Digitization and Industry 4.0 in Aerospace and Defense: boosting the transformation

May 10, 2017

By Thibault Dupont, Senior Director Aerospace & Defense, Roland Berger Canada

According to Roland Berger Aerospace & Defense Management Issues Radar 2016[1], top executives in the A&D sector expect digitization to have a massive impact in their industry. Indeed, 98% believe that digitization is already heavily affecting the industry or will do so in the next five years. However, only 5% have a distinct vision on how to proceed

Digitization has already created massive impacts on multiple industries, deeply challenging incumbent business models. Beyond traditional B2C sectors such as the music industry (from Sony/Universal to Spotify and Apple Music) or the transportation sector (from old-fashioned taxi companies to Uber or Zipcar) – just to name a few – B2B sectors are also starting their own significant transformation phase through digitization. As a case in point, in less than 15 years, SpaceX (created by serial entrepreneur Elon Musk who also founded Paypal, Tesla and Solarcity) has developed into a leader of commercial satellite launches. By focusing on simplicity, reliability and modularity (similarly to the software industry), SpaceX has proven to be a game changer in the space industry.

The A&D sector remains at an early stage of digitization compared to other industries. Entry barriers remain extremely elevated in a concentrated market with stringent certification requirements. Traditional long-cycle businesses such as A&D are used to linear innovation and have experienced difficulties in quickly implementing radically innovative products and processes. Recent surveys[2] have demonstrated that only 26% of aerospace players’ respondents primarily conduct processes with clients and suppliers electronically. The vast majority still use fax, phone and e-mail, especially when dealing with their supply chain partners.

However, we see the sector starting to adapt. Incumbent players have started to understand that digitization will impact the complete life-cycle of an aircraft (development activities, serial production, aftermarket and operations) as well as the complete supply chain (from raw material suppliers, tier-3/2/1 to end-customers). Multiple technologies from the Digital and Industry 4.0 worlds are relevant for the A&D industry. Governments are also starting to play a central role in encouraging digital transformations in their respective countries (through technological roadmaps, incentive plans or high value design initiatives).

Selection of digital cross-functional technologies and solutions by step of aircraft life-cycle

Some innovative approaches and products are already being deployed and offer a glimpse as to how the A&D industry may operate in a few years from now:

  • Boost Aerospace is a Joint-Venture between Airbus, Dassault, Safran and Thales, offering a digital platform with harmonized collaboration services for different steps along the development and serial activities
  • Lockheed Martin Digital Tapestry platform links all stages of manufacturing between engineering, production, and the supply chain using digital technology
  • Airbus AMx program is related to additive manufacturing and bionic designs, to create lightweight structural parts allowing to reach weight reduction objectives
  • In the defense aftermarket business, the US navy has implemented mobile 3D printing spare part production units on its combat ships (e.g. USS Essex) for ad-hoc production of spare parts in remote locations

This in-depth revolution requires A&D players to radically change their traditional approach to innovation, by not only implementing the right organization and processes, but by also spreading the digital mindset within the entire company. Innovation is no longer the mere responsibility of the Engineering department – that traditionally developed new technologies. Instead, it should involve interdisciplinary teams working together to form customer-centric solutions. Digital transformation’s 1st step, which looks at the problems encountered by customers, should be embedded in the players’ overall strategic plans. Key challenges remain and Governments can also play a role in solving them by putting together appropriate plans: cybersecurity, skilled human resources and high levels of cooperation along the value chain. In turn, steps of the value chain will be made redundant and players unable to adapt will disappear.

[1] Aerospace and Defense Management Issues Radar 2016, Roland Berger

[2] Stegkemper International Operations Excellence