Setting the Aerospace Supply Chain Up for Success After COVID-19

By Logan Wamsley

The future of the aerospace industry and its supply chain coming into 2020 was bright, but no one could have predicted how much would change in just a few short months. Virtually every major industry experienced significant challenges in the peak of the COVID-19 pandemic, but few were quite as widespread or highly publicized as those faced in the aerospace industry.

A Difficult Year

In the first few months of 2020, passenger volume on commercial aircraft dropped more than 90%, and airline companies that make the lifeblood of their industry were forced to move quickly to contain costs in the face of a near complete shuttering of incoming profits. Employees, experienced and unexperienced alike, were among the first casualties, with many of them being placed on furlough, if not laid off outright. From there, many aircraft orders were either delayed or cancelled, which in turn had drastic consequences down the supply chain all the way to the aircraft OEM. These manufacturers were forced to deal with layoffs of their own, and in many cases, had no choice but to reduce investment in any areas, such as R&D divisions that had sights on long-term returns.

The global economy is not out of the woods yet, but return to any semblance of normalcy that resembles the optimism of late 2019 or early 2020 will not happen overnight. To begin the healing process, aerospace OEMs should begin by completing a thorough re-examination of where additional capital can be found for jumpstarting recently dormant R&D divisions. “History has shown that companies that continue to invest in innovation during a downturn are better positioned than rivals to capitalize when the recovery gains steam,” writes Dalue Brosius for Composite World. “Resuming R&D in these projects doesn’t have to happen all at once, but a strong commitment to progressively ramping up investment in composites innovation is imperative for the industry to take advantage as soon as the time is right.”

Untapped Working Capital in the Aerospace Supply Chain

There would be no quicker way for an aerospace OEM to quickly realize the full potential of its on-hand working capital than through a Partstat Inventory Management Solution. Working capital is typically reserved for maintaining current production commitments and making inventory purchases in line with a standard just-in-time inventory production model.

Partstat, however, changes this model. Instead of using the customer’s working capital for such transitions, Partstat will step in and purchase all the inventory necessary to maintain production for the entire lifecycle of the product using its own capital. As a result, the customer’s upfront capital spend remains untouched, all while avoiding any potential supply chain issues such as price inflation, shipment delays, or obsolescence-related last time buy issues.

For the aerospace industry, this means additional, uncommitted working capital on hand to re-commit to research and development, which will be crucial to maintaining a viable place in the market as the COVID-19 pandemic subsides. Additionally, aerospace OEMs can also more quickly re-enter the hiring market to either reclaim or discover new skilled talent before competitors have the opportunity to do so — a significant advantage considering the notable talent shortage that was already well-known before COVID-19. Expanding the workforce now will prove to be critical as the industry continues to recover.