The aerospace and defense industry has an enormous problem.
Major airplane programs have been consistently late to market — up to three years and longer. These delays have cost companies billions and, in some cases, tens of billions of dollars in direct costs and lost sales. Delays have also deteriorated market values and hindered credibility. The delays are widespread rather than isolated to a particular company or market segment.
A primary reason these problems persist is the extraordinary complexity of today’s major airplane programs. Typically, hundreds of suppliers are involved in these initiatives and their decisions are interwoven with those of a multitude of other suppliers.
Compounding this complexity, there is a wide geographic dispersion of suppliers across virtually all regions of the world: Asia-Pacific, Europe, Latin America, the Middle East and North America.
Additional byproducts of the increased program delays and higher complexity include:
- fragmented, disaggregated and misaligned airplane product development processes;
- supply chain miscalculations such as parts shortages; and,
- manufacturing and engineering inefficiencies.
This far-reaching problem with delays, and how to solve them, is of paramount significance because there is so much money and credibility at stake for established and emerging aerospace and defense companies. Solving this problem will be strategically and financially critical to the overall health of industry players. Finding a solution is pivotal in driving higher revenues and profits, lowering production costs, accelerating airplanes in the market and delivering more affordable, reliable, comfortable and enriching flying experiences to airline passengers.
Two Important Aspects to Story Unfolding
There are two especially important aspects to this story now unfolding:
- First, there are new investments in advanced product development capabilities and technologies that address these problems in new and innovative ways.
- Second, there is a new, higher order of strategic thinking, a digital coming of age, that is fueling these changes — this will affect tens of thousands of engineers and involve billions of dollars of research and development investments.
To help aerospace and defense companies effectively overcome this problem, Accenture has recently made two acquisitions in the past months:
PCO Innovation, an independent international consulting and systems integration group that specializes in product lifecycle management (PLM) software technologies for aerospace and defense companies. This acquisition adds approximately 600 consultants to Accenture. The company also recently bought PRION Group, which adds another 500 employees. These two acquisitions raise Accenture’s headcount to more than 3,000 people focused on product development, engineering and research and development.
PLM encompasses all the processes and systems involved in product development from the original airplane conception, through servicing commercial airplane, until the end of the plane’s life. These processes and systems involve numerous corporate functions such as engineering, product development, supply chain management, manufacturing, services and marketing. Aerospace manufacturers employ hundreds of thousands of highly skilled engineers, scientists and technicians to use these increasingly global PLM processes and systems.
Product development spend is substantial. According to Accenture’s research, Global 2000 aerospace and defense companies manage billions of dollars on funded research and more than $18 billion per year in self-funded research and development alone. PLM enables risk and cost reduction by consolidating product data, standardizing processes, reducing information searches and distributing product information electronically through the extended aerospace enterprise.
PLM is, like never before in aerospace and defense, becoming a strategic topic for chief executive officers. Why? Because it can directly impact program delays and manage integration across functional silos in ways that can dramatically boost the financial performance of aerospace and defense companies. PLM should no longer be considered the engineering department’s “black box.” To achieve high performance, it should be a high priority strategic instrument in all aerospace and defense executive boardrooms.
Coalescing Digital Mindset
The concept of digital is not new in aerospace and defense. But what is new are the much higher levels of sub-contracting, global design, development and maintenance-related data available from in-service aircraft. The industry is embracing a digital mindset like never before. This means more and more of its decisions are being made from the perspective of being an all-digital business in product development, operations, supply chain, marketing, procurement, engineering, services and the rest.
This new and coalescing digital mindset aims to make sure the industry’s digital pipes connecting product development, engineering, supply chains and the in-service fleet keep flowing smoothly with high-quality data which is currently often lacking. The evolution of PLM technologies and capabilities is a great example of this stronger digital mindset. It is being used as a foundation for product data to be used in manufacturing and in-service support. Digital is fundamentally changing the way aerospace and defense companies operate — from how they interact with customers and stakeholders, to how they manage their employees, to how they differentiate themselves in the market and how they grow their businesses.
John Schmidt is the managing director of Accenture’s North American Aerospace and Defense business. He can be reached at email@example.com.