Logistics management in the Aerospace & Defense sector

The Aerospace & Defense industry includes various sectors, all characterized by a highly complex supply chain involving thousands of strongly interconnected parties. Being able to count on an efficient supply chain is more necessary than ever for the aerospace sector, which today needs to speed up processes, reduce costs, overcome current challenges and be able to sustain the growth expected for the near future.

In fact, although the Covid 19 pandemic hit commercial aviation hard, there is already a significant trend that leads experts to expect a return to pre-pandemic levels by the end of 2023 as well as long-term growth backed by the following data:

• 82% of the population has never travelled by air
• by 2030, 60% of the world’s population will fall within the middle class bracket.

On the other hand, the defense sector, always more resilient, did not suffer unusual blockages during the pandemic but, due to its structural characteristics, was obviously affected by the slowdowns in the global supply chain, which hindered its growth and the M&A operations that had characterized it in the previous years.

The recent conflict in Ukraine has certainly made the geopolitical situation and, consequently, all activities and exchanges related to the industrial world much more uncertain and complex.

In this context, companies operating in the A&D sector supply chain must prepare to manage future production challenges by optimizing their operations to better cope with the new normal and not lose market share.

A fundamental first step to understand the complexity of logistics management in the Aerospace & Defense sector is to get to know its dynamics and organization.

The Aerospace & Defense sector supply chain 

The term Aerospace & Defense industry actually refers to a complex network of relationships between manufacturers and suppliers which, in turn, implement outsourcing policies to maintain an optimal structure that will allow them to stand out in an increasingly competitive international market.

The aviation industry, in particular, can be divided into 3 main industries:

• Aircraft production (OEM and Tiers)
• Aircraft Support / Maintenance (MRO)
• Aircraft Operation (End customers of commercial and military aviation)

The supply chain of the aerospace and defense sector is characterized by a strong interdependence of the various parties in the chain and by the need to comply with all the quality standards set down to guarantee the reliability and safety of products. This requires careful and accurate management of the quality control, compliance assessment and certification processes of manufacturers and suppliers.

The supply chain components in aerospace manufacturing

The production chain of the aerospace sector is extremely fragmented and involves multiple parties on different levels, as shown in the following pyramid structure:

• OEMs (Original Equipment Manufacturers) – They sit at the top of the value chain pyramid and control crucial aspects such as design, production, and assembly.
• Tier 1 – These are top-tier suppliers that are directly involved by the OEM in the design of an aircraft and provide them with the most complex systems and components such as engines, wings, or the fuselage.
• Tier 2 – These are companies that assemble systems and manufacture parts according to the instructions of Tier 1, acquiring the necessary components from Tier 3 companies. Their role within the supply chain is critical as they must ensure the continuous flow of components between Tier 3 and Tier 1.
• Tier 3 – These are companies that manufacture parts and components and supply them to Tier 2.

Let’s take a closer look at the fields of action and the major players in each group.

For all these manufacturers, Modula is a very valuable ally to improve the traceability of SKUs, optimize stock management, and ensure accurate picking operations. These advantages have led various Tier 3 companies to install and use several Modula hardware and software solutions, often created according to specific needs.

Trends for MRO companies

The maintenance, repair and overhaul (MRO) sector slowed significantly during the pandemic, but its recovery is mainly supported by the expansion of the commercial aviation industry in Asia, especially India and China.

The sector is increasingly turning to technology, which ensures a better use of available data and provides:

• Robotic integrations
• Predictive Maintenance
• Automatic detection of damages
• Electronic logbooks
• Electronic flight bags.

MRO suppliers see automation as a tool to make operations more efficient and compensate for the shortage of specialized manpower that plagues the industry.
What will be the trend?
The continuous and further exploration of digital technologies such as blockchain.

The challenges of the Aerospace & Defense sector logistics 

In recent years, the Aerospace & Defense industry has faced numerous global challenges that have involved supply chains in different areas, in addition to some sector-specific issues. 

Given the complexity of this increasingly dynamic industrial context, companies interested in expanding or consolidating their market shares should:

• ensure they have the necessary logistical capacity to deal with possible critical situations;
• adopt new technologies strategically and not reactively, in order to:
  • have a broad overview of company operations (integrating ERP, WMS, MES, PLM);
  • ensure the safety of workers with IoT, wearable, and AR/VR systems, while increasing their productivity with automated systems such as VLMs;
  • digitize the supply chain to increase traceability. 
• improve plant efficiency by solving problems related to:
  • Lack of storage space: thanks to automatic vertical storage systems, thousands of products of different sizes and weights can be managed automatically and delivered to warehouse operators in an ergonomic manner;
  • Increased operating costs: thanks to the use of industrial automation systems it is possible to speed up picking operations, make inventory management more efficient, and improve product safety;
  • Communication and data security: the adoption of technologies such as mTLS and data encryption ensures the security of communications.

In summary, the management of logistics for the Aerospace & Defense sector has very distinctive features and regulations requiring ad hoc solutions characterized by high technological and safety standards.

For companies in the A&D sector there are various reasons to choose Modula’s products.

Automatic storage systems can safely, cleanly, and accurately store and track expensive and delicate materials, such as electronic components, aircraft parts and chemicals used in manufacturing processes, while always complying with regulations.

In addition, given the complex structure of the supply chain in this sector, efficient space management enables many companies to improve their performance by saving not only space but related costs as well.

The future of the industry is expected to be a crescendo of complexity and relationships between global stakeholders, and consequently it will be critical to optimize supply chains with the support of automation and digital technologies. 

The improvement of the logistics capacity and the efficiency of plants can be ensured, first of all, by a well thought out reorganization of storage systems: for this purpose, many companies in the sector have chosen Modula to optimize the management of their storage processes.

If you are interested in suggestions on how to optimize your warehouse, download the “warehouse reorganization ideas” guide to further explore the topic.