Digital technology in the supply chain: Still in its infancy

The aerospace and defense industry is no stranger to digital technologies, such as analytics, wearables, and the industrial Internet of Things. Many companies in this space have been hard at work manufacturing and selling digitally enabled products and systems. For example, new aircraft can now, in real time, track flight data like fuel consumption, speed, and potential equipment failure. Such information can be used to make minor changes midflight that could save fuel, improve flight time, or even save lives. (A Forbes article from last year highlights some of these potential changes.)

But when it comes to using digital technologies in their own supply chain operations, even companies in these technologically advanced industries are only in the initial stages of implementation. That's what makes Accenture's recent report on the aerospace and defense supply chain—"Are You Playing Ramp Up Roulette With Your Suppliers?"—so interesting.

The technology that has achieved the greatest adoption level so far is analytics, according to the report, which is based on the consulting firm's latest Aerospace and Defense Digital Supply Network Survey. Three-fourths of respondents say they have either implemented or plan to implement analytics for supply chain execution; two-thirds have either implemented or plan to implement analytics for supply chain planning and forecasting. The use of mobility tools, such as tablets, wearables, and other personal devices, is also increasing, with half of respondents planning to use or already using them for supply chain execution. Cloud-based technology, currently used or planned by 34 percent of respondents, also shows great potential for the aerospace and defense industry.

The report's authors believe the biggest potential benefits of digital technologies lie in increasing collaboration among supply chain partners. Outsourcing, especially of aspects of the production process, is increasing within aerospace and defense. Yet the industry is "still challenged by a lack of transparency and weak collaboration," according to the report. Digital technology could help resolve these problems. For example, analytics and simulation of products could be used during development and testing, and wearables could help companies conduct virtual production inspections.

There are, however, many challenges that the aerospace and defense industry must overcome to realize these benefits. According to Accenture, the use of digital technology is inhibited by such things as complex processes, legacy operating models, data security concerns, and certification. Indeed the biggest challenge of all, says the report, may not be the digital technologies themselves but integration with existing systems and processes.