Gaining altitude with PwC

February 2012
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How can aerospace & defense companies improve their value chain? PwC

At a glance

Supply chain risk is a major issue aircraft manufacturers, but one-fifth (21%) of commercial and defense aerospace supply chains are not prepared for the high ramp-up expected from newly announced civil and military programs, creating vulnerability or failure. Aerospace companies and their leading tier-one suppliers should prepare for potential supply chain problems, especially particularly in light of delays experienced in recent programs.

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Issue 2 – Supplier management: Can aircraft manufacturers prevent rate ramp-up problems?

By Dirk de Waart and Chuck Marx

At a time of soaring order books and rapid production rate ramp-up, supply chain risk is top of mind for aircraft manufacturers. When PwC looked at 12 key commercial and defense aerospace growth programs, we found that a fifth (21%) of suppliers are not financially ready to support the high ramp-up ahead of them. Dirk de Waart, leader of PwC's PRTM Commercial A&D Group, discusses the findings and explains how PwC is using an approach, taken in part from the world of private equity M&A, to help companies pinpoint risk and prevent supply chain disruption.

High production rate ramp-up will be needed across much of the A&D sector. Both the leading civil aerospace manufacturers--Boeing and Airbus--have announced a series of record deals for their new generation of commercial aircraft. Military programs such as the Joint Strike Fighter and Tanker are also ramping up in the next five to ten years. But big rate increases also mean pressure on the supply chain, leaving programs vulnerable to supply chain delay or failure. Aerospace companies and their leading tier-one suppliers are very conscious of the potential problems, particularly in light of the major delays that have affected recent programs. The question is what is the best way of preventing future problems?

Read other issues in the Gaining Altitude series: