Accelerating Innovation in Aerospace

Revenue growth is always top of mind for business leaders, but as competition grows and product complexity increases, companies are equally focused on profitability as a key objective. In the aerospace industry where product lifecycles are lengthy and customers are operating under extreme cost pressures, maximizing profitability for each product is critical, as is continued growth through faster introduction of innovative products.

Innovation Moving Beyond Product Technology

Creating profitable products requires companies to take a holistic view of innovation, encompassing the technology, organization, and processes involved in bringing a new product to market. Product technology continues to advance with more improvements originating not from the original equipment manufacturers (OEMs), but from an ever-expanding network of suppliers. Where cost cutting was the mantra of supplier management discipline, the focus has shifted to managing other aspects of the relationship, as benefits from cost cutting initiatives become increasingly marginal. Supplier relationship management is increasingly about harnessing the contributions of all players in the ecosystem and requires OEMs to consider the over- all new product introduction process in order to accelerate innovation.

Evolving Business Models Create Varying Collaboration Demands

Organizational models are also evolving to reflect the shifting sources of innovative technology. Recognizing that all of the latest and best knowledge does not reside within their own organizations, OEMs have transitioned to alternative business models for accelerating product delivery. These models have evolved from the classic "prime plus subcontractor" to more federated ecosystems where the traditional prime contractor becomes a systems integrator, and where the sub-contractors assume comprehensive ownership of the process from design through delivery. Airbus adopted a federated model in creating a consortium for the A300 series of commercial airliners, and Boeing is following suit with its approach to building the 787. Boeing's 787 consortium is drawing on hundreds of first and second tier suppliers spread across three continents, with as many as seven supply tiers spanning the supply chain. This level of complexity in the product delivery network demands a high, and continuously varying level of collaboration among participants.

Managing Process and IT Infrastructure Complexity

Given the scale of outsourcing in the aerospace industry, there is a growing need for managing collaborative processes that span functional, organizational and corporate boundaries, throughout the new product design and launch cycle. Cultural and organizational barriers to effective collaboration are breaking down as participants in federated models engage more broadly, but the limitations inherent in existing IT infrastructure constrain the collaborative process and result in slower product delivery or trade offs in product quality. A dynamic IT infrastructure for supporting collaboration must effectively deal with changing organizational structures: increased merger and acquisition activity means that tomorrow's environment may look very different from today's; and forcing everyone to use the same infrastructure technologies is both costly and impractical.

A Dynamic Innovation Engine to Support the Product Delivery Network

The figure above illustrates a typical environment within a federated product delivery model. Each supplier has point interactions with the OEM and in many cases, with other suppliers too. These interactions require systems and information to be brought together in a unified manner to support collaboration. But differences in platforms and tools used by each supplier means that each environment is created as a one-off, and is costly to maintain. The problem is compounded by the need to recreate these environments through- out the product delivery process to, for example, run a clash analysis based on updated component designs. With hundreds or thousands of such environments needed across the delivery network it is easy to understand why companies resort to more manual, time-consuming collaborative approaches that ultimately delay new product introductions. Many of the issues stemming from the use of legacy infrastructures to support modern business models for product delivery can be resolved by creating a "dynamic innovation engine": an IT environment that facilitates more flexible collaboration across the product delivery network.

The figure above depicts an environment created by leveraging the platforms and tools used by the OEM and each supplier. The environment is dynamically created as required by the business process spanning the network, and it can be torn down and re-created on demand, allowing scarce resources to be better utilized, and significantly reducing maintenance costs. Wholesale replacement, or even large- scale re-factoring of existing IT infrastructure to better support continuous innovation is not an option given the complex ecosystem in which aerospace companies are operating.

How then, do we create a global, dynamic environment that adapts to changing business demands? And how do we enable changes to be introduced incrementally while ensuring that benefits can be realized right from the outset?

One approach addresses these issues by bringing together four key elements: an open platform, mechanisms for dynamically delivering IT services to the business, a robust approach for managing information and the ability to integrate these infrastructure components into business workflows.

Open Platform - Optimizing access to and utilization of resources across organizational boundaries is fundamental to supporting globally distributed innovation teams. An open standard platform allows business processes to utilize heterogeneous, proprietary technology via a uniform set of interfaces and services.

Service Delivery - Supporting a continuous innovation environment requires managing the underlying technology infrastructure in response to business process needs. Creating the multitude of environments required for collaboration among OEMs and suppliers is a technically challenging, costly and time-consuming task. With service delivery, a group of suppliers can deploy applications and data on a shared set of resources based on a schedule that is aligned with the needs of the business process. The environment is created on the fly, without requiring prior configuration of hardware and software resources. When the environment is no longer needed, the resources may be returned to their original state and re-used for another task, potentially by a different set of suppliers. Environments can also be "frozen" and recreated on demand, eliminating the cost associated with maintaining dedicated environments for an extended period.

Information Management - Another critical aspect of effective collaboration is ensuring that information is easily accessed and made available at the point of consumption. Managing the large, distributed data sets that are typical in the aerospace industry can become an overwhelming challenge. Information Management components coordinate the tracking, transport and synchronization of large, distributed data sets required for design, testing and other product innovation processes. This allows a knowledge worker to access required information without requiring intimate technical knowledge of filenames, storage paths and network locations. Metadata, or information relevant to the current business context, is used to describe and rapidly locate specific data. And rules are used to determine the most cost and time effective approach for accessing that data, ensuring optimal utilization of costly network and storage resources.

Business Workflow Integration- Transformational impact to the innovation process does not mean wholesale upheaval of existing business practices and tools. Aerospace OEMs and suppliers alike have made significant investments in product lifecycle management (PLM) and engineering design systems. In order for any collaborative solution to be effectively utilized, it must integrate with these systems and be controllable by both human and automated means.

Impact of Accelerating Innovation

The benefits of creating this type of dynamic environment can be significant, both in terms of impact to the immediate operations, but also in terms of longer term impact to strategic aspects of the business. Based on analysis conducted by AMR Research, investments in simple automation of product innovation environments can pay for themselves in a matter of months, while providing a foundation for longer-term enhancements.

The figure above illustrates the nature of the benefits realized and the extent of returns over different time periods. Adopters of technology that accelerates innovation notice marked improvements in their supplier interactions, which translate directly to shorter product delivery cycles and higher quality designs. Over an extended period, once these transformative capabilities are broadly institutionalized, the impact extends beyond operational measures to market share growth and competitive advantage.

close window