Aerospace: An opportunity to fill supply chain gaps in a growing market
The long-term forecast for commercial OEM aircraft is about 39,000 deliveries over the next 20 years, at a value of approximately $5.9 trillion. Moody's Dec 2017 industry report was also upbeat about the 2018 outlook for the sector and predicted that "strong aircraft order backlog" will fuel 10 percent growth in the aerospace industry's delivery ramp-up. This growth would boost profits and cash flow for companies. However, the report also warns of potential supply chain risks in the year ahead. The US aerospace industry is the largest in the world, with a skilled and educated workforce, extensive distribution systems, diverse offerings, and strong support at the local and national level for policy and promotion. However, there are some supply chain vulnerablities in this growing market that need to be addressed.
Supply chain vulnerabilities
- Massive orders for Airbus, Boeing and Embraer commercial aircraft have left supply chains at a choking point, with a significant risk of manufacturing or supplier problems delaying aircraft delivery. Both Airbus and Boeing announced that they exceeded commercial aircraft net orders and operational performance targets. As production ramps up, manufacturers need to be confident that their suppliers can keep up. As a result, suppliers need to develop methods of managing and producing the subassemblies, components and major systems for the aircraft. The ability to shorten the manufacturing and design build time is a critical challenge
- In the business aviation sector, new orders are creating challenges at both ends of the corporate jets market. Gulfstream is the market leader right now. However, their large-end Gulfstream G650 is sold out for 4 years with no relief in sight. At the lower end of the market, there are too many completed aircraft without a buyer/owner to take delivery. Additionally, while pre-owned inventory shows a positive trend, residual values remain low
- In the military sector (DOD and foreign equivalents), major manufacturers need to find a way to reduce the overall cost and speed up deliveries to the Air Force. Here, supplier quality and rate and cost issues are impacting the global supply chain. Acquisition reform under the Trump administration is likely to put pressure on contractors to accept more of the risk, with ‘cost plus’ contracts on the decline
Our experience and expertise
Maine Pointe’s team consists of seasoned aerospace consultants with experience across the entire supply chain. We have worked on numerous successful projects for major manufacturers, including completing and obtaining customer acceptance and FAA airworthiness certification for over 50 aircraft for a major US aircraft manufacturer.
Our subject matter experts apply this deep domain knowledge to help drive:
- Supply chain optimization
- Achievement of the ‘Art of the Possible’ in challenging, siloed supply chain and operational environments
- Better readiness rate, quality and cost reduction by optimizing maintenance, repair and overhaul (MRO)
- Improved availability of cash to spend on repair and acquisitions (procurement)
- Reduced overall repair and overhaul (flow days) time through improved throughput and team productivity (increasing capacity)
- Efficient and effective logistics methods and reduction in time of transit to ensure arrival in proper condition for use by repair and operations teams and overhaul teams (MRO)
- Improved procurement methods to reduce overall cycle time, cost and supplier performance
- Increased corporate equity
Who we are
We are a global implementation-focused professional services firm trusted by many chief executives and private equity firms to drive compelling economic returns for their companies. We achieve this by delivering accelerated, sustainable improvements in both EBITDA and cash across their procurement, logistics and operations to enable growth.
What we do
Our unique Total Value Optimization™ (TVO) approach helps drive self-funding operational momentum through the triple effect of driving cost out, releasing cash and fueling growth. We thrive in joint team environments with our clients and private equity firms to deliver the measurable change needed in today’s fast-paced world.
A results-driven approach
Total Value Optimization™(TVO) is achieved when an organization is dynamically able to anticipate and meet demand through the synchronization of its buy-make-move-fulfill supply chain to deliver the greatest value to customers and investors at the lowest cost to business. Calculate the value potential for your business today and take our 10-minute assessment.
How we do it
Our clients are continuously focusing on improving EBITDA, cash and growth for existing and new markets. Our hands-on implementation experts work with executives and their teams to rapidly move up the Total Value Optimization (TVO) Maturity Curve™ and enable growth by:
- Identifying and quantifying the real opportunity
- Identifying current constraints and barriers
- Creating a robust and measurable business case with a clear ROI
- Developing a pragmatic roadmap for accelerated results
- Working closely with clients to implement and track measurable improvements
- Infusing best practice and delivering a quantifiable ROI
- Training, mentoring and enhancing internal teams for sustainable performance