Flight path to innovation: the changing aerospace business environment
Flight path to innovation: the changing aerospace business environment
Keywords: Aerospace industry, Economics, Business
The Aerospace industry is currently facing what some commentators have described as the “greatest economic crisis ever”. Airline traffic has been hit by a number of well-publicised global issues, primarily the sluggish world economy, aftermath of 9/11, conflict with Iraq and the SARS outbreak. This has had the knock-on effect of hitting all aspects of the Aerospace industry from Airframe and Engine manufacturers through the component supply chain and into the maintenance, repair and overhaul (MRO) environment. The consequences of which are likely to be that some companies do not survive the crisis, or at least that considerable consolidation occurs across the sector. Either way, the inescapable truth is that all companies have to review their cost base to remain competitive and ultimately survive.
However, this is not simply about cost savings alone but is about becoming more efficient, being in the position to be more flexible and having the ability to react and exploit opportunities as they come up. At the core of this flexibility is a requirement for supporting IT systems to be responsive and flexible to support the changing environment.
Within the Aerospace industry, one area that is increasing under pressure to perform efficiently and effectively is the MRO provider. In an industry downturn, airlines are achieving a lower utilisation rate and concomitant reduced flying hours. Heavy maintenance work is being held back and conversions are being limited to commercial-freighter conversions. Not only are MRO providers now competing in a smaller field, but cash strapped airlines are looking to them to offer faster turnaround times for a reduced cost. To further compound the issue, they are also finding themselves having to compete with original equipment manufacturers (OEMs) who are beginning to enter the after-market services arena, along with the MRO operations of the airlines themselves. Today airlines are trying to reduce the number of suppliers and are looking for MRO providers that offer total solutions – i.e. one stop shopping. More than ever there is a need for the industry to enter into strategic relationships, and even more importantly, to embrace collaborative commerce.
Collaboration is about turning the existing model of working on its head and creating a trust-based partnership in which risks and gains are shared over the long-term. Collaboration can work for all participants of an extended supply chain – from taking orders, monitoring progress, confirming a product design or engineering concept, planning a program schedule, co-ordinating logistics etc. Collaboration ultimately promises greater efficiency, faster design/development/ maintenance cycles, and higher productivity from the existing manning levels. It is evident that any company looking to pursue a policy of external collaboration must ensure that it is already internally integrated. Effective information technology is undoubtedly an integral tool in the creation of any collaborative environment; however, it should not be seen as the panacea itself, rather an enabler to reach the desired ends.
The use of technology to support collaboration can be seen at every level of the supply chain. The operational integrity of flight- critical systems is of paramount importance for ensuring flight safety. With the advent of intelligent onboard monitoring systems, information technology can be expected to play an important role in aiding aircrew and ground maintenance personnel to identify and correct potential problems in a timely and cost-effective manner. By linking these on-board technologies to ground-based Enterprise MRO systems improved aircrew caution/warning advisories can trigger and schedule ground maintenance whilst aircraft are still in the air. Operationally, the objective for such monitoring enabled by technology is to provide the decision-makers of the air carriers, air traffic management, manufacturers and other air services providers with regular, accurate, and insightful measures of the health and performance.
IT systems are already important in a heavily regulated industry, where the amount of information and reporting required is immense, and regulation and safety are key. There is little tolerance for those that cannot perform;turnaround times must be met along with all the requisite standards since the penalties for non- performance are so great. IT systems are able to store and track all the necessary information and effective collaborative technologies enable all relevant individuals to access it 24/7 from wherever they are in the world. As a result the promise is of a higher utilisation of facilities and equipment, which subsequently decrease downtime, resulting in a more rapid return of assets back into the hands of the airlines. Furthermore, collaborative technology can mitigate the risks associated with unscheduled maintenance activity by providing more accurate forecast capabilities. Those businesses prepared to combine the implementation of advanced IT systems with open and collaborative commerce are the most likely to see an improvement not only in their profits, but also their business profile strengthening their position for future opportunities. Companies that are prepared to move away from the ubiquitous “us and them” attitude, towards a more co-operative commerce will reap the benefits of reduced limitations and increased opportunity.
As part of an effective collaboration network, organisations will be able to share design and production data via the web. Today's supply chain environment needs the Internet to more effectively leverage IT infrastructures to interact with suppliers, customers and employees. In doing so efficiencies are gained between the collaborating organisations, and also within organisations that gain a better insight into their own activities and as a result find, among other cost benefits, reductions in their inventory levels whilst improving their service levels.
The organisations that have the ability to track resources like labour,materials and services can achieve productivity gains approaching 50 percent. With all the information being seen consistently across the collaborative network, accurate responses involving costs and resource requirements can be quickly calculated, and data on each part be tracked and monitored through its entire life cycle. The resulting maintenance programme is much more efficient,with the timing of the maintenance and the ordering of the parts and engineers ensuring a much faster turnaround time, with the right elements in the right place at the right time. Mechanics spend only about a quarter of their day actually adding value; most of their time is spent looking for, providing, or deciphering information, seeking approvals, and innumerable administrative tasks. With so many areas of specialisation, each information and heavy regulation, the difficulty is in trying to see the bigger picture. The right systems gave that holistic view of operations, integrating the functions necessary to complete the task without compromising on quality. This is particularly important when you consider the prohibitive costs of unscheduled maintenance. The aim of all maintenance providers must be to decrease the amount of unplanned downtime whilst increasing the amount of planned downtime; fast,accurate and real time data analysis provided by effective information technology systems can help that happen.
Relationships with constantly changing partners and contracts involving multiple companies and locations are an integral part of the Airline industry. However, collaboration aims to foster trusting and mutually beneficial business by enhancing these relationships with partners having consistent single views of information across the network. The companies using these technologies as an enabler will see benefits that will enable them better to weather the current industry downturn, and help them be more flexible and responsive to their customers when an upturn in the business climate occurs.
Paul Eggleton is the business development manager, Manufacturing Industries for SAP, UK – a leading provider of business software solutions. Through the mySAP Business Suite, people in businesses around the globe improve relationships with customers and partners, streamlining operations, and achieving significant efficiencies throughout their supply chains.
Details available from: SAP UK Limited. Tel: +44 (0)870 608 4000; Fax: +44(0)870 608 4050; Web site: www.sap.com/uk
Paul EggletonBusiness Development ManagerManufacturing Industries, SAP UK
