The Aerospace and Defence (A&D) industry is in a pinch, facing surging demand fueled by geopolitical uncertainty and a renewed focus on military readiness. As the recent Deloitte 2024 Aerospace and Defense Industry Outlook highlights, “supply chains remain one of the most persistent [challenges]” threatening to hinder the sector’s ability to capitalise on this growth.
Global defense spending reached unprecedented levels in 2023, spurred by a desire for enhanced military capabilities. The ongoing emphasis is on emerging technologies, with artificial intelligence (AI) taking center stage. AI-powered autonomous systems, battlefield analytics, and decision-making tools promise to reshape the modern battlefield.
Despite promising long-term growth prospects, the A&D sector remains plagued by “continued disruption in the global supply chain,” leading to delays and hindering production. Material shortages and extended lead times are a direct consequence of constrained supply chains, highlighting the industry’s vulnerabilities.
A key concern lies in the reliance on limited or sole sourcing, particularly for critical minerals essential to emerging technologies. As Deloitte notes, “companies often must rely on current production for the supply of both new and aftermarket parts.” Geopolitical volatility can quickly disrupt trade flows, leaving A&D companies scrambling for alternative sources.
To overcome these challenges, the A&D industry cannot afford to maintain the status quo. As the Deloitte report stresses, “A&D companies should accelerate their digital transformation journeys in 2024.” Digitalisation, modernisation, and the strategic adoption of AI are crucial to streamlining operations, optimising supply chains, and ultimately meeting surging demand.
AI can become a game-changer, providing actionable insights and enabling predictive analytics to mitigate supply chain risks. Generative AI tools have the potential to address talent shortages and enhance worker productivity.
The A&D sector confronts a future of both immense potential and significant obstacles. Those companies that invest strategically in digital transformation and technological innovation, embracing a “strong offense” approach, are best positioned to navigate this dynamic landscape and capture the opportunities that lie ahead.
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