry 4.0 do exactly that.

And yet, the opportunities run deeper than those presented by either. Tancredi suggested that an “IT-OT convergence” is upon us, opening the door to unprecedented supply chain visibility and predictability. This convergence means merging the information technology (IT) side of any manufacturing business—the ERP system, the CRM software and other back-office applications—together with the IIoT data generated by the operational technology (OT) systems just described.

“This gives manufacturers the ability to perform all kinds of KPI and business analytics reporting that is both accurate and predictive,” he said. “You can start to compare what’s happening in real time on the production floor with what the scheduling and planning systems say should be happening. As a result, you’re suddenly able to identify trends and patterns that would otherwise remain invisible.”

A Fine Line

Convergence-powered opportunities aside, there’s much more to supply chains and global trade than many of us might imagine. Michael Taylor, an international trade partner who heads the customs practice at the Atlanta-based corporate law firm King & Spalding LLP, explained that the movement of goods and technology across borders creates a need for all manner of import and export controls, licenses and regulations.

“Bringing goods into your manufacturing process and ensuring that your supply chain operates both clearly and cleanly is critical, particularly as companies are trying to balance the need to maintain raw materials with available warehousing space, sales activities and production capacity,” Taylor said. “This is especially true in the high-tech areas—aerospace included—due to the expense and importance of the products involved. Success here can mean walking a very fine line.”

Taylor recalls the big push that many manufacturers began two decades ago, moving products offshore in pursuit of higher profit margins. And while this business model still exists—and is often quite successful—a lot of things can go wrong, he pointed out, as is evident in today’s trade climate. These include the rising freight costs and shipping delays already discussed, as well as tariffs, quotas and even national security issues.

Legal and customs issues can hinder the delivery of imported goods, negatively impacting downstream manufacturing processes.

Strategic Thinking

“There’s a lot here that’s out of your control,” he said. “This is why manufacturers need redundancies if they’re going to take something outside of their home country. Yet this can be difficult with aerospace components and the materials used to make them, which often have very limited sourcing options. You have to be strategic in your sourcing decisions.”

Fortunately, many aerospace contractors—especially those supplying goods to the U.S. Department of Defense (DOD)—are constrained to some extent by government supply chain policies, which restrict the purchase of critical components to specific countries of origin (that is, those that are friendly to us). According to Taylor, these practices have evolved and expanded over the years, culminating in the government’s INVEST in America Act and Buy America initiatives as described on the King & Spalding website.

“This is one area where the Trump and Biden administrations have taken similar paths in trying to assure that there’s sufficient domestic sourcing of products,” he said. “I think a lot of people want to avoid a repeat of what happened with COVID, where an overseas supplier gets shut down and then, all of a sudden, we have supply chain issues in the United States for critical materials.”

Gaining Visibility

Because of this, the aerospace and defense industries probably haven’t struggled as much as others have over recent years, despite their deep bills of materials and extensive supplier lists. This doesn’t mean there’s no room for improvement, though. Dale Tutt, vice president of aerospace and defense at Siemens Digital Industries Software in Plano, Texas, suggested that the pandemic has only accelerated some of the industry’s longstanding challenges.

“Many of the OEMs and large Tier 1 suppliers haven’t had all of the visibility that they needed into their supply base,” Tutt said. “When problems occurred, they usually found out about them after the fact and didn’t always understand the full impact of an incident that would affect the company.”

Tutt shared a story from his time in the aerospace industry, when the factory of an engine-bearing manufacturer suffered a natural disaster and was out of operation for months. And even though the components it supplied were several layers deep within the supply chain, the shortage disrupted top-level production until the suppliers were restored. Such disruptions can occur in any market sector–but aerospace, with its carefully qualified supply base, is perhaps most vulnerable.

The Role of Industry 4.0

This is why it’s critical, he said, that manufacturers engaged in this industry attain a comprehensive understanding of their vulnerabilities. “Once companies start mapping out their supply chains, they quickly realize the source of these shortages. For instance, they’ll often discover that their competitors are using the same suppliers for commodity items such as fasteners and bearings. Once you gain that transparency, it becomes much easier to react than manufacturers who rely on outdated ERP systems and, in some cases, spreadsheets and emails to manage their supplier base.”

Production data delivered by the Industrial Internet of Things (IIoT) gives manufacturers greater visibility to their processes, helping to alleviate potential supply chain disruptions.

Siemens and other manufacturing software providers will tell you that a modern supply chain management system is key to increased efficiency and transparency—whatever the industry sector—since it serves to eliminate the historical and current woes described here. What they might fail to point out, however, is the need for interoperability between a manufacturer’s enterprise software systems and that of its suppliers. That’s where Industry 4.0 comes in.

“You’re seeing greater emphasis on digitalization now and how it can be brought into the supply chain,” said Tutt. “The digital twin certainly plays a role here, as it provides increased visibility to the supply chain, procurement options, engineering requirements and the like. When coupled with a platform like our Mendix solution, a low-code, cloud-based development tool that enhances data interoperability between a manufacturer and its suppliers, it gives everyone involved greater awareness of their risk profiles. As a program leader or procurement manager, you’re able to make better, more informed decisions.”

Here in Youngstown

There’s another way to reduce risk profiles: manufacture locally and eliminate as much of the supply chain as possible. Both are easily accomplished with what many consider the genesis of Industry 4.0: additive manufacturing. There is a caveat, however. “If we look at the aerospace supply chain on a macro level, additive is not making a significant impact today. Nor will it tomorrow, either. But when we think more specifically about supply chain disruptions and where could a technology or series of interconnected advanced manufacturing technologies come together, we absolutely think that additive has a role.”

That’s according to John Wilczynski, the executive director of Youngstown, Ohio-based America Makes, said to be “the nation’s leading public-private partnership for additive manufacturing technology and education.” For the past nine years, this DOD-sponsored institute has worked to increase the adoption of additive manufacturing through technology and skills development, collaboration with AM providers and industry users, and promotion of the 3D printing ecosystem. Its ultimate goal? To assure that the United States is the global leader in additive technology.

As with the IIoT, it’s tempting to ask what 3D printing has to do with supply chain shortages, especially in light of Wilczynski’s comments about the technology’s admittedly marginal role in the aerospace industry. He’s quick to point out that the immense promise of 3D printing—not to mention its increasingly important role in tooling and prototype development—is not so easily discounted.

Finding the Sweet Spots

Shortly after the founding of America Makes, Wilczynski and his colleagues launched the MAMLS project, an acronym for the Maturation of Additive Manufacturing for Low-Cost Sustainment. It was a four-year program, led through the Air Force, encompassing dozens of exploratory projects and costing tens of millions of dollars. The simple question they posed at the beginning was, “Where can additive make a difference?” And even more fundamentally, “Can additive make a difference?” The answers were surprising.

“The reality of aircraft sustainment is that a great number of low-volume, high-mix type problems exist,” he said. “If you look at it from a business opportunity perspective, it’s a sweet spot for additive. For instance, there are always out-of-production aircraft component failures that you’re always trying to figure out how to deal with, and do so in a hurry. Adding to this manufacturing challenge is the uniqueness of the components, not to mention the lack of jigs and fixtures needed to make the parts. Additive hits a home run on all accounts.”

In another project, America Makes tackled the concerns raised throughout this article—how to manufacture products quickly in the event of a broken supply chain. Here again, additive manufacturing presents some intriguing possibilities. “That program was called Advanced Manufacturing Crisis Production Response, or AMCPR,” Wilczynski said. “It proved that the concept of digitally distributed manufacturing is sound. In it, a 3D file can be uploaded to a printer practically anywhere in the world and the part produced in days or hours. Granted, there must be raw material available, as well as someone capable of operating the machine. But as with the additive community’s response to the PPE shortage during the pandemic, we saw that the concept offers great promise in the event of future supply chain disruptions.”

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