Gearing up for the defense industry's digital transformation

The U.S. government already spends more on defense than the next seven countries combined, and this spending continues to increase as geopolitical tensions rise. Experts predict spending will rise 3 to 5 percent per year through 2027. This steady growth is occurring alongside a surge in demand for commercial airliners, increasing pressure on manufacturers to produce highly engineered components, aircraft, tanks and ships more efficiently.

The global race is on to capture aerospace and defense dollars and develop bleeding-edge military technology. The U.S., China and Russia are striving to maintain their dominance or take the lead in various areas, including defense, space programs, industrial infrastructure, digital transformation and more.

Meanwhile, the international arena is generally more contentious due to rising nationalism, terrorism and state-sponsored cyber intrusions. The U.S. government is pushing its allies, especially NATO countries, to spend more on defense and contribute more to U.S. military installations in Europe. Moreover, trade disputes and technological espionage threaten to disrupt the global aerospace and defense supply chains.

The U.S. military in particular is facing the diametric challenge of investing in next-gen weapons (e.g., hypersonic missiles) and technological capabilities (artificial intelligence, robotics, cybersecurity) while simultaneously managing large stockpiles of obsolete or worn out equipment and vessels.

All of these emerging dynamics introduce uncertainty and push manufacturers to find more effective ways to keep up with rising demand, global competition, shifting regulations and complex new technology integrations.

Those in the position to go after growing piles of defense dollars with their best foot (and supply chain partners) forward can anticipate positive revenue growth for the next decade. But being in that position and staying there takes hard work and smart systems. Contractors can’t keep winning on the usual terms with the usual capabilities.

The top mandate must be reducing costs. Even though mind-bending defense budgets are rising, it’s not the free-for-all buffet of spending of Pentagons past. There is more public scrutiny, more controls around contracts and wider use of fixed-cost contracts. Manufacturers are mandated to reduce their general costs every year or risk losing the contract. Their counterparts in government defense agencies are under the same pressure. They have to stay on budget, deliver more value in less time and do so under intense scrutiny.

Just as in other types of business, defense manufacturers and agencies can only achieve the required efficiencies, cost reductions and production speeds through the digital transformation of their manufacturing systems, processes and supply chains. In many cases, the race to win defense contracts is about who is going digital and who is extracting the most value out of enterprise integration and automation.

Enterprises and agencies that enable smart manufacturing frameworks like the digital thread and digital twin through the strategic integration and orchestration of the industrial internet of things, cloud computing, advanced analytics, machine learning and automation of equipment, systems and processes will be in the best position to adapt, innovate and compete in the face of global uncertainty and upheaval.

Consider, for instance, the enormous complexity of change and quality management involved in designing, building and maintaining fighter jets, aircraft carriers and unmanned vehicles over dozens of years to withstand the most extreme circumstances. Doing so involves thousands of components from hundreds of suppliers manufactured to exacting standards. These supply chains are finely tuned, multi-tiered systems in and of themselves. What happens when suppliers from a foreign country are suddenly blacklisted?

Cultivating the agility, intelligence and resilience to swap out suppliers, maintain control over intellectual property and deliver incredibly complex assets on time and on budget should be a top priority for both manufacturers and the government agencies they serve. It appears certain that in the months and years ahead, manufacturing practices will be forced to change as shifting alliances and economies -- not to mention regulations, skills shortages, environmental issues and rapid innovation -- fuel disruption.

The public-private collaboration between the Defense Department and manufacturers from around the world is profoundly complex: Both the government and U.S. conglomerates buy and sell technology and components from microchips to turbine engines to and from foreign countries and companies. This means answering to multiple countries’ laws and regulations, reacting to geopolitical events and managing country-specific labor, logistics and natural resource issues.

As pressure mounts for sustainable waste and cost reductions as well as radically improved productivity throughout the public-private manufacturing ecosystem, the risks introduced by the inherent complexity and uncertainty loom larger. IT systems staffs in DOD are being tasked with figuring out ways to manage these dual challenges. Manufacturing execution systems are vital to both sides of the manufacturer-government partnership. MES provides the orchestration layer that makes it possible to evaluate, integrate and collaborate with all stakeholders.

MES can deploy and control processes globally by digitally capturing history, specifications and performance down to the component level. Quality and safety requirements demand a watertight supply chain where every item has a specific ID that can be traced throughout its entire lifecycle. As-designed, as-built and as-maintained documentation is recorded automatically, in real time, providing full traceability and visibility. Reaching the necessary level of integration between manufacturing systems -- enterprise resource planning, product data management and product lifecycle management, for starters -- will require comprehensive interoperability and orchestration.

Manufacturers and their government counterparts need new strategies to secure their future and adapt to change. They’ll need to catalyze step changes in the visibility, control and velocity of their operations. To do so, they'll be undertaking digital transformation on an unprecedented scale. There’s a reason we refer to this epochal convergence of connected technologies and globalization as the Fourth Industrial Revolution.

Yet, even revolutions have important first steps. Manufacturing and government tech managers have to get on the same page, identify priorities and requirements and help build resilient partnerships. Securing a piece of the defense spending pie and fulfilling contractual obligations with efficiency and precision starts with transforming production operations: connecting disparate systems; gathering, analyzing and leveraging data from end-to-end; and synchronizing processes on an intelligent framework of connected technologies.