The Value of Supply Chain Quality Management in the Aerospace and Defense Industry

Quality is one of the pillars of supply chain management, along with cost, service, and risk. Managing quality across the supply chain is critically important for all industries, but especially in Aerospace and Defense. What have been some of the obstacles? How is technology helping Aerospace and Defense companies to streamline and automate this process? What is the value proposition of Supply Chain Quality Management? Those are some of the key questions I discussed with Bill Alrich, Customer Solutions Representative at Elemica, during a recent episode of Talking Logistics.

Quality Management in Aerospace and Defense

I began our discussion by asking Bill why quality management is especially important in Aerospace and Defense. “These industries operate in a highly regulated environment,” explained Bill. “Failures generate headlines around the world, and death and injury are very possible consequences of not doing things right in design and manufacturing. At the same time, they are under pressure to reduce costs and innovate faster. This has led them to outsource more and extend their supply chains — 70% of the value of finished products comes from external sources. They have suppliers around the world that are the biggest risk factors. Therefore, quality management is a bigger factor for Aerospace and Defense than for other industries.”

Quality challenges

Given the high risk, how are Aerospace and Defense companies managing quality? Bill suggests that they use spreadsheets for about 85% of their quality data, which puts them behind other industries. “Because of the low volume, high value and long lifetime products of this industry, quality management systems designed for mass production industries don’t work for them,” says Bill.

“Security is another issue. If someone steals the blueprints for a new missile or plane, there can be serious consequences,” he continues. “That can make it more difficult for supplier collaboration, especially during the design phase when you want to collaborate closely with your suppliers. Many have resorted to building portals for collaboration with suppliers. But building software is very different than building planes, as Boeing has found out. That’s why so many continue to use manual methods and spreadsheets.”

Technology enablement

I next asked Bill about the role of technology in helping Aerospace and Defense companies with quality management. Bill comments that there are many quality management systems in the marketplace, including spreadsheets and modules from ERP vendors, but this industry must find systems designed specifically for discrete manufacturing.

Bill also recommends utilizing a robust industry network that allows companies to connect with their suppliers and avoid the problems and costs of building portals and one-off integrations. “Once that is in place, they can provide instant notifications of acceptance or rejection of shipments or quality issues and start to get suppliers engaged to respond effectively,” says Bill. “This gives you a timely stream of data to analyze and use for scorecarding and many other factors for better decision-making.”

Supplier participation in digital transformation

Given the importance of networks in quality management, I asked Bill about supplier participation in these networks. Bill notes that the lack of participation by suppliers “is the biggest issue companies must prepare for before the project even starts. To avoid that hurdle, companies must get procurement involved along with quality. There has to be buy-in from the buyers because they are the ones that own the supplier relationships and know which suppliers will need the most hand-holding, as well as which ones supply the most critical components.

“It’s also important to break the project down into chunks that suppliers can absorb easily,” continues Bill. “Ramp up to the more complex pieces where the real benefits lie. And then the third thing is to spell out the benefits the suppliers will get out of it, such as reduced manual input or the assurance that their shipments won’t get rejected. Procurement are the ones who have to sell this to the suppliers.”

Selling Quality Management to Executives

Of course, before you can implement any new quality management program, you have to sell it to management to get funding approval. I asked Bill to elaborate. Bills says, “Companies are paying for quality management one way or another, whether they know it or not. It just doesn’t show up in convenient slots on the balance sheet like inventory.” Bill shared a number of issues to consider and the benefits/cost savings, as well as top-line improvements, to include in the business case for management. I encourage you to view the full video for all the details. Then keep the conversation going by posting your own perspective and experiences on this topic.