The aerospace and defense supply chain is under pressure. According to FinancialTimes.com, in 2020, Boeing and Airbus are expected to deliver more than 1,800 passenger jets, a 45 percent increase over 2013.
That means all of the thousands of companies that manufacture seats and dashboards and carbon fiber and rubber and paint and wheels have to work faster. But throwing money at the problem is not a viable approach. When customers step up their demand, they expect volume prices.
Delivering more with less? Let’s think about who in the executive suite has experience with that … Enter the CIO, who has been increasing capacity while reducing costs for years. Ken Bell, CIO of Orbital ATK, which designs and manufactures satellites and launch vehicles, propulsion systems, tactical missiles, defense electronics and ammunition, sees four areas in which IT greases the wheels of the aerospace-and-defense supply chain.
1. Integration and standardization
Integration and standardization is not new. IT has been using standards to integrate business processes for ages. Product lifecycle management and manufacturing execution systems have been around for a while now. For Bell, standards are not revolutionizing the supply chain, but they are dramatically improving it.
“Because core data has become progressively more common and refined, and feedback loops are tighter, we now have finer fits and smoother operations when compared to a decade ago,” says Bell. “When Orbital ATK has a contract to provide a complex set of products to another factory to be assembled into something even more complex, we use CAD data that our supply chain partners can maintain, add to, and then send to the next partner on the chain. Because we are using a common data platform, the entire supply chain works together better to produce higher quality products faster.”
Like standardization, CAD systems are not new, but the software that integrates the data has become more sophisticated. “We’ve all had enough practice that we can integrate our supply chain processes on a much larger scale,” Bell says.
2. Converged infrastructure
Spinning disks create latency, and latency is the enemy of speed. But when you have a node that has to jump between suppliers, you slow everything down. That’s where infrastructure engineering feats of strength come in handy. “Imagine a data center with converged infrastructure devices that are the product of multiple vendor partners, who have all gotten together to create this central repository where the design of an entire launch vehicle resides in digital form,” says Bell. “Moore’s law still applies; improvements in networks, storage, and commoditized operations are squeezing the latency out of the internal supply chain.”
Orbital ATK, Bell and his team have been able to combine web-scale converged infrastructure with MPLS data transport and commodity data center services to realize measurable enterprise-wide business productivity and IT performance improvements. “And we’ve done this at a cost reduction over the previous generation infrastructure,” Bell says.
3. Technology vendor partnerships
“Vendors like EMC, IBM, Cisco, and Dell have put their heads together to provide revolutionary product suites that are extremely helpful to those of us on the aerospace and defense supply chain,” says Bell. “For example, EMC’s converged infrastructure offering is based on its strategic partnership with Cisco and VMware to add value through improved efficiencies.”
This allows Bell and his team essentially to outsource the management of some technical complexity. As these and similar relationships appear and mature in the marketplace, innovations in product lines are expected to allow aerospace and defense suppliers to deliver lower cost and higher productivity to their customers and help them remain competitive.
4. Customer cycle partnerships
Jet fighters and rocket ships are large, technologically dense, complex machines. They require a multitude of materials, parts and sources. And the companies on their supply chain are large and complex as well. You might have a prime supplier that is responsible for assembling the fighter jet and has contracted out parts of the jet to sub suppliers. But that prime supplier might also produce components that feed the supply chain. They are prime and sub at the same time. “Orbital ATK might buy fuel tanks from a big supplier, like Lockheed Martin, but then turn around and provide materials that go right back to Lockheed Martin to assemble into the larger product,” says Bell. “This happens a lot in rocketry.”
With all of this back and forth between suppliers, it can be hard for customers to have insight into the quality or status of the chain. “The big providers want real-time information on progress,” says Bell. “In certain parts of our business they want to know, for example, how much of what we are producing gets thrown away as scrap. They want to know how much they are paying for that waste, and they want to reduce those costs.”
In order to provide a comprehensive view of the supply chain, companies including Orbital ATK are forging strong, collaborative relationships with other suppliers. “Building more intimate and strategic relationships imparts a working knowledge of the business to suppliers, increases trust amongst business partners and makes planning and budgeting more predictable,” Bell says. “We all become better at ensuring on-time deliveries, resolving problems, and improving the quality and depth of the supply chain.”
With improvements in standards, infrastructure, and vendor and customer partnerships, the future is bright for the aerospace and defense industry, as long as executive committees see the light. “Failure to invest can take many forms,” says Bell. “Companies can fail to make a commitment to the disciplined, methodical development of the tools that improve manufacturing quality. They can fail to invest in the people that bring a blend of both software development and hardware engineering skills. For certain, failures to invest will manifest somewhere down the line and probably not in a good way. The lengthy budget and implementation cycle times in our industry will mean that the time to recover and catch up could easily mean three years lost.”
Even though we’re 60 years into the IT era, business executives can still be naïve about what IT is really about. “There can be a tendency to minimize the investment in new technologies and in staffing,” Bell says. “But aerospace and defense is a feeder industry. We develop technology that gets used in other industries. If we squeeze the golden goose too hard, we impede the network effect of cross-industry innovation, as well as technology advancements in aerospace and defense.”
With potentially constrained funding levels, extreme cost and delivery pressure, and new costs such as those associated with information security, Bell finds that careful and constant planning is his most powerful strategy. “We try to look as far ahead as possible to track the trends in technology, the economy, and the industry that could influence our business,” Bell says. “We look at NASA and DoD funding levels, at strategic directions in our supplier companies, and at our vendors’ roadmaps for product development. Even when we only see the hazy outlines, we can learn enough to mitigate risks and continuously deliver a high level of customer service.”
About Ken Bell
Ken was CIO at Orbital Sciences, and he took on the CIO role at Orbital ATK following its merger with Alliant Techsystems in February 2015. He had previously been the CIO of an international systems integrator, a consulting manager at Touche Ross (now Deloitte and Touche) and a captain in the U.S. Army. Bell received Master of Science (Computer Science) and Master of Arts (English) degrees from the University of North Carolina at Chapel Hill.
Martha Heller is CEO of Heller Search Associates, an IT executive recruiting firm specializing in CIO, CTO, CISO and senior technology roles in all industries. She is the author The CIO Paradox: Battling the Contradictions of IT Leadership and Be the Business: CIOs in the New Era of IT. To join the IT career conversation, subscribe to The Heller Report.