Aerospace & Defense

Aeronautics, space and defense bear similarities to major industry, where supply chain management is at the heart of operational performance. Yet this industry is distinguished by the scope of industrial collaboration and R&D.

Although these three sectors are faced with different opportunities, they share the same technological base, a common industrial fabric, and small-series/large program logic. 

Aeronautics is an industry that must evolve so as not to become a victim of its own success.

Civil aviation is performing well but large programs and growth have required major industrial and financial efforts by all industry stakeholders (manufacturers, parts manufacturers, some medium-sized companies, and a large number of SMEs). A number of challenges loom on the horizon, as the delivery of 30,000 aircraft is required within the next 20 years!

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  • Manufacturers are commissioning their latest programs,with new models that require materials with a more complex production process, and a faster rate of production than current models. Industrial facilities are changing to move closer to new markets, to operationally offset the exchange rate risk or to better manage mergers and integrations
  • At the same time, the stoppage of the comprehensive in-house development of new aircrafts, the emergence or return of manufacturers - particularly in China and Russia -, and the major changes in the sources and types of funding for research are marking the beginning of a new era for R&T and engineering
  • The historically uneven distribution of margins in the industry is encouraging players to seek out new growth opportunities in services and operational maintenance, to rationalise procurement and support functions, and to capture greater value

To meet these challenges, companies in this sector must:

  • Control their growth, internationally harmonise their operations, and optimise their cash flows to maximise the potential of their industrial footprint
  • Strike a balance between incremental developments (to consolidate their five-year order backlog) and the possibility of creating the next ground-breaking innovation, to ensure a technological head-start over newcomers
  • Share R&T, while protecting it from the competition, to optimise their research capacity and benefit from new methods of funding
  • Attain and retain the production rates required in terms of capacity and performance, while optimising operational performance. This will reduce their working capital requirement and turn order backlogs into deliveries
  • Increase profitability and the share of revenue for services and MRO, based on established programmes, a controlled supply chain, or new offers that can be converted into sources of income

Space is both a State controlled and commercial sector that is being revolutionised in the face of ground-breaking innovations and service invention requirements

The economic model of the space industry is being overhauled. The entrance of new, private players, the ambitions of new nations, and the emergence of ground-breaking innovations are changing the landscape of an industry that was originally State controlled.

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To rise to these challenges, companies in the sector must:

  • Preserve the use of space by managing the level of debris pollution
  • Become more competitive in order to compete with private players such as Space-X, Google, and Facebook. For this they need to overhaul their governance, economic models, industrial footprints, and collaboration models with their insurers, operators, and manufacturers
  • Make fast technological decisions with approved financial support schemes. This will improve the competitive advantage of launchers and communications satellites (electric propulsion, new architecture, modularity, cost/redundancytrade-off) and get around ITAR restrictions so as to avoid dependency on the USA
  • Invent new services and convert them into sources of income, by integrating new technologies and tools (internet access via satellites in medium orbit, Galileo, Copernicus, etc.)
  • Capitalise on the launch of space tourism and regulate sub-orbital spaceflights

Defense: a cutting-edge industry that is subject to fluctuations in national budgets, seeking a revival in exports, operational maintenance, and services.

Whereas defense budgets remain stable on a global level, spending in European countries has dropped. This has been offset by increases in BRIC and the Middle East, where defense budgets rose from 5 to 15% in 2014. Exports are becoming essential for companies in the sector. As a result, military equipment and its development require solid investment, particularly in latest generation combat aircraft.

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To maintain their technological cutting edge and order numbers, companies in the sector must:

  • Master partnership development and modular approaches
  • Improve the range of services and optimise the MRO chain. Military action and the pursuit of savings mean placing the emphasis on optimising operational maintenance/MRO in order to cut costs and improve equipment operating capacity
  • Organise themselves internally to support and guarantee 'mature programmes', which are the result of the increased lifespan of existing equipment that has not been replaced, such as the ATL2
  • Manage offsets, technology transfers and export control, in addition to local partners, in order to be able to respond to the manufacturing and technology requirements of new customers
  • Update, control, and optimise industrial models, supply chain, and traditional procurement strategy to compete in this global market
  • Extend design-to-value to exports, in order to meet the specific requirements of these new customers and limit additional costs

 

How can Argon Consulting help you?

We guide clients in this sector through their transformation process, from the assessment of opportunities, right through to the implementation of all operational performance levers and, in particular, in:

  • Definition of new locations and organisational changes to anticipate or address growth, PMI, the harmonisation of  operational modes, and the launch of partnerships
  • Creation of technological roadmaps and improvement of management and effectiveness of research programmes and cooperative R&D
  • Design-to-value and to-cost, for programmes and partnerships
  • Programme optimization
  • Procurement and upstream supply chain optimisation (sourcing and off-set strategy, supplier performance management, reduction of parts inventory, implementation of VMI, and supply performance in general)
  • Supply chain planning (demand, capacity, and inventory planning)
  • Industrial performance and lean management (cycle reduction/reliability, cost-cutting)
  • Operational maintenance (forecasting/planning of maintenance traffic, prioritising work-in-progress, optimising margins)
  • Optimization of spare part distribution (sourcing and distribution network, stock policy)

 

Argon Consulting’s clients include:

DCNS, Groupe Safran, Thales, Latécoère, French Directorate General of Armaments, French Ministry of Defense, Air France

Case Studies

Improvement of management practices of maintenance interventions and spare parts stock management
How to improve customer service by re-engineering the planning process and implementing a finite capacity planning tool?
Transformation projects in the aeronautics sector: critical for supporting sector growth
Deployment of a standard design-to-cost approach in an international group
Management and acceleration of an innovation program