The report shows that the lack of capacity planning adds to the ramp-up challenge

A lack of capacity planning is increasing the ramp-up challenge for many aerospace and defense (A&D) manufacturers striving to meet planemaker Airbus’ ambitious production increases, according to a report released by consulting firm Vendigital.

Airbus first announced plans to ramp up its popular A320 program in November 2021, and some manufacturers were unsure if it would be possible to meet that demand, especially as many were still suffering from the aftermath of the pandemic shutdowns they left in their wake with depleted resources and a shortage of skilled workers. With rate increases firmly underway, A&D manufacturers know there are more challenges ahead as Airbus moves closer to its goal of making 75 jets per month by 2025.

To learn more about how the industry is dealing with rate increases, Vendigital conducted a project to assess rate readiness within the A&D manufacturing supply chain, involving more than 100 suppliers from Asia, Europe and the US. The assessments conducted revealed that more than a third of suppliers – 38% – had inadequate capacity planning processes in place. Without urgent attention, this could leave them behind and potentially lose market share.

Paul Adams, director and A&D sector specialist at consultancy Vendigital said:

“We know that increasing rates is a challenge for manufacturers throughout the supply chain. The project we undertook provided an under-the-hood assessment of how the industry is coping with tariff increases and it is clear that a lack of focus on capacity planning is holding some companies back.”

The suppliers conducting the rate readiness assessment faced a steep ramp-up challenge as their upstream customer attempted to increase production output, sometimes in a matter of weeks. The upstream customer had itself carried out a comprehensive review of its internal processes with the aim of optimizing operational efficiency. The report warns that any manufacturer planning a rate readiness assessment should look both inward and outward.

Paul Adams said, “It’s easy to think that meeting the ramp-up challenge will depend solely on supplier readiness. While that’s important, there’s no point investing resources in strengthening supply relationships and building additional capacity if your own processes are underperforming. To be truly collaborative, any organization needs to look both inwards and outwards, and data is key to that.”

The lack of focus on capacity planning seen in the supply chain was primarily due to a lack of skills. Many A&D manufacturers are still operating with a depleted skill base that they have not yet been able to rebuild following pandemic-related disruptions. In some cases, it was found that a lack of knowledge of key equipment and lapsed maintenance programs made it difficult to reliably predict production performance. In other cases, even when capacity planning took place at a senior level, a lack of focus on communication and process efficiency prevented the message from reaching the production floor.

Adams commented, “Ramping up is always a time of heightened risk for any manufacturer, not least those with complex, global supply chains. For those who succeed, there are potential rewards — opportunities to strengthen customer relationships, differentiate products and services, and increase market share.”

While less pronounced than the lack of capacity planning, other supply-side shortcomings were identified during the rate readiness assessment. These included challenges in accessing a skilled workforce, difficulties in sourcing raw materials and components, inferior production tools and equipment, and operational efficiency issues.

The report offers advice to A&D manufacturers across the supply chain on steps they can take to assess their own ramp-up readiness. The first step is to find out more about what the demand curve looks like and over what timeframe, and should be followed by a detailed assessment of individual suppliers and a prioritization process to identify where additional support may be needed.

Building relationships and moving to a more collaborative way of working with suppliers and sharing information can also help mitigate risk and pave the way for rate increase. Further steps include creating an action plan, working together to develop the competency base as needed, and regularly reviewing progress to ensure continuous improvements are being made.

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