Many firms in the aerospace and defense market are long time users of ERP, having invested heavily in MRP and MRP II systems in the 1970’s and 80’s.
As you know, these early systems are the ancestors to today’s modern ERP systems. In fact, the concepts of MRP itself were develop by these firms during World War II. But with the rapidly changing landscape, this blog will serve to educate an ERP project team on what to consider when researching a modern ERP solution for aerospace and defense contracting firms.
Let’s begin our investigation into this question by analyzing the data gathering, storage and analysis requirements of a typical firm in the aerospace and defense ERP. Firms in this industry usually require access to the following data along with a robust storage medium to assure long-term data availability.
- A robust list of key supplier contacts and their interaction with them
- Product lifecycle management tools
- The ability to migrate significant quantities of design data from CAD systems to ERP
- Robust document control tools
- Comprehensive project management tools that are fully integrated with ERP
- Top notch planning and scheduling support
- Quality management tools that significantly exceed the needs of most industries
That’s quite a shopping list. Additionally, these tools will need to be exceptionally deep. Let’s look at each of these requirements individually.
- An initial look at the Customer Relationship Management (CRM) needs of a typical firm might raise the question, “What’s the big deal here? Most of these firms have only one or at most a few customers, why would CRM be important?” While the number of customers may be small, these relationships contain several dozen one-to-one relationships from sales to engineering to project management, production and logistics. These relationships are critical to the success of each
multi-million dollar project, so knowing who is interacting with whom and having a well-documented record of these interactions is very important. The need for CRM may not be as wide as a typical firm, but the requirement here is many times deeper.
- Managing a product throughout its life cycle is the next significant area of need. Many airplanes both small and large will be in service for several decades or more. This also holds true for products built for use in our national defense. For example many M1A1 main battle tanks used in the Middle East have been in service for 30+ years. Over the life of these products, numerous system upgrades have been installed, as well as refurbishments and repairs. Maintaining a comprehensive record of these enhancements is critical to the smooth operation and logistics associated with maintaining them. Users would be put at risk if an erroneous component were installed or maintenance was performed in the wrong manner.
- Producing a product in this market involves bringing together thousands of component parts. Even the component assemblies themselves can be quite complex. The ability to design and evolve these items is an ongoing process, so a solid integration to the ERP system is required to assure designs are implemented in a controlled fashion.
- Following closely behind this need is the requirement to tightly manage the related documents themselves. All firms in the aerospace and defense industry will have robust internal audit procedures to assure that only the most current drawings, work instructions and routings are disseminated to the production floor. The importance of this goes without saying, but creating the necessary controls in the past could require an army of internal auditors. Modern ERP systems have improved on this process by making it nearly 100% error-proof. Electronic documents tightly linked to the ERP system assure that only the most current documents are available to system users.
- A typical aerospace product, as well as its subsystems, will require years to develop. Some of these projects will even pass the decade milestone. Over the course of the project, hundreds of people will touch the development and launch. Managing these subprojects and their related costs is usually done with Microsoft Project or a similar tool. These tools can be a good solution for managing the project, but typically may not be tightly linked to the ERP system. Labor may be managed in the project tool, but costs are likely being gathered in ERP. So consolidating the costs and hours while comparing these to the project status can be problematic. Firms solve this with a program management office that can grow to be a significant expense in itself. The right ERP system can minimize this cost.
- Providing the best tool to support a firm’s production planning and scheduling is an obvious need. As I mentioned earlier in this blog, these firms developed the foundation for ERP/MRP 70+ years ago. The tools provided by all Tier I and II ERP vendors reflect the evolution over this time frame and generally will not be a major differentiating factor in the selection process.
- Finally, we need to create a robust quality management system. Since the products of these firms will be sold internationally, this system must meet applicable ISO and CE requirements. This system requires ease of data gathering, rock solid security and a well-documented audit trail that assures compliance.
As one can see, ERP software selection has many nuances. Where does this leave the typical aerospace and defense firm when beginning the search for an upgraded ERP solution? The OEM’s in aerospace and defense are typically large vertically integrated entities. They will be looking to solutions from Tier I ERP suppliers, SAP, Oracle and Microsoft like SAP Business One, Oracle E-Business Suite or JD Edwards. These solutions are all capable of providing the robust solutions outlined in the previous bullets.
These solutions, however, may be significantly more costly than what a typical smaller OEM or Tier I or Tier II supplier can economically afford. This will not be a problem as the ERP supplier market place offers good solutions in this area, too. Vendors meeting the needs of these smaller suppliers include the following.
- Infor Syteline
- Epicor ERP
- Microsoft AX
- Microsoft NAV
These vendors provide the ability for a small or mid-sized firm to install the basic modules to meet the previously defined needs or to add optional modules as needed to provide additional functionality.
The challenge for any firm in this industry, whether they be large or small, is to clearly assess their existing ERP system and the business processes that support it. What are the shortcomings and waste that are part of the current business process and how is this system affecting the firm’s ability to meet their customer needs? Following this assessment process, the project team should clearly define what they hope to achieve by installing a new ERP system and where they fit on the complexity spectrum.
We are in a unique position to see these challenges first hand as independent ERP consultants.
Many companies over-estimate their needs by wanting to play with the big boys. Be realistic. If your firm is truly small or mid-size, don’t waste money by buying a “too complex” system. This mistake can be as costly as staying with the limitations of your existing system. Finally, assure that your project manager and implementation team are up to the task of implementing your new system. If you require some temporary assistance for the 6-12 months of implementation, look to a consulting firm like Ultra that has installed many systems and saved the cost of adding full-time employees.
Contact Ultra to put together a solid team, develop a tight plan and set your sights on the future!