Aerospace Industry Investment Plant, Equipment

1
Aerospace Industry Investment Plant, Equipment
IT
Key Driver Technology Cycles

• What Is the Relationship Between the Driver and
  Investments?
• A one-to-one (or greater) reduction in AIT costs
  (Plant and Equipment Driven) and Cycle Time
  Improvements.
• 25 percent (or greater) ROI on effectively
  implemented enterprise IT systems (PDM, ERP, B2B,
  etc.)
• High cash (and personnel resources) demands
  create insurmountable thresholds for
  implementation
• Adverse publicity impeding enterprise system
  adoption, implementation, and use
• Does the Driver Have a Major, Moderate, or Minor
  Effect or Impact on Investment Decisions, As
  Measured by What?
• Major Impact As Measured by Percent of Sales,
  Forecast of Revenue Stream, PAT
• Major Impact Overhead and/or Wrap Rate
• What Actions / Initiatives Are Being Taken Within
  the AD Industry to Address These Impacts?
• Outsourcing of Non-Core Competency Operations
  (MIS, Selected Manufacturing, etc.)
• Partnering Considered for all Life-Cycle
  Processes
• Mergers and Acquisitions to gain Critical
  Competencies, at less cost and time, than
  internally developed capability/capacity
• Focus on lower cost Market Portals as electronic
  substitutes for ERP Systems
• What Actions Are Recommended for Further Study or
  Evaluation?
• Comprehensive industry Evaluation of Lean
  Practices and Case Examples (Raytheon Ammram
  Production, Boeing 717 Line, Goodrich, among
  others
• Maximize Benefits from Existing Enterprise System
  Implementations
• Implement many of the AIA Prime and Supplier
  Management Council Initiatives (i.e.,Supplier
  Management Excellence Program)

2
Aerospace Industry Investment Plant, Equipment
IT
Key Driver Market Characteristics

• What Is the Relationship Between the Driver and
  Investments?
• A one-to-one relationship to Market Dynamics
  (i.e., expanding or contracting market, revenues)
• Competitiveness and Market Position Dominate
  Allocations
• Current Government Regulations on Profitability
  (allocation of costs inhibits range of choices
  and levels of investment)
• Does the Driver Have a Major, Moderate, or Minor
  Effect or Impact on Investment Decisions, As
  Measured by What?
• Major Impact As Measured by direct effect on
  overhead, margins (PAT)
• Major Impact On key process owners and
  personnel resources allocation to key projects
  (IT specifically)
• What Actions / Initiatives Are Being Taken Within
  the AD Industry to Address These Impacts?
• Partnering, Strategic Alliances, and Outsourcing
• Updating of Legacy Systems (Less costly than new
  major systems), but not as effective
• Maximizing Benefits from Industry Lessons
  Learned on IT Systems
• Adoption of Lean Practices
• What Actions Are Recommended for Further Study or
  Evaluation?
• Participation in Aerospace and Defense Industry
  Lean Assessment (DCMA Action Request)
• Adoption of AIA SMC sponsored acquisition,
  policies and data exchange, and standards and
  formats
• Reinvigorating Business Case Analysis Techniques
  to Better Prioritize Investment Allocations

3
Aerospace Industry Investment Plant, Equipment
IT
Key Driver Supplier Consolidation

• What Is the Relationship Between the Driver and
  Investments?
• Simplifies B2B Communications (fewer suppliers)
  but at a potential peoduct/service cost impact
  (IT Systems specifically)
• Prolongs Retention of Obsolete or Legacy P and E
  due to potential loss of Critical Item Suppliers
  (TWTs, Microwave Components, etc.)
• Limits Outsourcing Flexibility
• Does the Driver Have a Major, Moderate, or Minor
  Effect or Impact on Investment Decisions, As
  Measured by What?
• Moderate Impact As Measured by Percent Supplier
  Work Rationed to Delivered Product Value
  Administrative Cost decreases as a result of a
  smaller supplier base
• Moderate Impact Cost to Integrate COTS items
  into Military Systems due to disappearance of
  Critical-Item Suppliers
• What Actions / Initiatives Are Being Taken Within
  the AD Industry to Address These Impacts?
• Strengthening of a Supplier Base thru AIA
  Supplier Excellence Quality Initiative
• Greater Emphasis on use of commercial electronic
  technology in Aerospace Environments (Per IDA and
  other commercial use studies)
• What Actions Are Recommended for Further Study or
  Evaluation?
• Adoption of a Intergraded vision of Life Cycle
  Enterprise Data Schema and a MultiView Program
  (DoD)
• Critical Review of B2B systems and Market Portals
  for Prime Supplier Communication Efficiency

4
Aerospace Industry Investment Plant, Equipment
IT
Key Driver Intellectual Capital

• What Is the Relationship Between the Driver and
  Investments?
• High Turnover of sophisticated equipment design
  and development and IT system skills (CRM, PDM,
  ERP, etc.) without continued new investment
  driven challenges
• High levels of new employee acquisition,
  familiarization, and education and training costs
  due to attrition of disillusioned staff
• Loss of P and E and IT system potential gains and
  unrealized bottom-line enhancement
• Does the Driver Have a Major, Moderate, or Minor
  Effect or Impact on Investment Decisions, As
  Measured by What?
• Minor Impact a Executive Level Investment
  budget, among the first casualties, during
  Profitability Stress
• Major Impact at Operating Levels Loss of
  Innovation, Process Efficiency, and increased
  Subject Matter Expertise Attrition
• What Actions / Initiatives Are Being Taken Within
  the AD Industry to Address These Impacts?
• Greater use of outsourcing as short term answer
  but effect is debilitating depending upon
  perceived loss of core competencies
• Increased E and T budgets to address increased
  attrition
• Increased resignation to use of Legacy systems in
  spite of inefficiency and lack of
  interoperability
• What Actions Are Recommended for Further Study or
  Evaluation?
• Commitment to Lean Aerospace Initiative
  Practices, and industry publicizing outstanding
  Lean Practices Case Examples (Raytheon, Boeing
  etc.)
• More rigorous business case analysis of ROI in
  Intellectual Capital

5
Aerospace Industry Investment Plant, Equipment
IT
Key Driver Policy / Legislation

• What Is the Relationship Between the Driver and
  Investments?
• Current Regulations limit profitability and
  limit flexibility on overhead budget uses result
  is a practical limit on upper range of investment
  
• Lack of multi-year funding options restricts
  strategic investment flexibility
• Does the Driver Have a Major, Moderate, or Minor
  Effect or Impact on Investment Decisions, As
  Measured by What?
• Moderate impact as measured by company IR and D
  contribution percentage and allocation of profit
  for investment
• Major impact on ability to reduce system/profit
  cycle time and commitment to production
• What Actions / Initiatives Are Being Taken Within
  the AD Industry to Address These Impacts?
• Serious and Determined Acquisition Excellence
  Program enactment of a multi-year ACTD type
  initiatives
• Capture of Lessons Learned from Military
  Services Acquisition Excellence Model Programs
• What Actions Are Recommended for Further Study or
  Evaluation?
• Adjustment of Government CAS Standards as related
  to IT System Cost Recovery
• Capture of key Lessons Learned from model
  Enterprise System Implementations

6
Aerospace Industry Investment Plant, Equipment
IT
Key Driver Capacity Management

• What Is the Relationship Between the Driver and
  Investments?
• Obsolete P and E capacity and obsolete IT systems
  increases overhead and project direct cost
  encumbers competitive position
• Outsourcing new prime mechanisms for capacity
  adjustment including traditional MIS and selected
  IT functions
• Effective ERP systems provide real-time
  assessment of capacity status
• Does the Driver Have a Major, Moderate, or Minor
  Effect or Impact on Investment Decisions, As
  Measured by What?
• Major Impact on IT as measured by transaction
  process cycle time on obsolete vs. modern systems
• Moderate Impact on capacity management
  administrative costs
• What Actions / Initiatives Are Being Taken Within
  the AD Industry to Address These Impacts?
• Greater use of Outsourcing Strategies
• Greater reliance on Partnering and Strategic
  Alliances
• Implementation of Best of Breed ERP and B2B IT
  Systems
• Adoption of Lean Aerospace Initiative Practices
• What Actions Are Recommended for Further Study or
  Evaluation?
• Case Studies of Best in Class performers on
  Action Being Taken, above