Global Aerospace & Defence companies need to make fundamental changes to the way they operate if they are to maximise the opportunities on offer, believes Mark Newall, managing director of Accenture’s UK&I Aerospace and Defence Practice.
Aerospace & Defence (A&D) companies are operating in a period of significant change, governed by a complex and constantly-evolving mix of economic and geopolitical factors. This is transforming companies’ priorities and objectives at an unprecedented pace and putting new pressures and demands on A&D organisations.
What are the ingredients in this changing mix? To name just a few of the current trends, A&D companies must manage the impact of globalisation, create new forms of collaboration with partners and customers, build new service capabilities, and create the flexibility to adapt quickly to market needs. In short, A&D companies need to become more agile and responsive.
What is needed is a fresh mindset and culture, based around a completely different definition of how an A&D company thinks and what it actually does. As the market evolves, the winners will be those companies that successfully harness the technology, people, supply chain and innovative approaches necessary to take advantage of the rapidly emerging opportunities.
The most fundamental global shift under way for A&D companies is the move away from their traditional role as suppliers of platforms, toward becoming service providers focused on guaranteeing the availability of particular assets.
This is a quantum leap one that requires a new business model underpinned by a whole new set of Key performance Indicators (KPIs). Significantly, many of the models that A&D companies may wish to follow are to be found in other industries that have undergone similar shifts, ranging from telecommunications to PCs. In Accenture’s experience across many sectors, a smooth transition to a service-orientated business model requires a clear service strategy, robust performance management, workforce transformation and excellent information management services and solutions.
Efficiency
For A&D businesses, a critical factor at the operational level will be world-class management and through-life support throughout complex multi-year programmes a capability which will be key not just to achieving high service levels, but also to driving long-term efficiency gains and financial returns.
With these factors in mind, an A&D company approaching the move towards a ‘service management’ mindset must ensure it is armed with a robust and comprehensive capability framework, incorporating and integrating all the elements critical to its new business model. This should include a clear strategy and operating model for this new service business.
Once an A&D company has its capability framework in place, it needs to use it to direct a radical reengineering of four aspects of its business. The first is its supply/repair chain, which must carry not just physical components but also clear and up-to-date two-way service information and metrics. The second is its information and knowledge management systems, which need to be up to the job of supporting this new supply/repair chain. The third is to build capabilities and organisations (for example, Fleet Maintenance capability and Maintenance Authority organisation). The fourth is transforming its workforce to fulfil a new role.
In the supply chain, A&D companies are already well-versed in moving assets quickly and effectively between locations. However, in the new environment they must augment these core logistics skills with a flexible support organisation ? a ‘mobile field-force’ resembling the technical crews in the telephone and cable TV industries.
At the same time, suppliers will become much more than sources of parts, often taking on responsibility for delivering entire systems and sub-assemblies, sometimes over a period of several decades.
In terms of information and knowledge management, the field force and supplier network will need a robust foundation of supply-chain planning and forecasting. While demand planning under the traditional supply model already needs demand forecasting to support manu- facturing, the service model requires planning and forecasting to be performed at multiple levels and at all points within the supply chain.
As far as building new capability goes, A&D need to rapidly acquire and inject new skills and experience into the organisation; leveraging industry practices from other sectors that can act as useful proxies (for example, the commercial aviation sector); and re-deploying some of the most capable staff they have into these new areas who will “learn by doing” new things.
Incentivise
As for the workforce, the move towards services will place a whole new set of demands on how companies acquire, align, evaluate and incentivise their workforces. In particular, A&D companies will need to foster common corporate cultures focused on identifying and serving customer needs rather than shifting parts.
It will very often require companies to have the workforce operating in new locations enabling them to work alongside the customer in the execution of service delivery. In parallel, companies will need to ensure that their people have real-time access to the knowledge and tools needed both to service customers in line with service level agreements and maintain close relationships with suppliers.
I opened this piece by saying that A&D is an industry in which change is prevalent. This is now truer than ever before, and it is imperative that companies appreciate the profound implications for their business and operating models. Those that identify and build the right capabilities to transform themselves into agile, service -orientated partners for defence agencies will achieve higher levels of performance and emerge as the winners.
Source: Flight Daily News
