Bottom line: Security, suppliers’ ability to scale production quickly, and an intense focus on the cost of quality will dominate aerospace and defense in 2014.

Deloitte is forecasting the global aerospace and defense industry will experience 5% growth in 2014, with the majority of growth being driven by projected record-setting replacement cycles of obsolescent commercial aircraft. By 2023, annual production levels of commercial aircraft are expected to increase by 25%. Deloitte’s 2014 Global Aerospace and Defense Industry Outlook provides these and many other insights. The infographic to the right summarizes the key take-aways of the Deloitte report. Please click on the graphic to expand it for easier reading.

Predicting Cloud’s Impact on A&D

Balancing time constraints, project costs and finite resources while still maintaining production levels is a constant challenge for all suppliers. The potential of cloud-based platforms and applications to minimize these constraints while supporting new business growth is a galvanizing factor in the following ten predictions:

1.    Advanced security technologies become the new normal. During 2014 advanced security technologies, including asset, information and event management, threat detection and real-time audits of role-based access will become standard in cloud computing platforms as suppliers, contractors and government agencies, both in the U.S. and abroad, require them. There will be more Department of Defense (DOD) requirements defined for cloud platform-level security than in any previous year.

2.    Mobile device management enabled on cloud platforms becomes the foundation of strategic sourcing and supply chain management. With security and limited geo-location support on mobile devices, adoption in the commercial supplier base has begun and will continue to accelerate in 2014. Supplier management, direct and indirect procurement, quotes and proposals are all being done on mobile devices today. Commercial aerospace suppliers, faced with shorter sourcing and production schedules, will lead this trend in 2014.
 
3.    Suppliers on large-scale commercial aerospace projects increasingly adopt cloud applications and platforms to increase the accuracy and speed of collaborating. Today, on any given commercial aerospace project there is a mix of manually-based, semi-automated and highly automated collaboration systems – yet many times their lack of consistency slows down supplier performance. In 2014 there will be greater emphasis on the cloud as a catalyst of greater supplier and value chain collaboration.

4.    Defense-related suppliers will look to cloud-based applications that can streamline International Traffic in Arms Regulations (ITAR) compliance. As defense spending continues to slow down in the U.S, defense-related suppliers will begin looking to foreign markets to sell their products. Automating ITAR compliance is becoming a high priority for these suppliers as they seek out new international markets.

5.    Traceability enabled enterprise-wide via cloud applications becomes a must-have application to do business in 2014. With the passage of the National Defense Authorization Act (NDAA) (2011) suppliers can now be held liable for purchasing and integrating counterfeit and defective parts into their final product assemblies. Cloud-based traceability applications will see exceptional growth in 2014, driven by at least one incident of counterfeit products from a third world nation making it into a project. Given the proliferation of counterfeit products, there is bound to be just one incident, and it will make traceability one of the most compelling issues in A&D in 2014.

6.    Suppliers will first pilot and then adopt cloud-based integration platforms capable of business process re-engineering (BPR) to thwart competitors’ strategies of competing in time-to-market. The focus in much of the aerospace supplier base will be on better managing of time constraints, project costs and finite resources – all aimed at meeting first article delivery deadlines and reaching quality levels defined in sourcing and procurement contracts.

7.    The need to manage the cost of quality while staying in compliance with AS9100, DCAA, ITAR and TINA will be a strong catalyst of cloud-based compliance and quality management adoption. Commercial aerospace suppliers will have to quote on projects that stretch their ability to deliver on time and in compliance to specific customer requirements. Many of these suppliers are already committing to deals at or beyond their delivery windows. Cloud applications will increasingly be adopted to shorten time-to-market while attaining quality and compliance requirements.

8.    Cloud-based quality management applications progress from document control to supporting Non-Compliance/Corrective Action (NC/CA) and Supplier Audits. Quality management will change significantly in 2014 given the pressure on commercial aerospace suppliers to reduce schedules and costs while increasing quality. The progression from using quality management for document control to advanced areas of NC/CA and supplier audits will accelerate in 2014.    
 
9.    Analytics on production quality will become commonplace in cloud applications. By the end of 2014 nearly every cloud-based quality management system will have the ability to deliver dashboards that provide real-time access to quality management analytics and metrics of performance. The highest performing commercial aerospace manufacturers will have the ability to define financial measures of performance based on the quality metrics.

10.  Cloud-based applications will integrate traceability and corrective actions with supplier quality management to provide a 360-degree view of the cost of quality. Using business rules and historical data, the most forward-thinking commercial aerospace suppliers are integrating these diverse data sets to gain greater insights into how they can accelerate production while improving quality.