Any supply chain in the aerospace industry has OEMs (the traditional big players of aircraft manufacturing) and suppliers, which can be categorized into Tier 1, Tier 2 and Tier 3 parties. OEMs are responsible for the final design and manufacture, the most critical part of the supply chain. They deliver their orders to the Tier 1 suppliers, who in turn pass on their aircrafts parts requirements to the Tier 2 suppliers. Tier 3 suppliers provide some of the basic components that are required by the suppliers and are higher than them in the value chain.
What to pay attention to?
The scenario is changing within the industry, with Tier 1 suppliers and airframe producers becoming a more integral part of the process. New strategies for reduced costs and improved efficiency made OEMs depend more on Tier 1 suppliers. That increased the risk for both, buyers and suppliers. But it also increased the transparency as far as schedules, plans and aircraft programs were concerned. The bigger players however, were focused less on internal production and more on integration.
Let us look at some key developments and how it is affecting the players within the aerospace ecosystem:
- There are 3 major players in the market that specialize in jet engine manufacturing. Rolls Royce (45% of new orders), General Electric (38% of new orders) and Pratt & Whitney.
- This is a segment that is naturally dominated by competitive pricing. Some of the engine manufacturers try and avoid problems by getting into exclusive supplier contracts with OEMs and other commercial airline producers. There are times when the manufacturers enter joint ventures to share high investments on things like future engine development and design.
- Most companies in this segment have generous profits. They often sell their engines at a low margin, so that they can get hold of lucrative MRO deals in the future, which increases their profits over time.
- This market primarily consists of pilot assistant/interface systems like weather forecast, navigation, flight management and communication, along with electronic airline systems like anti-collision systems, system monitoring and flight controls.
- The avionics software market took a major hit due to the financial downturn and never managed to recover totally. However, the future seems brighter with the market expected to share the same fortunes as the aircraft manufacturing cycle.
Points to remember about MRO (maintenance, repair, and overhaul)
- Demand for this is created mainly by airline companies and this is expected to grow further with the number of aircrafts in operation set to go up in all regions.
- As most airlines are focusing on the core business of passenger transport, activities like MRO are getting outsourced to specialists. That generally helps bring down costs. On the other hand, companies are better equipped to handle.
- While the increase in number of airlines is great, one must remember that the demand for MRO will not increase in the same proportion. One of the primary reasons is the fact that the newer generation aircrafts require less maintenance work.
- A Capgemini report says the MRO market is expected to grow at about 4.4% till 2020. It earns the most amount of revenue (about 30%) from engine maintenance markets while the components section contributes to about 23% of the revenue with line maintenance and airframe structures manufacturer not too far behind at 21% and 15% respectively. The fact that the highest share of the market belongs to the OEMs is an added advantage for players in this segment.
In today’s complex omnichannel environment where customers expect nothing but the best, it is up to brands to make sure that every brand interaction is a delight for the customer. Customers are at the helm of building brands. They rule the roost in terms of dictating the market, dictating demand and dictating who survives in the battle of the fittest.
No complacence please
You cannot afford to compromise on customer delight
Omnichannel competition makes it all the more difficult for brands since now they have to take care of not just one channel or but a number of customer touch points. Customers thus expect consistent performance across all channels. Connected consumers are empowered with more information to drive their choices. Laxity towards customers or complacence can invite customer wrath, which can lead to depleting brand value. Thus, customers need to be kept at the forefront and should be the focus all the time.
There is humungous data available and companies need to leverage high tech analytics to make sense of it. It may sound complicated but when information is filtered out from these huge data points, it can become simple and effective for companies to come up with superior strategies to meet customer expectations every single time. You need to unlock the potential of data that sits in ERP and cloud, make sense of them and get hold of information that can give you vast insights into present consumer behaviour and even predict the customers’ next move.
Predictive analytics helps build actionable strategies
Futuristic strategies help you serve the customer beyond expectations
It may sound complicated but it’s essentially a three step process: Collect the vast data on cloud, integrate it, run the right analytics solutions and then you have with yourself valuable information around your customers. With predictive analytics in place, you can create actionable plans and strategies that will help you to better reach out to customers and enable you to develop a satisfied customer base and a higher profit margin.
By leveraging predictive analytics for your supply chain, you can derive a number of advantages. If through disparate data, you are able to predict the next move of the customer, it becomes a big plus for you. Predictive analytics empowers you with futuristic information, thus enabling you to create strategies that are targeted toward the customer.
A basic example would be that with predictive analytical technologies in place, you can ensure that you never face an out of stock situation. You can understand consumer behavior and foresee the demand over the next quarter, thus enabling you to coordinate with suppliers and maintain optimum stock level, thus reducing the risk of shortage of raw material, decreasing costs and inducing customer satisfaction by delivering on time.
Predictive analytics gives a competitive edge
Anticipate customer behaviour, up-sell, cross sell and ensure customer delight
Vendors today offer full-fledged platforms that take care of your predictive analytics needs. They offer platforms that help integrate disparate data spread across diverse regions or systems. This integration of data combined with highly advanced algorithms churns out valuable information about your supply chain, customers and stakeholders.
Predictive supply chain analytics thereby helps you predict not only what the next steps of your customers would be but also why they would be doing so. Now, by having the answer to the ‘why’ is crucial. You can not only build supply chain models to ensure your customers get high quality products; but also it also helps you analyse the variables that drive customer behavior.
In a nutshell, predictive analytics solutions for supply chain are capable of integrating data, explore and elaborate to give businesses valuable information. It is built to predict propensity to consume, predict customer life time value and helps in upselling and cross-selling.
With these capabilities in place, businesses are able to build a robust supply chain services and solutions that take care of product quality and ensure speedy delivery to customers. Predictive analytics gives your business a competitive edge, increases customer satisfaction, improves upselling, cross-selling and thus creates a better and stronger brand of your business.
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