Industry
Manufacturing
Future-Ready Manufacturing: Partnering in your journey to a sustainable manufacturing enterprise
Highlights
- Aerospace supply chains are facing a welcome challenge: demand has recovered strongly, but keeping up with it remains difficult. However, disruptions like geopolitical tensions, tariff uncertainty, and material shortages necessitate urgent improvements in the visibility, agility, and coordination across all tiers of the aerospace supply chain.
- Building resilient supply chains will require a mix of strategic measures such as multi-sourcing, nearshoring, stockpiling, talent development, and stress testing, combined with the adoption of new technologies such as artificial intelligence (AI), digital twins, Industrial IoT, and advanced control towers.
- We propose a phased roadmap to fortify the aerospace supply chain by improving the critical aspects of people, processes, data, and technology.
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The current state of affairs
Things are looking up for the aerospace industry as it experiences a robust resurgence.
Commercial aviation has nearly returned to the pre-pandemic (COVID-19) operational levels and is projected to grow 5%-10% annually over the next couple of years. This recovery, however, has not translated into operational stability.
Original equipment manufacturers (OEMs) as well as their suppliers, especially tier-1 suppliers, regularly report challenges to deliver on the order backlogs owing to a shortage of materials, key electronic components, and skilled workforce. Airbus, for example, reported strong Q1’25 financials but had downgraded their annual guidance mid-year in part due to supply chain issues and tariff related uncertainties also likely had a role in the 20% decline in aircraft deliveries in the month of Apr’25 compared to the previous month. This highlights the complexities of today’s supply chains where disruption at a tier 3 supplier, say of a high-pressure turbine blade, will send ripples all the way to the top.
In addition, geopolitical developments such as looming tariffs, Russia-Ukraine conflict, unrest in the Middle East, and US-China relations are pushing companies to constantly rethink and realign their supply chains.
The future-readiness of the aerospace industry is going to heavily rely on building resilient, adaptable, and robust supply chains that can withstand disruptions and using new-age technologies for the immense advantages they offer.
Potential risks and shocks to prepare for
Aerospace supply chains face a variety of systemic as well as localized risks, many of which are intensifying.
These risks can be classified into six broad areas:
- Supply-side risks, which include shortages, delays, and quality issues
- Operational risks, which include production issues such as safety incidents, unplanned shutdowns, strikes, labor shortages
- Cyber risks apply to an organization’s own or extended supplier networks and come in the form of IP theft, ransomware, data integrity
- Economic risks, which include tariffs, regulatory changes, bankruptcies
- Geopolitical risks, such as military conflicts, sanctions, political instability
- Environmental risks, which include weather events, pandemics and sustainability requirements
Let’s examine each of these factors and the impact they have on the aerospace supply chain in detail.
Supply-side risks are systemic in nature and affect the industry at large given the strong reliance on specialized raw materials based on critical rare earth (CRE) metals such as nickel, titanium, and tantalum, and other composites like carbon and glass fibers. Apart from raw materials, there are other finished goods such as castings and forgings, semiconductors, and electronic components.
The supply chain for such materials runs deep, suffers from opacity, and is controlled by a select few, making it vital to identify bottlenecks and potential shocks which can disrupt production.
Operational risks are more localized and specific to an organization. They are significant nonetheless and can cause considerable financial and reputational damage. Boeing is a prime example where a company known for its innovation and pioneering products suffered immense damage to its reputation due to oversight on safety and quality control.
Organizations need to be keenly aware of their dependence on technology and manual intervention – these range far and wide including system malfunctions, obsolescence, delayed detection, and even facility incidents.
Cyber risks are causing havoc across industries. The aerospace supply chain is vulnerable to cyber threats, given its inherent complexities due to a globally interconnected supply chain and reliance on digital technologies.
Each node in the supply chain is a potential vulnerability that needs fortification. Recent incidents, such as the ransomware attacks on a US-based aerospace supplier providing valves and pressure controls and a UK-based supplier providing aerospace consumables, underscore the need to address these vulnerabilities. These breaches not only impacted the business continuity for the suppliers involved but also for downstream customers, raising concerns about the security of critical aerospace infrastructure.
Economic risks impact the supply chain or financial planning of organizations in the form of tariffs and regulations or reduced market access. Measures such as sanctions and trade restrictions imposed by various countries limit access for aerospace manufacturers to markets as well as supply sources. This in turn results in shortages and price fluctuations.
Having a diversified supplier base, using strategic intelligence teams which can monitor or respond to global events and potential disruptions are crucial to responding to such threats.
Geopolitical risks – conflicts, trade restrictions, and diplomatic tensions – pose another kind of threat to the aerospace supply chain; recent events have highlighted these vulnerabilities. Titanium supplies have been affected due to the ongoing Russia-Ukraine conflict due to sanctions applied on suppliers from that region. Ocean freight premiums and port strain have gone up after escalations in the Middle East due to conflicts and attacks on shipments passing through the Red Sea. These shocks cascade through the sector because of delays in shipments, rise in insurance premiums, and uncertainty in supply planning.
Environmental risks are increasingly becoming a top boardroom agenda across the globe. The aerospace industry faces systemic environmental risk both from its own contribution to emissions, chemical run-offs, and depletion of resources on the environment, as well as the other way round due to adverse weather events, predictable or otherwise, paralyzing key manufacturing or logistics hubs overnight.
Addressing this duality in risks requires a multi-pronged approach involving sustainable sourcing, efficient processes, responsible end-of-life management of aircraft components, and reducing carbon emissions overall, alongside risk-analytics driven scenario planning, and diversified supplier routes.
Strategies to build resilience in aerospace supply chain
Supply chain risks are pervasive and often unpredictable, making it essential for aerospace manufacturers to put in place comprehensive strategies to build resilience.
Manufacturers must gauge what strategies are relevant for them and where they find themselves on the maturity scale on each of the strategies. Today’s aerospace chief supply chain officers (CSCO) face constant volatility due to an evolving industry with their span critical in ensuring seamless operations and keeping the engines, quite literally, chugging.
Having a wide array of sources of risk also means that there is so one cure-all solution. There are four broad pillars which need to be strengthened to build resilience, namely, supplier programs, predictive and cognitive ability, simulations and event response procedures, and sourcing strategies.
- Tier-N visibility and collaboration programs
- Stress testing the supply chain through simulations
- Cognitive analytics and early warning systems
- Building in diversification and backup plans
- Sourcing diversification involves working with multiple suppliers to spread the dependency and risk of disruption
- Nearshoring can involve both relocating production or sourcing closer to the primary market(s) or production facilities to shorten lead times, improve supplier communication, and enhance operational control
- Strategic stockpiling involves maintaining reserves of critical material and components whose shortage can have severe consequences on production. There is a clear tradeoff here between the inventory carrying costs and ensuring continuity of operations.
Tier-N visibility and transparency programs extend a company's understanding beyond its direct (Tier-1) suppliers to include deeper tiers like Tier-2, Tier-3, and beyond including subcontractors and raw material suppliers. This broader view allows companies to gain a holistic view of their supply chain, identify hidden risks early, and enhance sustainability and compliance efforts. It also uncovers new cost-saving opportunities by evaluating lower-tier suppliers for efficiency, ethical practices, and potential disruptions.
Simulations and table-top exercises enable aerospace manufacturers test their preparedness and do a reality check on the resilience of their supply chain – from short-term shocks such as supplier defaults or natural disasters to medium-term events such as geopolitical or regulatory changes or long-term implications of consumer demand shifts.
These scenarios and simulations incorporate the different links in the supply chain such as demand, raw materials, suppliers, production, warehousing, and distribution essentially building a digital twin of the supply chain. The results show potential vulnerabilities, bottlenecks, and dependencies existing in the supply chain; these insights can be used to propose, develop, test, and implement mitigation strategies.
Predictive and cognitive systems rely on wide swathes of internal as well as external data to analyze and identify patterns and anomalies, allowing early actions before an event turns into a full-blown crisis.
Some potential use cases are supplier performance and reliability monitoring through historical data on delivery, quality, and even financial attributes. This helps identify at-risk suppliers and activates contingency plans relying on cognitive intelligence. Another use case is where an active web crawler looks for adverse geopolitical or natural events classified geographically or by intensity which a manufacturer should plan for, aiding effective decision making.
The role of technology
Technology is increasingly being viewed as one of the foundation stones to build resilience in aerospace.
The integration of next-generation digital tools along with the strategies discussed earlier will enhance visibility, prediction, automation, and collaboration across the supply chain. To boost supply chain resilience, several mature digital tools and technologies are being implemented at scale. We’ll explore these, starting with the foundational ones and progressing to more advanced capabilities:
- Data collection and preparation
This step forms the basis of how effectively and deeply we can derive insights from the data that the organization has. Some examples of such data:
- Supplier data: Supplier reliability, delivery times, quality, and overall performance helps gauge their ability to manage potential disruptions
- Production data: Data gathered from processes, machines, and quality control reveals potential bottlenecks and highlights areas for improvement
- External data: Geopolitical and economic data, social media sentiment analysis, and public weather data
- Cloud-based collaboration and integration platforms
- Machine learning based modelling and analytics
Machine learning (ML) is proving to be a game changer, thanks to the advent of more computing power, advanced ready-to-deliver models, and the ability to work with unstructured data from internal or external data sources. With integrated data, ML can uncover patterns, forecast disruptions, and support decision making. Some examples:
- ML can combine internal data such as historical sales with external data such as economic forecasts, and even weather patterns to simulate demand shifts
- ML models can integrate supplier’s past performance data with public data such as supplier locations, financial results, labor or regulatory challenges, use attributes such as single sourcing and lead times to arrive at a risk score related to critical suppliers
- AI-powered digital twins and control towers
- Blockchain
Given the regulatory, quality, and reliability demands on the aerospace industry, blockchain brings in transparency, traceability, and efficiency in operations. Some use cases are:
- Airbus uses data immutability and integrity to track its components from origin to destination. This ensures integrity of information as well as reduces the risks associated with counterfeiting.
- Rolls-Royce and Lockheed Martin are using blockchain based smart contracts and supplier credential verification ensuring supplier veracity and quality standards of the components.
- Safran manages the lifecycle of its components from manufacturing to disposal on-chain, ensuring accurate and up-to-date data enhancing safety and compliance.
Given the risks that an organization carries are diverse and dynamic, tackling them also requires working proactively with your partners and maintaining an integrated view of the data. This data from various sources should be accessible and consolidated, as current as possible, and useable for analysis.
The choice of platform should align with the goals, data sources, data types, platform interoperability, and data security requirements.
As AI and ML evolve, real-time decision making related to inventory, orders, production, and logistics can be dramatically improved. The building blocks are all there, and over time, with feedback from the users and improving model capabilities, AI has the ability to self-learn and make the supply chain more responsive and adaptable.
AI-driven digital twins create end-to-end virtual replicas of the supply chain starting from sourcing till delivery providing insights into the impact on the supply chain due to inventory levels, supplier issues, transportation delays, and other scenarios.
A powerful one-two combo of control towers supported by digital twins enhances the resilience and the intelligence of the supply chain. Integrating near real-time data from various sources along with insights from the digital twin can enable dynamic decision making and rapid response capabilities of the control tower.
With a perpetual high level of scrutiny, standards, and low margin for errors, aerospace companies need to embrace technology to boost trust, improve operational performance and maintain a proactive risk-ready stance.
A roadmap for a resilient, responsive aerospace supply chain
Building the roadmap for a resilient aerospace supply chain is a long-term endeavor that demands coordinated investment across people, processes, data, and technology.
We have looked at several ways to build resilience into the very fabric of the supply chain and propose bringing these strategies and technology together into a cohesive and comprehensive framework.
At its core, it is the focus on talent development and retention, which keeps the entire framework together.
- Map
This is a critical first step for the organization due to the inherent complexity and high-stakes involved. Mapping out the network in detail will help identify all the interdependencies and connections between the critical nodes. Key steps include:
- Flow mapping: Visualize the flow of materials and information down to the point where each part comes in the build sequence. This will help identify bottlenecks, points of failure, and dependencies on critical materials.
- Determine the span and the depth: Lay out and zoom in on each link of the supply chain to map out tier-N-wise supplier attributes such as geographical spread, financial wellbeing, sustainability focus, ownership, and structure. This can be streamlined with the help of dedicated tools.
- Assess
- Plan
With risks, impact, and current state identified, it is time to come up with strategies which will either eliminate the risk or reduce its impact. Key considerations include:
- Think long term: It can be tempting to find quick and cheap fixes, but sustainable risk planning is done for the long term in line with the company’s goals
- Resource allocation: Deploying finances and resources toward upgrading personnel, technology, and process based on the Assess phase outcomes
- Integrate
At this stage, it’s all about enablement of the strategy and technology acting as the glue. From purpose-built tools such as blockchain bringing in traceability and trust to flexible solutions such as AI and ML with wide-ranging capabilities, the right choice will depend on the priorities set during the ’assess’ phase and strategies chosen during the ’plan’ phase.
Some potential use cases:
- Cyber risks are at an all-time high with sophisticated cyber and ransomware attacks becoming common place. Assess your own and your suppliers’ digital vulnerabilities to build a cyber defense strategy with layered security controls and clear incident protocols.
- Digital twins can simulate supply chain disruption scenarios such as material shortages, sudden site closures, optimize operations, or run real-time diagnostics. For example, Rolls-Royce uses digital twins of its engines to predict failures and plans out maintenance schedules in advance.
- AI and advanced analytics-based control towers provide visibility across the supply chain, integrating and analyzing data across suppliers, logistics providers, and manufacturing sites.
- Strengthen
The last step in the framework is where the insights and outcomes feed back into the program to fortify and continually improve the supply chain.
With strategy deployment underway, alongside the data and baseline metrics, a resilience governance mechanism is established - with cross-functional representation from supplier management, process, quality, tech adoption, and compliance.
Expected outcomes from this phase:
- A crisis response team with clear communication plans and protocols
- Live and integrated data sources and feeds
- Continual risk monitoring and model updates
- Contingency plans (Plan B, Plan C, Plan D, and so on)
- Regular stress tests with scenario simulations and tabletop exercises
With the network mapped in detail, the next step is to identify, categorize and assess the impact of the risks and vulnerabilities and the gaps between the as-is and intended state.
We propose an assessment model to help an organization find itself on a five-point scale: reactive à aware à proactive à adaptive à resilient
The level of maturity and the gaps identified inform the right strategies across people, process, and technology.
A key, but often overlooked, feature of the ’assess’ stage is establishing the right KPIs early, supported by a continuous feedback mechanism. Metrics like mean time to recover (MTTR), on-time-in-full rate (OTIF), and forecast accuracy help track and improve the agility and flexibility of the supply chain. Setting these metrics and targets upfront ensures focused execution.
Remember that this assessment and, hence, the response of the organization will change over time, and we will build this need for agility into the framework.
The strategies discussed earlier should be detailed out at this stage, supported by time-bound plans and associated metrics.
Technology is a proven enabler, but success depends on the selection of the right tools, each needing its own set of competencies as well as managing change effectively.
As visibility and collaboration improve across the supply chain, continuous improvement is a must.
Conclusion
A minor risk today can become a major disruption tomorrow.
The aerospace industry has always been at the forefront of innovation and also faces a complex global landscape and regulatory scrutiny. There is enormous opportunity for growth and transformation but also heightened exposure to potential disruptions. As recent global events have demonstrated, only those organizations that proactively invest in resilience—through diversified supplier networks, workforce development, and advanced technologies — will thrive in the long term.
By following the structured roadmap that has been outlined here and embracing new technologies, aerospace companies can transform their supply chains into agile, intelligent ecosystems capable of withstanding future shocks and sustaining competitive advantage.
