Once-busy airports are barren, planes are parked, and the future of travel is uncertain. After years of consistent growth, the COVID-19 pandemic has shattered the aerospace and defense (A&D) industry and manufacturers that support air travel.
With more than 95% of airplanes still grounded around the world, A&D leaders must reconsider supply-chain resiliency — and how to withstand unpredictable crises.
How has COVID-19 impacted the A&D industry?
The grounding of airplanes across the globe is having a profound ripple effect on the A&D industry, not only from a commercial standpoint but a behavioral standpoint, too. Questions abound on how A&D manufacturing will tackle the decrease in demand, how governments will determine which sectors receive aid, and how airlines will manage their restart once the threat is over.
Where does A&D manufacturing stand?
The pandemic has battered cross-industry original equipment manufacturers (OEMs), including A&D. Deciding between buy-back, financing or backlogging is a complex challenge for all.
A growing dependency on technology has exposed the need for IT to have a seat at the table, and companies are focusing on investing in manufacturing execution systems (MES) and digital supply chains.
What does the A&D supply chain look like now?
The airplane OEM backlog will have a significant effect on the A&D supply chain. Pre-COVID-19, A&D companies were already at risk due to a shifting industry. The pandemic has placed even more pressure on suppliers who expanded their production capabilities, leaving them overextended and cash-strapped. According to AeroDynamic Advisory, the A&D aftermarket and spare parts is set to drop up to 70% with airlines becoming more cost-focused, repurposing and extending the use of old aircraft parts.
Where do we go from here?
For companies that weather the storm, new opportunities for growth and changes to business processes are on the horizon. Investing in automation and shifting business models to conserve funds are ways A&D companies can better prepare for the future. Although uncertainty remains, investing in technology can help improve agility, collaboration and crisis management.
The road to a resilient aviation supply chain will require industry leaders to get creative and explore new opportunities. They will need to use these unprecedented times to re-group, re-strategize and re-define the A&D industry.
Danielle Homer is global marketing lead for aerospace and defense at SAP.
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