Manufacturing in the Aerospace and Defence sector involves the same disciplines and requirements as other manufacturing segment – it is nearly always high tech and strongly engineering oriented, with rapid change as a given, but must also cope with increased scrutiny, documentation and reporting requirements and rigid testing and certification.
A&D manufacturers need all the help they can get, and appropriate use of information technology can go a long way to help in meeting these challenges. Enterprise Resource Planning (ERP) and distribution software will help your efforts to comply, control, communicate, compete and cut costs and waste. A well designed and supported enterprise software system can be an integral part of an A&D manufacturer’s success in serving this very demanding market.
All ERP systems will manage the basics of effective planning, good inventory control, production scheduling and shop activity control, as well as engineering and field service requirements, but let’s take a look at what a solution designed for the A&D industry can do beyond this.
Project Management
Most A&D contracts will be complex projects, some lasting many years. Coordinating all the resources involved in the project can be achieved using project management tools that sit outside an ERP system. However, an ERP solution truly designed for this industry will have built-in project management that will not just plan the project, but will also execute the project and ensure all the activities and costs associated with project are tracked automatically without the burden of time-consuming and error-prone manual updates.
Contracts usually require a level of progress and cost reporting that is tied to the structure and nature of the contract. Starting with the work breakdown structure (WBS) in government contracts and similar contract organization in other markets, cost and schedule information must be accumulated and reported according to what the contract specifies.
ERP with built-in WBS and project tracking capabilities will help create initial estimates including material, labour, material burden, overhead, and subcontracting. The estimates are then carried over to the production system at contract award and costs to-date and estimate-to-complete readily available as needed for project management purposes as well as for reporting to the customer for billing and revenue recognition. Be sure to look for a system that includes the ability to create, execute, retain, and reuse allocations of cost and revenue to multiple projects, elements, departments or locations.
Supplier Management
Keep in mind that management responsibilities cannot be limited to just what occurs within the company – parts, materials and services provided by others also contribute to your company’s ability to maintain schedules and control costs. An integrated ERP solution includes supply chain management capabilities with supplier relationship management, after-the-sale service management and electronic kanban and EDIall contribute to the company’s ability to tightly manage all the activities—internal and external—that are important to A&D success.
You’ll also want the ability to pass designs and specifications to suppliers and work with them to refine the parts and components you will be including in your products. Many ERP systems will include a Product Lifecycle Management (PLM) system (sometimes called Product Data Management or PDM) to help manage this collaboration.
ERP will also help collaboration with suppliers on forecasts and planned purchases – by sharing your procurement plans and schedules with key suppliers and working together to develop a purchasing plan that fits with the suppliers’ capabilities and resources they will be better able to meet the schedule and provide reliable on-time deliveries.
Inventory Control
Your contracts may require strict controls of inventories and separation of inventory and/or inventory costs by contract or project. Government contracting regulations encourage the acquisition of economic quantities of parts and materials but insist on detailed and accurate cost accounting when parts are common to multiple contracts. An ERP system will ensure you have adequate controls and audit trails for application of costs, segregation of direct and indirect costs, allocations, labour accounting, overheads, material movements, etc. sufficient to satisfy DCAA auditors and comply with FAR standards and requirements.