Strong logistics partners can help navigate emerging markets, where there’s no margin for error.
Emerging market growth is reshaping commercial aircraft manufacturing with historic repercussions for the maintenance, repair and overhaul (MRO) side of the business.
Aerospace supply chains now sprawl across the globe, creating fresh opportunities for plane-makers and their suppliers.
The resulting complexities can be daunting, especially for manufacturers that lack the logistics expertise to meet new demands, according to a UPS white paper, Aerogistics: Insight on Emerging Markets and Supply Chain Complexity.
MRO companies that aren’t up to the challenge will be left behind.
“The resulting complexities can be daunting.”
The top reason is to maintain high service levels for customers there.
Secondly, MRO providers often must meet requirements of customers who demand local service facilities.
Finally, as production expenses rise in China and other traditionally low-cost markets, MRO providers are finding cost advantages in new markets.
Establishing aerospace operations in emerging markets is tricky, even under the best circumstances – and even for companies with global experience.
But these are fast-developing opportunities. They present unfamiliar demands, often coupled with inadequate local resources and expertise.
In emerging markets, especially the Middle East, Asia/Pacific and Latin America, aerospace companies must strive for operational agility and resilience to disruptions.
Once the customers are on board and investments are flowing to promising new regions, there’s no margin for error.
Growth And Complexity
The commercial aerospace industry is in the midst of a years-long growth cycle. Airbus and Boeing reported a combined 1,804 net new orders in 2015.
Although, that’s down nearly 40 percent from 2014, the plane-makers reported higher delivery numbers and robust order backlogs.
Clearly, these are good times for the aerospace industry, but there are countless players and moving parts to the supply chains that support it.
A variety of barriers make some companies pass on opportunities in emerging markets. Some simply wish to avoid supply chain challenges and other complexities that, in their view, make doing business untenable.
For example, the aerospace industry is tightly regulated.
“The aerospace industry is tightly regulated.”
Compliance obstacles like these are a huge worry for industry executives, according to another UPS white paper titled Aerogistics: Insight on Meeting Global Trade Compliance Requirements.
The paper identified internal compliance as the top concern shared by aerospace companies considering opportunities in emerging markets.
Country-specific compliance and document management related to global trade were noted pain points. Specifically, companies said detailed government requirements around importing and exporting posed unique challenges.
Other concerns identified in the Aerogistics paper include:
• Establishing initial operations
• Limited resources to pursue new markets
• Determining which markets to enter
• Keeping up with regulatory changes
Getting It Right
Aerospace companies with ambitions in new markets need strong logistics partners who have local expertise.
The right partner would have the appropriate technology and a global presence. They would be able to provide visibility into inventory and activities across the value chain.
They would be ready to navigate country-specific transportation infrastructures. And they would have the know-how to manage regulatory requirements in any new market.
“We don’t want to ship something that’s never going to get there,” one Aerogistics survey participant said.
Ultimately, an experienced logistics provider will offer the agility and responsiveness necessary for aerospace companies to thrive in emerging markets and enable them to focus on their core business.
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