Making the complex simple

Morgan Advanced Materials' aerospace market segment leader, Mark Forkapa explains how an innovation-led culture can enable a company to deliver cost reductions and added value solutions by making the complex simple for customers.
Even as the global aerospace sector enjoys unprecedented growth and investment, the pressures on those supplying key components continue to increase.

And in a marketplace where suppliers remain under continued pressure to deliver annual cost savings on the same component – up to 6% is not unheard of, a tough ask on a product which may have a 40-year life cycle – how can they remain profitable and avoid their own margins being further squeezed?

The key for many market players has been to reduce the cost base and this has meant consolidation of their offering. Vertical integration in the supply chain has become more and more commonplace, with materials developers and parts suppliers being acquired by assemblers, creating the potential for greater control over cost and providing a single point of access and accountability to the customer. Everywhere you look there is restructuring happening within the aerospace supply base.

Is there an alternative to consolidation that still enables suppliers to thrive - one which allows customers to continue to benefit from the niche specialisation and responsiveness of these suppliers? I believe there is.
Those suppliers that are not keen to become part of larger conglomerates have to ensure they deliver sufficient innovation in order to make their offering distinctive and sought after by their customer base.

This commitment to innovation must extend far beyond new product design – these days, that is almost a given – it must be ingrained in the business model and every aspect of the company's culture. Innovation in systems, materials and manufacturing methods must be adapted in whatever way is necessary to make that supplier as easy as possible to do business with and simplify the selection process.

Indeed, simplicity is at the core of a progressive supplier's culture. Traditionally the larger players in the sector were more prepared to work in partnership with suppliers to improve and simplify designs and drive out cost from the supply chain. Modern lean manufacturing methods and busy workloads mean that engineers at customer companies are rarely available to assist and input into product improvement programmes. Instead, the supplier is increasingly expected to deliver a fix or improvement with little or no input from the customer. If they can prove they have the structure in place to be this type of autonomous supplier, it's a major differentiator.

A similar change is also taking place in the area of logistics, where ‘just in time' delivery is increasingly demanded, even expected. This means suppliers may be delivering multiple, small consignments over a given period instead of just one containing all the components needed. In a sector when forecast accuracy, particularly for replacement parts, is notoriously unreliable, a supplier who can respond rapidly when a component is required urgently will earn customer loyalty and build their reputation in the market.

In short, creating a unique position through an innovation-led culture will ideally place a company to deliver the required annual cost reductions, ensure availability, and deliver true added value solutions which secure their future growth and prosperity. It is all about making the complex simple for customers.

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