New Aerospace Frontiers, Old Obsolescence Challenges
While initial thoughts of the aerospace industry typically conjure images of fighter jets, commercial aircraft, and possibly aftermarket parts among those who are familiar with this world, we often forget to include the rapidly growing training and simulation market. Boeing, for example, has historically been a leader in this field, but their recent announcement of the U.S. Air Force’s decision to adopt their new T-X advanced pilot training jet has positioned them to be the dominant player in lead-in fighter training for the foreseeable future.
While this appears on the surface as evidence of the aerospace industry further consolidating around a few top-tier manufacturers, establishing a set platform like the T-X (or other future announced by manufacturers such as Lockheed Martin and L3, for example) also opens the door for many adjacent Tier-2 and Tier-3 suppliers to establish footing in a more niche, but lucrative, market.
Direct market-to-market competition can prove quite difficult in an industry that is gradually moving away from the open “Wild West” market expansion of the 90s and toward the security of classic vertically-integrated business model. So, in response, many suppliers are opting to hyper-specialize by focusing resources toward these newer platforms where the market is still somewhat uncharted. This trend has consequences that can be skewed as positive or negative depending on where the company in question falls on the supply chain.
From a forward-thinking perspective, such a direction bodes well for long-term financial security. Making the transition to newer platforms early allows the manufacturer to be the first to establish marketplace visibility and to set a foundational impression with early adopters. Leveraging your strategy for future success, however, also means pivoting away your finite amount of production resources away from current platforms. If handled improperly, not only can this put current customers into a difficult position maintaining, repairing, or replacing components still in the middle of their service life (no small amount of time in aerospace), but it can threaten future relationships, as well. Sudden supplier-induced disruptions, such as unexpected component obsolescence, are not easily forgotten when the OEM is making plans to determine who will support their next design.
In order to remain focused on the future without losing sight of the present, it’s imperative that component manufacturers provide their customers a “soft landing” from obsolescence – a service that allows customer production demands to remain unimpeded even while prepping for new opportunities.
This is what makes the EDX Last Time Buy Solution uniquely suited for the demands of the aerospace industry. Using our own working capital, we will step in on the OEM customer’s behalf to purchase as much LTB inventory as necessary to meet current needs. This all occurs in a single transaction, which allows suppliers to realize multiple years of revenue at once and can net a significant cash-flow advantage in future endeavors.
The potential for future platforms in sectors such as training and simulation is exciting for the aerospace industry as a whole, but it’s equally important to not lose perspective of what’s important today. Short-term and long-term plans should be handled with equal care and consideration, with a suitable solution in place to bridge the two without sacrificing customer satisfaction in any capacity.