As has been written previously, McKinsey has been giving heavy emphasis to the need to forming a digital B2B ecosystem in MRO and manufacturing (see prior article). One of the points McKinsey stressed was the importance and value of creating a digital ecosystem that spans the entire supply chain.
As an Aerospace & Defense (A&D) manufacturer, here are 5 steps you can take today to build a digital ecosystem for manufacturing and make this strategy a reality.
1. Have a Shift in Viewpoint
Instead of considering other OEMs, service providers, or competing suppliers as adversaries, industry experts now suggest that the winning strategy is through the creation of a network of peers. This collaborative framework can help to secure each other’s place in the market. The network then makes everyone stronger against external competitive threats, especially during a time of transformation.
There are already several early examples of such ecosystems. The aviation sector has AVIATAR, a platform that can help airlines avoid delays and cancellations by using data to better organize and schedule maintenance. The oil and gas sector’s OpenEarth® Community is a shared software platform for accelerated technology innovation. Booksellers and publishers in Germany have developed Tolino as a joint digital reading ecosystem for e-readers.
2. Be Committed and Be “All In”
It will do you no good to be half-hearted. One business unit or division is not a digital B2B ecosystem. Commit to building an end-to-end platform. This requires a definition of all functions across the full extent of the value chain. Competitive animosity will need to be laid aside to create a community based on complementary strengths.
3. Generate Shared Value
The ecosystem must clearly lay out what each partner is to provide and gain in return. To be sustainable in the face of relentless competition, each party must benefit materially from cooperation. In turn, these relationships must result in high customer value. By teaming up effectively, the know-how of the sector can prevail against a new threat from low-cost competitors. Then, this knowledge can be used to develop an omnichannel infrastructure spanning customer self-service, field service, and contact centers to deliver superior value to your consumers.
4. Choose a Flexible, Modern Platform
Any successful digital ecosystem must be established on a technology framework that can work seamlessly in the cloud with standardized APIs. By its very nature, these ecosystems are comprised of many solution providers and vendors. A seamless infrastructure and easy-to-use user experience are essential elements. As well as the usual compute, storage and networking portions, it must have at its core existing expertise in ERP, MES, PLM, automation and other mission-critical systems.
5. Establish a Strong Management and Governance Framework
The success of your digital ecosystem/platform will be closely tied to how well change management is achieved. This means having the right agreements and understanding in place to assign owners, whether through licensing, joint ventures, or other vehicles. As the expression goes, the devil is in the details.
In the long term, it may not matter who your partners are within this digital ecosystem. Five years from now there likely will be a few new “bedfellows” that were never anticipated. What matters most is that plans are put in place now for your systems (IT and OT) infrastructure to digitally interoperate both internally across functions and departments and externally with outside systems, partners and solution providers. The better Aerospace and Defense manufacturers are prepared, the better they will fare when the dust settles in the digital marketplace where a high volume of business will be conducted in the foreseeable future.