Over the past several years, the aerospace and defense (A&D) industry has found itself enduring ongoing cost pressure and continued uncertainty in the global political and economic environment. Western economies, traditionally the largest spenders on defense, have operated under a new paradigm that includes spending cuts, new threats such as cyber-security and a shift to service-based businesses. In commercial A&D, key challenges include improving fuel efficiencies, environmental obligations and rising oil prices. The volatility and turmoil in the global economy strains defense and commercial markets.
The result of all this complexity is a disruption and slowing of the A&D product pipeline. The more variables an A&D company must contend with, the less flexible and reliable its performance. Complexity has become the most destabilizing force in the industry with widespread repercussions. For example, traditional supply chains have deteriorated into a fractured network of products, suppliers, markets, new technologies and customers. It’s becoming much harder to connect and integrate all these elements, causing product delays and higher production costs for everyone involved. Furthermore, the number of suppliers is decreasing, causing overdependence on suppliers in certain areas and, potentially, jeopardizing entire programs.
The good news is that aerospace and defense companies recognize the need to adjust to these new market conditions and are looking to make changes. A new Accenture (News - Alert) report, Improving Program Profitability in Aerospace and Defense, reveals that companies have room for improvement in the holistic way they manage the profitability of their programs to master this complexity. What’s required is not a single program profitability initiative but an adaptive methodology that can be continually reapplied throughout the lifecycle and supported by appropriate enterprise management and financial metrics... Read More