The COVID-19 pandemic – a low-probability, high-impact black swan event – has caused significant supply-demand shocks across every industry. The aerospace and defense (A&D) industry, particularly commercial aviation, has taken its fair share of slump. With social distancing becoming the norm and airline traffic coming to a grinding halt, airlines are inclined to defer orders leading to A&D manufacturers scaling back their production.
Given the dynamic nature of events unfolding, there is a need for A&D players to address recovery on a war footing with both short-term as well as long-term perspectives. These short-term and long-term actions are not mutually exclusive but are a continuum of interventions that can be implemented during various phases of recovery, as illustrated in the graphic below.
Figure 1: The phases of recovery during and after COVID-19
The immediate crisis management naturally brings focus back to the core purpose of the organization giving rise to resilience and adaptability, as organizations move away from the reactive phase towards proactive future proofing.
Black swan events such as the pandemic allow companies to reflect on and realign with their purpose to continue serving their stakeholders despite severe disruptions. Organizations that are realigning their strategy with near-term and longer-term objectives and accelerating the adoption of emerging technologies are positioning themselves well during the recovery phase and can outpace peers in the post-pandemic future.
Focusing on financial viability and cost conservation strategies can help A&D manufacturers remain afloat in the short term. Alternative revenue generating models, like partnering with medical device makers to manufacture ventilators and 3D-printed face shields, can serve both shareholders and community stakeholders alike. Further, the shift towards cargo and cabin modifications to utilize unused passenger capacity are some good reactive measures to weather the immediate scenario.
Given the complexity and extensiveness of its supply chain, the A&D ecosystem has numerous interdependencies across the business value chain. Being resilient requires industry players to assess challenges across the value chain and deliver results quickly and efficiently, thereby enhancing value and experience.
- Adopting remote workforce models: Deploying a remote/virtual workspace model with agile operations is imperative for business continuity. Workforce automation, software-as-a-service (SaaS), and cloud enterprise technologies clubbed with artificial intelligence (AI)-enabled security allow for a seamless implementation of virtual offices.
- Increased focus on health and safety: Operating in the globally spanning A&D manufacturing ecosystem amid COVID-19 environments requires enhanced health and safety measures. Integrating mobile applications, internet of things (IoT) wearables, and smart personal protective equipment (PPE) along with employee health and safety (EHS) solutions can ensure compliance while maintaining business continuity. These applications can be leveraged for inspection and incident tracking, real-time biometrics monitoring, and virtual and augmented reality (VR/AR)-enabled workforce training, thus promoting workers’ well-being and minimizing risks.
During the recovery phase, organizations are focusing on conserving cash and maintaining liquidity. Including a longer-term perspective to this can aid organizations in the post COVID-19 period as well, as described below:
- Deploy a black swan (COVID-19) war room, virtual or otherwise, to identify and analyze all cost elements and assets, distinguish core/non-core functions, and identify opportunities for external partnerships.
- Cloud infrastructure-as-a-service (IaaS) and managed and shared services models allow for scalability and elasticity while optimizing spending on non-core areas.
- Find the balance between immediate need for cost reduction and investment in solutions that can offer cost optimization over the longer run. For example, an intelligent equipment control system with connected products and platforms with reconfigurability and repair would offer manufacturers better controls over their resources and costs over time.
- De-risking the extended A&D supply chain: At the core, designing an effective supply chain ecosystem is about getting the right product/service in the right quantity and quality from the right place at the right time. An intelligent supply chain with AI-enabled analytics generating insights from multiple IoT sources can help organizations create an effective and connected ecosystem. This setup learns adaptively and provides insights from unstructured and semi-structured data, thereby improving procurement, inventory control, and traceability. An end-to-end visibility of the supply chain can be achieved by coupling connected networks with digital twin technology that offers the ability for simulating multiple scenarios and predict failures and risks.
- Collaborative robots: Forward-thinking organizations are revamping their shop floors with smart manufacturing and factory automation technologies. Collaborative robots or cobots, which are light weight, affordable, and mostly plug and play, achieve results efficiently and seamlessly. Cobots achieve better human-machine interaction (HMI), and at the same time, ensure a safe work environment.
This proposed strategy that revolves around the phased business tactics of purpose-driven objectives, resiliency, and adaptability for the near-term and long-term will set the stage for a healthy recovery. Further, the confluence of maturing digital technologies that have already witnessed an increasing pace of adoption across the A&D ecosystem, will play a visible role in defining the new dynamics of the post COVID-19 world, as depicted in the figure below.
Figure 2: COVID-19 recovery challenges and potential technology interventions
The A&D industry needs to look beyond recovery and plan for de-risking potential disruptions in the future. This means companies need to reimagine their business models and operations around an ecosystem that is intelligent, automated, and on the cloud. Adopting TCS’ Business 4.0TM principles will help companies extract value from an extended ecosystem and embrace prudent risk-taking cultures for the way forward.