Growth Without Growing

Survey launched by Porsche Consulting shows that in order to become more efficient, the aerospace industry must rethink their approach

Air traffic is a growth market. Worldwide, the number of air passengers is increasing by about five percent a year, and global demand is doubling every 15 years. This positive economic trajectory is posing an ever greater problem for the industry, namely, that of delivering these orders on time. Even now, only 80 percent of orders are delivered to customers by the dates specified in the contracts, and for new product ranges the delays may be measured in years. The industry is clearly not equal to the changes in demand. “The performance level of the entire supply chain needs to rise considerably,” observes Eberhard Weiblen, Chairman of the Executive Board of Porsche Consulting. “The automobile industry can serve as a positive example here.”

To examine the situation in greater detail, Porsche Consulting launched an industry-wide survey of top managers at production, supplier, and logistics companies in the civil aviation industry. The results showed that in order to become more efficient, all of the partners in the supply chain must rethink their approach and employ comprehensive, universal planning. “An insufficient degree of industrial depth along the entire supply chain is preventing monthly production rates from rising,” says Joachim Kirsch, partner and expert for the aerospace industry at Porsche Consulting. This does not mean setting up additional production capacities, but rather making better use of existing ones. The survey revealed that in some cases, as much as 60 percent of capacity could be freed up by means such as improving scheduling and production processes.

“Growth without growing” is the key formula here. With its “New Value Chain,” Porsche Consulting has developed an approach that enables the industry’s performance and profitability to be improved. According to the study, this approach can raise the on-time delivery (OTD) quota to over 95 percent and generate an average productivity potential of 20 percent. That corresponds to savings of currently $1.6 billion every year. Similar developments can be expected for backlogs in the worldwide supply chain. For the top 100 suppliers, for example, these could be reduced by more than 20 percent. That corresponds to $36 billion a year.

To make use of this potential, the individual partners in the supply chain need to build on three factors, namely, the three that have had an impressive effect on the automobile industry for years: transparency, planning quality, and professionalism.

Read more about the survey:

The New Value Chain – Greater Efficiency For Aviation Industry (Summary)

The New Value Chain – Greater Efficiency For Aviation Industry (Entire publication)