New information from Deloitte Consulting LLP's Aerospace and Defense industry group indicates that the risk of failure for A&D companies is "real and significant" if companies don't implement changes now to help ensure the longevity and success of their supply chains.
"The risks are imminent," says Jim Schwendinger, vice chairman, global aerospace and defense, Deloitte Consulting. "Costs and inventories are growing, service levels are lagging, and products are not making it to customers on time or on budget. Significantly optimizing your supply chain for high-speed performance is an effective way to deliver what customers and the market expect."
Achieving supply chain success, Deloitte says, will likely involve enterprise-wide changes. As programs become larger and more global, the complexity of managing the supply chain grows tremendously. Aligning supply chain capabilities with the company's corporate strategy and growth objectives is key to building a sustainable, integrated model.
"Over the past year the A&D industry has suffered numerous service issues, many as a direct result of inefficient supply chains," says John Coykendall, principal, Deloitte Consulting. "These difficulties have resulted in enormous cost overruns, delayed new product rollouts, missed delivery dates, and have forced companies to make serious adjustments in production, which, in turn, has affected their entire supplier network."
These major setbacks, Coykendall says, are many times the result of supply chain breakdowns. While companies frequently attempt to improve supply chain performance, too often the approach to solving one challenge creates disruption elsewhere in the supply chain. By taking an integrated supply chain view, companies can drive improvements in performance while also reducing costs.
"Supply chains have traditionally been depicted as linear streams, and...