The aerospace and defense industry has an enormous problem.

Major airplane programs have been consistently late to market – up to three years and longer. These delays have cost companies billions and, in some cases, tens of billions of dollars in direct costs and lost sales. Delays have also deteriorated market values and hindered credibility. The delays are widespread rather than isolated to a particular company or market segment.

A primary reason these problems persist is the extraordinary complexity of today’s major airplane programs. Typically, hundreds of suppliers are involved in these initiatives and their decisions are interwoven with those of a multitude of other suppliers.

Compounding this complexity, there is a wide geographic dispersion of suppliers across virtually all regions of the world: Asia-Pacific, Europe, Latin America, the Middle East, and North America.

Additional byproducts of the increased program delays and higher complexity include:

- fragmented, disaggregated and misaligned airplane product development processes;

- supply chain miscalculations such as parts shortages; and,

- manufacturing and engineering inefficiencies.

What now and what’s new?

At the upcoming Singapore Airshow, a new and very important story is likely to unfold. The story will be about these delay problems and how the industry is rapidly identifying and executing new and innovative ways to solve them. Along with this is how companies will need to build up their in-service support capabilities. This story will be bigger than at any previous Singapore Airshow because of the looming challenges facing Asian aircraft manufacturers.

Why is this so important?

Because there is so much money and credibility at stake for established and emerging aerospace and defense companies. Solving this problem will be strategically and financially critical to the overall health of industry players. Finding a solution to this problem is absolutely pivotal in driving higher revenues and profits, lowering production costs, accelerating airplanes in the market, and delivering more affordable, reliable, comfortable, and enriching flying experiences to airline passengers.

Three Points

There are three aspects to this story worth watching:

- First, there are new investments in advanced product development capabilities and technologies that address these problems in new and innovative ways;

- Second, there is a new higher order of strategic thinking, a digital coming of age, that is fueling these changes; this will affect tens of thousands of engineers and involve billions of dollars of research and development investments; and

- Third, there are repercussions about this for the Asia-Pacific market

More on New Investments

To help aerospace and defense companies effectively overcome this problem, Accenture has recently made two acquisitions in the past months:

PCO Innovation, an independent international consulting and systems integration group that specializes in product lifecycle management (PLM) software technologies for aerospace and defense companies. This acquisition adds approximately 600 consultants to Accenture. The company also recently bought PRION Group, which adds another 500 employees. These two acquisitions raise Accenture’s headcount to more than 3,000 people focused on product development, engineering and research and development.

PLM encompasses all the processes and systems involved in product development from the original airplane conception, through servicing commercial airplane, until the end of the plane’s life. These processes and systems involve numerous corporate functions such as engineering, product development, supply chain management, manufacturing, services and marketing.

Aerospace manufacturers employ hundreds of thousands of highly skilled engineers, scientists and technicians to use these increasingly global PLM processes and systems.

Product development spend is substantial. According to Accenture’s research, Global 2000 aerospace and defense companies manage billions of dollars on funded research and more than $18 billion per year in self-funded research and development alone.

More on a Digital Mindset Growing in Aerospace

The concept of digital is not new in aerospace and defense. But what is new are the much higher levels of sub-contracting, global design and development and maintenance-related data available from in-service aircraft. The industry is embracing a digital mindset like never before. This means more and more of its decisions are being made from the perspective of being an all-digital business in product development, operations, supply chain, marketing, procurement, engineering, services, and the rest.

This new and coalescing digital mindset aims to make sure the industry’s digital pipes connecting product development, engineering, supply chains and the in-service fleet keep flowing smoothly with high-quality data which is currently often lacking. The evolution of PLM technologies and capabilities is a great example of this coalescing digital mindset. Digital is fundamentally changing the way aerospace and defense companies operate—from how they interact with customers and stakeholders; to how they manage their employees; to how they differentiate themselves in the a market; to how they grow their businesses.

More on Asia-Pacific’s Aerospace and Defense Market

Asia-Pacific is one of the fastest growing aerospace and defense markets. In Asia-Pacific there is strong demand for new aircraft and defense systems. Today, Asia-Pacific is on par with North America and Europe in terms of revenue passenger kilometers. But in 2032 Asia-Pacific is likely to be as much as 50 percent greater than these established regions. Growth rates in acquisitions of military and defense systems are projected to far exceed those of Western markets. How aerospace and defense companies solve their complexity and program delay problems -- along with building their service and support capabilities -- are high stakes challenges. They will need to be widely addressed in this fast growing region.

John Schmidt is the managing director of Accenture’s North American Aerospace and Defense business. He can be reached at