#8 - Taking on supply-chain challenges

In the wake of the pandemic and widespread disruption of the global supply chain, the aerospace and defense (A&D) industry continues to scramble to adequately source raw materials, address parts shortages, and reduce lead times. Couple that with record demand for new commercial and military aircraft and parts to service growing fleets, and we’re looking at a perfect storm that could constrain the supply chain for years. But I emphasize could, because there’s work being done to mitigate these challenges from a distributor perspective.

By combining Electro Enterprises, BTC Electronics, and BJG Electronics, FDH Electronics was formed and as its president I’m aware of the challenges ahead, but I’m much more excited for the opportunities. Let me explain.

The global environment is demanding more defense spending and society is increasingly looking to the skies to solve historically difficult transportation, supply chain, and logistical challenges. In just more than a century, the world’s gone from learning to fly to our military seemingly defying our current understanding of physics and aerospace propulsion. This reliance on the skies has produced entirely new forms of flight technology, including supersonic stealth aircraft, unmanned aerial vehicles (UAVs), electrically powered advanced air mobility technology, and improved commercial and military aircraft more efficient and safer than their predecessors.

This presents a significant opportunity for distributors to serve a growing need.

Distributing value

Historically, distributors haven’t had as significant a role as they do today. The role of distributors is evolving as we recognize the industry’s changing needs, adapt, and create solutions to help customers realize time and money savings and overall efficiencies.

While FDH Electronics distributes finished products sourced from trusted manufacturers, value-added services are also important to our customers. We can buy components and build a finished electronic product to customer specifications, shortening the 20-week lead time to a matter of days.

Much of the success comes down to our ability to adapt to market conditions and adopt new technologies and advanced tools, including leveraging enterprise resource planning (ERP) for automated decision-making and precise inventory management. If distributors want the industry to continue leaning on them for supply-chain needs, they need to lead the way with innovative solutions, whether it be through cutting-edge ERP solutions or adopting various artificial intelligence (AI)-powered or Internet of Things (IoT)-connected technologies.

Delivering product

The top issue in the mil-aero market is availability of product, where 15-week lead times a few years ago have stretched to a year in some cases. This is especially prevalent with electronic components, as they require specific raw materials that have become more difficult to source in a timely manner.

The challenge extends even further at the manufacturer level, where once they have the raw materials, they need the workforce and equipment to produce the components and finished goods. In many cases, this is a national security issue, and the stakes are much higher. That’s why it’s so important for distributors to have a vision for what the industry needs.

This means ensuring we have inventory in the pipeline based on current lead times; and working closely with customers to know their demand schedule. If they’re going to need 500 pieces of an item during the next 12 months, we need to have that product on our shelves now, giving ourselves the ability to service the customer’s needs and adjust the schedule in either direction. Having a relationship where our customer is comfortable providing us with their demand helps us plan with them as a strategic partner.

Consolidating networks

Another evolving aspect within the defense industry during the past 10 to 15 years is how manufacturers are consolidating their distribution networks to simplify the supply chain and maintain traceability through fully authorized distribution partners. Fortunately, our existing franchise relationships with manufacturers have provided us with new opportunities during this consolidation process.

Conclusion

The post-pandemic world will continue to present challenges to the A&D industry’s supply chain, but these challenges also open significant opportunities for distributors. By serving as a single point of contact, we simplify procurement and offer value-added services contributing to efficient supply-chain management when product availability has never been more

FDH Electronics https://fdhaero.com

About the author: Mitch Enright is president of FDH Electronics.