Aerospace & Defense Technology - December 2023 - 13

ed a record order backlog of close to
8,000 commercial aircraft as of the end
June. Boeing also recently disclosed an
issue with one of its parts suppliers that
would impact production of its 737 Max
engine.
Meanwhile, sourcing components like
How Business Networks
Can Help Stabilize the
A&D Supply Chain
A blueprint for modernizing the supply chain for greater
connectedness and collaboration.
W
hile supply chain problems
eased in some markets as
the pandemic ran its course,
aerospace and defense is
among the industries where not only do
issues still linger, new supply challenges
are surfacing.
" The COVID-19 pandemic caused a
shock and desynchronization of the
aerospace and defense supply chain, "
Matteo Peraldo, a partner at the consulting
firm Alix Partners, wrote in a June
2023 post to LinkedIn. " This disruption
has had a negative impact on inventory
levels that persists today. "
Uncertain OEM take-rates, depleted
safety stocks to offset supply chain disruptions,
along with operational and
quality issues during aircraft production,
have exacerbated the problem, Peraldo
goes on to explain. So have short-term
disruptions in inbound supply caused by
uncertainties with raw material and component
deliveries, which have prompted
companies to increase buffer stock.
Supply chain issues like those experienced
recently by some of the industry's
foremost original equipment manufacturers
suggest there's a lingering post-pandemic
supply chain hangover, at least for
certain companies. Pratt & Whitney's
parent, RTX, reported in September that
a material-related manufacturing flaw
for PW1100 GTF engines, which power
A320neo airplanes, would diminish
pre-tax operating profit to the tune of as
much as $3.5 billion over the next several
years. Hundreds of aircraft across multiple
airline groups reportedly were removed
from service as a result of the issue.
Supply chain issues also are impacting
majors like Airbus, which in July reportAerospace
& Defense Technology, December 2023
mobilityengineeringtech.com
computer chips remains challenging
for the A&D industry, in part because it
lacks the volume to compete with other
industries like automotive. Issues with
other parts
Persistent issues like these are casting
doubt on whether aircraft OEMs
can meet planned supply ramp-up targets.
Demand for aircraft is high. But it's
unclear whether manufacturers and their
supply chains will be able to increase output
to meet it. And now, with ramp-ups
expected to continue, there's a growing
sense of urgency to stabilize what today
is a highly oscillating A&D supply chain.
But in light of some of the looming issues
people across the industry have been
buzzing about at recent events like the
Paris Air Show, the question is, how? One
issue is attrition and inexperience within
the A&D skilled labor force, which appear
to be negatively impacting manufacturing
output, efficiency and quality. Meanwhile,
capital constraints are limiting
flexibility with safety stock and buffers,
and multi-tier issue-resolution remains a
major challenge.
If the A&D industry is to meet higher
ramp-up targets and quiet that troublesome
supply chain oscillation, in my estimation
companies should be focusing
on two areas in particular: (1) increasing
inventory resilience, and (2) improving
planning. More streamlined approaches
in these two areas - especially with Tier
2+ suppliers - will be critical to reducing
delays and making production more
efficient. The fewer in-production aircraft
that sit on the factory floor because
of bottlenecks in sourcing a key part or
component, the better.
To build inventory resilience, there
needs to be better inventory transparency
across the supply chain, with improved
reporting, tracking of KPIs, and channels
that provide relevant parties with
an early warning of potential inventory
issues. Suppliers must find ways to gain
more insight into their operations and
production capabilities, so they can
13
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Aerospace & Defense Technology - December 2023

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