Now that we’re heading into a new normal of life after the COVID-19 pandemic lockdown, aerospace manufacturing managers are faced with dynamics they haven’t encountered before. How will the steady growth of recent years trend as leisure and business travelers react to the social changes resulting from the COVID-19 crisis? How quickly will recovery happen when two major U.S. air carriers report combined losses of nearly $4 billion in Q1?
Aerospace manufacturers continually face uncertain dynamics, from ever-changing technology to budget cuts to current pandemic lockdowns. To continue meeting deadlines, holding budgets, and remaining competitive, businesses must adapt and re-calibrate to optimize earnings before interest, taxes, depreciation, and amortization (EBITDA) and profitability. Business leaders will need more precision in planning and processing data in real-time to align the business with the supply chain.
Consider these five steps to stabilize your aerospace supply chain operations, optimize throughput, and maximize your profits as the economy re-opens.
1) Plan ahead now
It’s not too late to get a head start to assess and plan for recovery. Aerospace manufacturing leaders can use this checklist to quickly evaluate their operations:
- Have you analyzed your cash flow?
- Do you understand your labor position and risks to key roles?
- Have you assessed your supply chain and demand?
- Have you factored in your available production capacity to optimize your production schedule?
- Do you understand trade-offs and how to optimize flow?
The next part of planning is to assess inbound and outbound supply chains and understand your inventory and work-in-progress. Do you trust your inventory tracking system, or do you need to conduct a physical inventory?
Further, don’t leave it to just the material. Look at the time and costs of international shipments, as they may be different than pre-crisis. Since many pockets of the country are going through the curve at different rates, global commodities are likely to see a whiplash effect as stockpiles of raw materials head to new markets.
Set aside time to develop an alternate sourcing strategy and push for 100% transparency in supply chain tracking. After developing an alternate sourcing strategy, assess risks by asking these questions:
- What happens if the U.S. and China implement new tariffs?
- What financial risks do I have with currency translations?
2) Seek talent to improve your team
Identify critical skills and roles in your manufacturing plant. Consider reassessing jobs that have been redefined by the crisis. Develop a depth chart for these roles and evaluate weak points. Next, create a training plan to fill in skills gaps, and consider augmenting your team with people who have proven expertise and match your business’ critical skills.
It’s more important now than ever to find the right people with the best skills to manage what’s coming next. Whether you need support in assessing a volatile supply chain or filling an engineering role, staff augmentation can be a great decision.
Recruiters should look across industries for skills that align with your needs and that can increase the team’s strength. Provide augmentation by a seasoned veteran for anyone who is new, as well as program managers, supply chain leaders, and skilled positions such as CNC machinists and manager-level roles.
Also, consider investing in targeted change management training to help develop resilient leadership skills so your business can emerge from the crisis stronger than before.
3) Increase engagement with value chain
Striving for 100% transparency in your supply chain is immensely challenging, but you can get there with a plan and by improving processes. With new unknowns surfacing daily, it makes sense to add new methods and tools to gain that visibility. Work with your upstream vendors/sources and your downstream customers; they are facing the same changes and challenges. Talk to them frequently and ensure the entire process works seamlessly toward establishing an achievable schedule – every day for every shift.
4) Put safety first
A successful restart will require adapting production and inventory management practices for social distancing guards and barriers, as well as sanitizing workspaces, people, tools, inventory, and finished goods. Any time you re-engineer a workflow or production space, incorporate safety into every step.
I recommend applying a lean-manufacturing 5S review of facility operations while keeping people safe from typical injuries and the coronavirus. Chances are that your changeovers are becoming more frequent as production runs drive toward a higher mix, lower volume ratio. If your team isn’t seasoned and well-trained in disciplines of a single-minute exchange of dies (SMED) quick changeover program, consider on-the-job training; it shows management’s commitment to safety and helps productivity.
Safety walk-throughs are critical – especially if you’ve changed plant-floor layout and put people in new roles. Look at new traffic patterns and areas where new work-in-progress stocks are created. Further, consider what will happen to personal protective equipment (PPE) supply and demand as industries restart around the world.
5) Understand investment trade-offs
Understand the risks of capital debt versus reinvestment. Can your supply chain grow to meet the incremental addition of capacity? Ramping up production capacity requires diligence. The tools, methods, and detailed playbook used in the aerospace industry could really help your team meet the challenges of a COVID-19 supply chain and strengthen it.
I also recommend businesses apply for low-cost loans if they’re strapped for cash. The funds, for example, can be used to purchase new equipment for a line that will set you up for success in the future. Now is the time to enter the additive manufacturing world or expand its use if you have already gained some experience. It may be better to get the loan rather than fighting the good fight only to see slow equipment limit profitability and restrict growth opportunities. Educate yourself so that you fully understand which loans are available from the Small Business Administration (SBA) and their implications on your company’s debt and other elements of your profit and loss.
As businesses start implementing these steps for a restart, keep in mind we all have just one chance to make this right. Consider these steps to get your business back to normal – or even stronger than before.