What are today’s shareholders in aerospace and defense (A&D) manufacturing expecting from company leadership? Deloitte recently analyzed letters to shareholders from the top 20 A&D companies and discovered a few core management themes to drive sustained growth.
There are two standout themes worth exploring:
- Achieving long-term operational performance through better working capital management, process improvement, and program transformation
- Supporting continued business growth by investing in new technologies
Based on these themes, it’s apparent that one of the biggest challenges for the industry is marrying aging manufacturing methods with modern advances in technology. When you’re measured on operational performance, how can you ensure that your inward focus on operations and management will balance with an outward focus on the market to stay ahead of the curve? Let’s walk through how leading manufacturers have begun tackling these challenges, and how your team can apply these findings to your own initiatives.
Achieving Long-Term Operational Performance in Aerospace Manufacturing
Working Capital Management
Freeing up working capital for short-term investments should be a priority for any organization. But how do aerospace industry leaders find opportunities to improve working capital? It starts with a three-pronged approach:
- Generate immediate savings from reducing existing inventory
- Optimize procurement policies to avoid excessive working capital in the future
- Tight collaboration with suppliers to ensure limited variation
But that’s no easy task. Industry leaders are increasingly turning to technology solutions like LeanDNA to maximize savings and efficiencies in the above areas. Having the ability to manage inventory, shortages, and suppliers all in one place makes doing, fixing, and measuring easy.
One LeanDNA user in aerospace prioritized existing inventory and procurement policies that required immediate attention to reduce their inventory. They ended up saving $20M in just one quarter — a 10% reduction in overall on-hand inventory. Not a small feat for an established industry leader!
How can your organization achieve similar results? Your existing ERP alert system probably isn’t doing enough right now. Many in A&D manage hundreds of thousands of parts. Even if you run a time-intensive PQ analysis to identify your most used parts, the ERP system fails to prioritize in the same manner. Instead, your supply chain managers are inundated with thousands of extraneous alerts and recommendations with no systematic way of prioritizing them based on value to your company.
To make real changes, you need to identify your inventory’s low-hanging fruit. Seek opportunities to make impactful changes to your ERP’s policies that represent the most significant savings for your organization. LeanDNA customers have seen the benefits of prioritized recommendations by only investing their time driving savings that justify adjustments to their ERP system.
You’ve managed to eliminate waste and put some inventory controls into place, but improving business processes is another story. Find intuitive ways of getting your team to embrace lean to make sure it drives lasting improvement. Implementing a lean project system that can be accessed from the cloud and enables transparency across your organization is critical to maintaining continuous improvement. By linking lean projects directly to improvement goals, your team will focus on actions with the most measurable impact. Your existing methods may have failed in the past, but improving processes is an empirical endeavor– you should be able to measure, and share, your improvements.
There are many benefits to digitizing your lean project management for process improvement, as Broadwind Energy realized after implementing LeanDNA. Managing projects online enables teams to be more successful by providing structure to how they manage continuous improvement efforts. SaaS applications are also easy to set up and use, meaning your entire organization can quickly yield positive results.
Aircraft programs offer one of the largest opportunities to improve operations. For newer programs, transformation can reduce costs and improve delivery rates. For established programs, companies may achieve year-over-year cost reduction by implementing initiatives to change the way manufacturing is done. The results are reduced material costs and labor, improved cycle time to drive WIP reduction, improved supplier performance, and more. In fact, many organizations now have Chief Transformation Officers dedicated to addressing these opportunities!
LeanDNA is being used to help one CTO with their Airbus A350 program’s delivery performance. This CTO was able to drop shortages by 30% while simultaneously reducing inventory by 8%, improving on-time delivery performance and reducing holding costs across the entire program.
Support Continued Business Growth Through Investing in New Technologies
If you’re looking for the next technological disruptor to compliment your lean journey, consider a product with demonstrable ROI that can be tied directly to measurable improvements within your organization. This not only accelerates the adoption process across your organization, but enables your team to track improvements going forward.
A top 20 A&D manufacturer deployed LeanDNA at one of their sites in late 2014 and within a matter of days, they were able to visualize data feeds from SAP via pre-built dashboards designed around industry best practices. The result was that the site could immediately see the health of its supply chain and opportunities for potential inventory improvements. As the tool expanded to 10+ sites with different ERP systems, the benefits increased. Cross-site analytics and combined visibility brought several ERPs together into a single, unified platform.
The industry leaders highlighted by Deloitte continue to drive results because they take the bold steps necessary to exceed expectations. Outpace your competitors by adopting new technology to help improve your internal management processes to drive stellar results.