Doing business in the Aerospace and Defense (A&D) sector poses additional challenges to a manufacturer beyond what companies face in other markets. They have stringent reporting requirements, often they are held to a higher standard of quality and reliability, and there is continual focus on efficiency and cost cutting. Engineering and product lifecycle management demands tend to be extraordinary and there is usually a strong need for full traceability through the life of the product.
This series discusses some important considerations for A&D manufacturers in the context of enterprise information systems and how they can help in addressing five important areas of concern—compliance, control, communications, competitiveness and cutting cost, waste and complexity. Enterprise systems are essential tools for running a manufacturing business effectively, but the demands of the A&D market can place demands on system that are not easily addressed by one-size-fits-all products that are not specifically tailored to this environment.
Cre8tive Technology (www.ctnd.com) will be posting a weekly six part series on The Five Cs of Aerospace & Defense Success:
Part 1 The A & D Challenge
Part 2 Compliance
Part 3 Control
Part 4 Communicate
Part 5 Competitiveness
Part 6 Cutting
In addition to the various compliance requirements there might be in the A&D manufacturer’s industry like state and federal tax reporting and regulatory agency requirements (OSHA, FAA, Sarbanes-Oxley, NHTSA, FDA, etc.), most A&D contracts require an additional level of progress and cost reporting that is tied to the structure and nature of the contract. Starting with the work breakdown structure (WBS) in government contracts and similar contract organization in other markets, cost and schedule information must be accumulated and reported according to what the contract specifies.
In most manufacturing systems, costs and schedule data are accrued and tracked at the work order and purchase order level. Few have a built-in capability to track cost and schedule across multiple work orders or purchase orders and accumulate those costs and schedules according to any other grouping (project, contract phase, or element) that would be useful in providing the customer with the required status information. The default work-around is to establish and maintain a separate spreadsheet-based project/contract tracking system—a tedious, labor-intensive, and error-prone process.
Add-on products or custom programs can be used to bring the data into an auxiliary contract or project structure table (file), but again, this process is not particularly timely and can be difficult to maintain—each activity (PO or work order) must be mapped to the appropriate contract element(s) and auxiliary programs written to bring the data over to these outside files. Reporting is also a custom programming job.
A&D manufacturers should seriously consider a packaged enterprise software system with built-in WBS and project tracking capabilities. They should be able to use this system for initial estimates including material, labor, material burden, overhead, and subcontracting. The estimates are then carried over to the tracking system at contract award and costs to-date and estimate-to-complete readily available as needed for project management purposes as well as for reporting to the customer for billing and revenue recognition. Be sure to look for a system that includes sophisticated ability to create, execute, retain, and reuse allocations of cost and revenue to multiple projects, elements, departments or locations, in order to greatly simplify what can be an otherwise time-consuming and error-prone task.
Follow this series and other previous postings on www.ctnd.com.