Aerospace and defense ecosystem playbook

A&D investments in smart manufacturing

In October 2020, Deloitte and the Manufacturers Alliance for Productivity and Innovation (MAPI) jointly launched the study, Accelerating smart manufacturing: The value of an ecosystem approach, to identify the ways in which ecosystems can potentially accelerate aerospace and defense digital transformation.

A&D executives surveyed are allocating 32% of their overall factory budgets to digital initiatives, implementing on average more than eight smart use cases. However, only a few participants have these use cases operational at one or more facilities. How are certain A&D companies able to achieve faster progress and better returns on their investments?

While 78% of A&D executives surveyed indicated value from their external alliance partners, they may not be fully leveraging the power of the network to which they are connecting. This is where an A&D ecosystem approach can dial up the results.

Deloitte and MAPI’s 2020 Smart Manufacturing Ecosystem Study has identified a path forward that can accelerate progress toward an A&D ecosystem approach to embrace digital transformation.

The A&D ecosystem approach: Amplifying collective network strength

A smart manufacturing ecosystem, similar to an innovation ecosystem, is formed when different entities come together in meaningful ways to solve shared challenges and meet shared objectives.

Ecosystems allow for greater capacity and flexibility in adapting to the new world at scale. This not only enhances competitiveness, but also helps to respond to disruptions better.

Four primary types of ecosystems support smart manufacturing initiatives:

• Production
• Supply chain
• Customer
• Talent

Production ecosystems provide access to unique vendors and capabilities

Ecosystems are generally driven by a convener who has the ability to connect business issues with an enabling platform.

Multiple ecosystems can exist simultaneously, each with its unique vendor connections and capabilities.

A&D companies, instead of reaching out directly to vendors, can approach such conveners and gain access to specific technologies or enable certain use cases more quickly.

The A&D ecosystem approach can also help companies connect to more partners. According to our survey, A&D companies that joined ecosystems were able to create many more relationships, both directly and through their ecosystem conveners, and leverage them to accelerate their smart factory efforts.

These include 4x more connections with Industry 4.0 vendors, operational technology vendors, and automation providers—the three partners A&D companies indicated are providing the most value to their digital initiatives.

One key to success is understanding how to effectively manage these connections to amplify their impact.

Pathways to an ecosystem approach

The ecosystem approach can work, but it’s not easy. It requires a deliberate method that often involves an executive commitment to solving priority business issues with smart manufacturing and the creation of a road map with important milestones.

To support the road map, A&D companies often reach out to their ecosystem to build an enabling platform with an enterprise architecture. Curating connections strategically, A&D companies then accelerate their initiatives while determining which specific advanced capabilities to cultivate in-house.

An implementation framework to consider:

Start your smart manufacturing ecosystem

• Define scope. Don’t build capabilities you don’t need. If you understand the nature of the business issue, the scope of the solution becomes easier to understand.
• Act with speed. Speed is one of the key benefits of tapping into an ecosystem.
• Scale fast. It’s easy to do a proof of concept in an unscalable way. The ecosystem is ready to scale your test case. It brings scalable capabilities that are ready to respond.
• Systemize the process. Create repeatable steps so that as you continue to activate new business use cases, you can tap into the ecosystem more readily.

About the study

The study included an online survey of more than 1,000 executives at manufacturing and aerospace and defense companies across three key regions globally: North America, Europe, and Asia. It also included executive interviews with more than 30 leaders from manufacturing companies and ecosystem participants.