Taking Off For Success: Driving Digital Innovation in the Aerospace Industry
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Taking Off For Success: Driving Digital Innovation in the Aerospace Industry

Mark Hermans, Managing Director, PwC and Rachel Sealy, Partner, PwC
Mark Hermans, Managing Director, PwC

Mark Hermans, Managing Director, PwC

Today’s aerospace industry is generating an unprecedented amount of revenue and shows no sign of slowing. However, in order to continue flourishing in today’s interconnected world, the industry as a whole must embrace and implement new tactics to foster innovation and maintain their stance against new entrants and emerging competition.

Aerospace and defense (A&D) companies decreased R&D expenditure by 0.5 percent in 2018 while those in other industries are aggressively investing. This results in limited firepower in the technology arms race and is an issue that must be addressed. Companies that harness the proliferation of emerging technologies and maturation of the Fourth Industrial Revolution (4IR) will effectively position themselves to attract a diverse and talented workforce, and grow capabilities to lead the business through the rapidly changing landscape.

Embracing Emerging Tech Solutions

Compared to other industries, products coming out of the aerospace industry have a much longer lifecycle, are utilized on a larger scale, and have distinct safety and regulatory requirements. This creates the unique need to accurately track the product through every stage from production to maintenance and use. Aircrafts, depending on size, can include up to several million parts, and data on each part is often collected manually. Between all using parties, it is nearly impossible to keep track of all the pertinent information about the life of an aircraft. Leveraging Blockchain, for example, offers a solution to this traceability challenge. Blockchain enables the creation of a digital birth certificate for each part, plane and individual involved in building or operating an aircraft. This digital birth certificate can be continuously updated with visibility into the airworthiness, qualifications, usage, and status for traceability throughout the aircraft’s lifecycle.

Creating real-time traceability of everything from raw materials to the whereabouts of the finished product enables end-users to use the data to anticipate disruptions and design to reduce product complexity. The result is an ecosystem of trust from one stage to the next, between all parties. While blockchain is a crucial ingredient in building a more connected ecosystem, it becomes more powerful when applied with a combination of additional emerging technologies. This combination of emerging technologies is key to improving the aviation industry overall, including cloud, artificial intelligence (AI), 3D printing, also known as additive manufacturing (AM), and machine learning. Blending these technologies to address real business problems and advance strategic goals is a challenge to which the aviation industry must rise.Rachel Sealy, Partner, PwC

From AI, AM, and machine learning comes the opportunity to introduce heretofore unseen efficiency and productivity gains. When it comes to AI, about six in ten companies globally are making significant investments. It is no longer about remaining competitive, but maximizing the available resources to survive as a business. With newfound capacity, companies will have the ability to look beyond the norms of their industry and bring to life new ideas and solutions. 4IR technologies are moving beyond prototypes and will deliver results, but only if businesses invest in harnessing their potential. The breadth of digital capabilities required will also challenge the aerospace industry to invest to equip its workforce’s digital skills.

Adapt a Silicon Valley Mindset

Aerospace companies are losing the war for talent to Silicon Valley. The Silicon Valley companies set the bar for how to attract and retain the kind of digitally-skilled workforce that aerospace companies need. By introducing new C-Suite roles such as a Chief Digital Officer, companies can actively prioritize improving their digital acumen and set them up for technological success – from rethinking product design to reimagining a 4IR-enabled, connected supply chain.

Seventy-nine percent of CEOs find the availability of key skills to be one of their top concerns. By understanding the digital capabilities required to drive the next digital revolution, companies can focus their talent acquisition, reskilling and/or upskilling strategies appropriately. To compete with the Silicon Valley talent acquisition powerhouses, aerospace companies need to create a workplace culture that embraces continual-learning, demonstrates an ongoing investment in their personnel, with an innovation-led mindset.

Create a Secure, Connected Ecosystem

Technology has opened the door for new models of tech-enabled cooperation. The aerospace ecosystem has expanded to include non-traditional players that serve the industry alongside incumbent players with new capabilities and skills. Though these parties – suppliers, vendors, customers – are part of the same ecosystem they’re occasionally in competition with one another. Aerospace companies must expand their tech potential to effectively operate in an increasingly dynamic ecosystem while simultaneously and proactively incorporating cyber and privacy measures to protect critical information and ensure it is available only to the appropriate parties. Pioneering companies are already implementing advanced technology across the supply chain to allow for greater visibility and potential opportunities for collaboration. This evolved business model will drive value by safely sharing information with all parties involved.

This increased competition may fluster some, but it also provides opportunities to pursue joint ventures and strategic partnerships with competing tech companies. The A&D industry is no stranger to deals activity—in 2018 the sector conducted over 800 deals alone. Finding the right capabilities, the right resources, and the right deal is critical for industry leaders. Whether it is a joint venture or an outright acquisition, evaluate it in the context of the extended ecosystem and how to most strategically collaborate.

Moving Forward

As the aerospace industry looks to continued success, companies must adapt to all aspects of the changing landscape, starting with adopting emerging technologies by increasing investments in R&D. Embracing a strategy focused on digital and innovation, backed by a strong workforce, will be key to success. Companies hesitant to introduce emerging technology are being left behind and a shrinking talent pool is heightening competition, both from traditional competitors and non-traditional aerospace companies working to cement their place. It’s time for the aerospace industry to charge forward – or risk being overtaken.

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