ERP software is in the midst of the ultimate stress test – how are A&D manufacturers faring?

Writing for Defence Online, Matt Medley, Senior Product Manager at IFS, examines how aerospace and defence companies’ ERP software is coping with the coronavirus pandemic.

The nature of the aerospace and defence (A&D) industry means manufacturers must be prepared to shift business priorities, capitalise on new technology opportunities and react immediately to market events or regulatory changes. These can be opportunistic and planned, such as moving toward servitisation to unlock aftermarket revenue or onboarding new technology to revolutionise factory operations, but they can also come from external sources at a moment’s notice.

Take the market pressures from the COVID-19 crisis, which is decimating supply and demand, and spawning regulatory mandates such as the US Government invoking the Defense Production Act. There are already some leading trend-setters in A&D manufacturing—witness CAE Inc. shifting its focus from manufacturing flight simulation systems to developing an easy-to-build ventilator to help combat the crisis in Canada.

But all too often, manufacturers find opportunities hampered by legacy software systems, or a software supplier who wants them to follow a particular development route. In a recent Accenture survey of UK CIOs, 53% said their current Enterprise Resource Planning (ERP) system was inflexible and they wanted to extend it using intelligent technology.

With this in mind, here are four key ERP ‘stress tests’ A&D manufacturers must consider when transforming their business operations.

1. Industry-specificity and configuration control is vital A single platform developed to appeal to an array of industries may well work for operations including finance, HR and payroll. But running A&D manufacturing operations isn’t the same as managing daily retail business processes.

Far too regularly, A&D manufacturers set out on an implementation strategy and discover costly and complex customisations must be made to their software infrastructure to accommodate critical processes including precision part engineering and intensive quality control. A&D manufacturers need assurance that their systems infrastructure supports the current and future business needs of their industry—rather than dance to the tune of their software supplier.

Cloud isn’t for everyone Many ERP vendors are pushing their customers to the cloud as a prerequisite. This may be a sensible choice for industries with less heightened security requirements, but A&D manufacturers are involved in a sensitive supply chain, where they must prove compliance with strict military security requirements. When researching the challenges of cloud adoption in A&D organisations, Tech-Clarity found two-thirds highlighted security as a “significant risk”—rising to almost three-quarters when looking specifically at OEM respondents.

A&D manufacturers must have full control over supporting enterprise software deployments. Where business processes dictate, this could be a physically secure on-premise installation, a full SaaS-based deployment or a hybrid environment spanning both.

2. Connect operations – from the factory floor into the field

A&D manufacturers are lagging on the Industry 4.0 or smart manufacturing curve. During a recent webinar looking at the impact of Industry 4.0 for A&D manufacturers, IFS asked 140 A&D decision makers several questions on Industry 4.0 adoption. Only 20% of participants were actively looking to leverage 4.0 technology, identifying it as an enterprise-wide priority, while 68% were still researching how these initiatives can drive digital transformation.

Open architecture means A&D 4.0 is open for business Under the hood of many ERP suites, multiple software products are comprised of disparate applications, developed separately and lashed together with a common user interface. No software can exchange data with every sensor, and A&D manufacturing organisations with inflexible deployments will need to customise and add to their existing implementation to gather information from every available sensor.

Smart factories and intelligent assets deployed in the field will generate many terabytes of data. Simply extracting this data – let alone mining it to inform business decisions and better seize aftermarket service revenue – is something A&D manufacturing is still realising.

Look out for RESTful APIs

But industry-specific manufacturing ERP software built on API-driven architecture can prevent this. A&D manufacturers and services companies today may have developers who write software to introduce data from the IoT and enable other systems to interact with enterprise software. RESTful APIs, a software architectural style for designing networked applications, make it much easier for them to link valuable data steams into the core ERP system.

3. Intelligent decision making means no silos allowed

Introducing data into a supporting enterprise solution is half the battle, but analysing that information to gain insights into operational and business performance is the next step. Data analytics has gone from an observation tool to an optimisation tool, from proactive to predictive intelligence and to help mitigate rapid industry changes.

By actively monitoring asset and process performance, A&D manufacturers can make quicker, better-informed decisions, resulting in productivity improvements, cost savings and added maintenance predictions. But this is moot if data exists in a heavily customised and fragmented enterprise software implementation. Siloed sources cannot be harnessed to paint a full view of manufacturing operations and back-end business processes.

Smarter software enhances business decisions

Enterprise software should combine solutions that visualise information to support decision making both strategically and tactically, providing relevant insight and context. This includes integration with other vital programmes, including Manufacturing Execution Systems (MES) which drive execution of shop-floor operations, and Customer Relationship Management (CRM) to record customer-specific information.

By combining enterprise architecture, business activity monitoring, intelligent business process management, business intelligence and reporting capabilities, a unified platform is created which aligns with the organisation’s business objectives.

4. Security at a level higher than most

A&D manufacturers are required to meet stringent security needs. This applies to the physical products A&D manufacturers deliver—and their digital presence. Witness the security mandates required by defence operators, such as the International Traffic in Arms Regulations (ITAR) and the newly released U.S. DoD Cybersecurity Maturity Model Certification (CMMC) Version 1.0.

The U.S. Government explains that “the CMMC is intended to serve as a verification mechanism to ensure appropriate levels of cybersecurity practices and processes are in place to ensure basic cyber hygiene as well as protect controlled unclassified information (CUI) that resides on the Department’s industry partners’ networks.” Failing to adhere means A&D manufacturers are shut out of valuable military RFPs and bid situations.

Forewarned … but is your software forearmed? Enterprise software is key in meeting digital security requirements. ‘One-size-fits-all’ ERP systems simply don’t contain the industry-specificity to keep A&D manufacturers compliant. Without a fully integrated application suite allowing data to flow between supply chain management, manufacturing, engineering and CRM, it’s difficult to know which products, parts or transactions may jeopardise an A&D manufacturer.

It will become increasingly important that any ERP solution used for A&D manufacturing has functionality specifically designed for export control and cybersecurity regulations. A business involved in regulated materials or military contracts must be able to efficiently marshal this information from within their ERP system and combine it with external regulatory data to ensure compliance as they process orders, share information and conduct other transactions.

Enterprise software as a strategic enabler

New business opportunities, the challenge of embracing technology advancements and the sudden emergence of disruptive market forces are all happening at once. Success today will depend on an A&D manufacturing organisation’s ability to be agile in their operations and flex their business models—those who can’t adapt just won’t make the cut.

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