How Mid-Sized Defense Manufacturers Can Leverage ERP to Compete With The Primes

How Mid-Sized Defense Manufacturers Can Leverage ERP to Compete With The Primes

Author: | Published: 21 Jan 2020

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The Australian Defense Force (ADF) is a well-respected institution, contributing to the security of Australia by protecting its interests and people. Beyond their usual call of duty, they were even mobilized to support rescue and recovery operations for the ongoing bushfire crisis.

The defense sector also plays an important role within the Australian economy, offering almost 30,000 jobs and support for the small to medium manufacturing sector. Considering over 3000 of the manufacturers that supply to the defense sector is SMBs, it is vital for more emphasis to be placed on helping them enhance their capabilities to become long-term strategic suppliers.

If you think about it, defense equipment produced by manufacturers needs to last for at least 30 years. This is a clear reason why the defense wants to see a rock-solid supply chain that will still exist when the equipment is at the end of its lifecycle. So how can SMBs transform themselves into businesses that are perceived to be ready to work with or even compete with the primary defense contractors or ‘primes’ to supply this sector?

The first line of defense to win a strategic defense contract

It is a significant challenge for SMBs to win major defense contracts either directly with defense or working with the primes as a key part of their supply chain due to not having a suitable management structure in place. They also lack the knowledge, skills, experience needed to develop their businesses to the next level required to even be considered.

In order to, therefore, compete against industry ‘primes’, a manufacturer must demonstrate that they have established the required growth strategy, systems and resources to enable their companies to transform into major strategic suppliers and still be thriving in 30 years.

The challenge of digital maturity

A significant factor that could mean the difference between winning or losing a defense contract is digital maturity. The first step on this digital transformation journey for defense suppliers is to understand how the convergence of digitized machine parts, improved connectivity and emerging ‘Industry 4.0’ technologies, such as IIoT and AI, will help them to improve the productive time of their employees and equipment, as well as aiming to eliminate paper from the production environment.

The defense sector has been a forerunner in the use of IIoT technologies to improve processes and product efficiencies. In fact, the sector was among the first to realize the utility of sensors in areas such as aircraft maintenance and health monitoring, real-time identification of quality issues, rapid delivery of software updates and optimized tracking and traceability.

As a result, military aircraft are currently generating terabytes of digital data every day. So far, only a tiny fraction of that potentially invaluable information is being leveraged. This presents an opportunity; the vast ocean of data will eventually yield profitable secrets, such as the identification of new manufacturing and service opportunities.

A Single Source of Truth

Based on the fact that the defense sector will continue to produce massive amounts of data now and into the future, defense suppliers need to consider the introduction of a digitally advanced factory environment with what we call a ‘Single Source of Truth (SSoT). This is a fully integrated approach to Enterprise Resource Planning (ERP) that ensures error and redundancy free data. Combined with manufacturing operations management (MOM) software, an SSoT provides AI with accurate, real-time data from across the entire enterprise and optimally, along its associated value chain.

Faced with intense, globalized competition, changing attitudes to acquisition and sustainment, shifting economies and geopolitical instability, our SMB manufacturers who want to be operating in the defense supply chain need to become more agile and forward-thinking than they’ve ever been before. The result of this journey will be more opportunities for long term defense contracts here and globally and ultimately increased profits and more jobs.


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