The Department of Defense is cutting its budget. Is the aerospace and defense industry ready?

The Secretary of Defense, Robert Gates, has tasked the Department of Defense to reduce expenses by $100 billion. This means that the aerospace and defense industry must look to reduce spending and make systems more efficient. And there are many opinions on how the industry can approach this challenge.

Six Sigma Consultant, an expert in the operation, planning, and design of aerospace, defense, and commercial quality assurance systems and programs, says that reduction in defense spending will have an immediate impact on both the short- and long-term profitability of defense and aerospace contractors. “The Department of Defense is looking for contracts to cancel or reduce, yet the aerospace and defense industry has not done a good job in protecting itself from these kinds of cost reduction measures,” Six Sigma Consultant says.  He thinks that lean thinking, a waste reduction and process efficiency program refined by Toyota, is key to the industry’s long-term growth.

“The aerospace and defense industry has started to deploy lean thinking. As processes are improved and become more effective and efficient, the industry will be in a better position to compete for a smaller segment of shrinking DOD funds,” says Six Sigma Consultant. “Lean thinking is about the process of reducing waste throughout the organization in order to free up resources that can be deployed to other parts.”

Bradley Burchnell, who has served in the US Navy and has over 20 years of manufacturing consulting experience, says the challenges facing the aerospace and defense industry are the result of a lack of clarity. “The industry has professionals and companies that evaluate new technologies, approaches, and materials. Some of them are doing extraordinary things. For example, General Dynamics Land Systems has started a center to share and exchange ideas to meet new challenges,” Burchnell says.

Conversely, there are those original equipment manufacturers (OEMs) that are quite large and have difficulty achieving a high degree of flexibility simply due to their size. “The real challenge is developing a purchasing consortium where small companies can compete with larger companies simply by adjusting their buying habits. Additionally, the industry needs to create standards for common parts and scale them appropriately, rather than re-inventing the system.”

Luis Figueroa, an expert in technology strategy in the aerospace and defense industry, says that the key to becoming leaner while maintaining growth is having more effective execution with continuous attention on risk management strategies and focused innovation. “Innovative strategies like those outlined in books such as Blue Ocean Strategy and The Innovator’s Dilemma address new markets and market segments,” Figueroa says, and that can lead to new ways of doing business. He says that accelerating the use of commercial of-the-shelf technology for hardware and software, such as mobile computing and social networks, will allow the aerospace and defense industry to be leaner and more innovative in the development of future products and service solutions.

By Maureen Aylward

What do you think?

If you have a question or comment about the aerospace and defense industry, we would like to hear it. Click here. Would you be interested in signing up to be a Zintro expert and generate free leads for your business? Click here.