Desktop Engineering Blog

Implementing Risk Management in the Aerospace Supply Chain

Posted by Geoff Haines on 11-Feb-2016 14:30:00

Risk Management in the Aerospace Supply ChainIrrespective of size, all organizations across the aerospace supply chain face risks. Yet many organizations don’t have a systematic strategy in place to respond to risks. 

That’s why Aerospace supply chain partners need to implement a system of risk management, reducing the chances risks will negatively impact the organization’s bottom line.

Risks in the Aerospace Supply Chain

Aerospace supply chain partners face both internal and external risks. Internal risks include breakdown of machinery, shortage of skilled labour, delays in product delivery etc. External risks include the threat of competition, political/economical risks, natural disasters etc.

Internal risks can be controlled and prepared for to reduce their impact if the situation arose. For example, consistent maintenance checks on CNC Machines and tooling can help to ensure that potential breakdowns can be avoided, keeping the production process moving. 

External risks are more difficult to control, but not impossible. For example, many OEMs are re-shoring their supply chain back to the USA in order to gain greater visibility and control over supply chain operations. 

The benefit of re-shoring is that you can avoid the potential for natural disasters in overseas countries, as well as laws and regulations that can negatively impact your business operations.

Risk Management Practices

When implementing a risk management strategy, there are a number of elements you need to keep in mind. 

Risk Identification entails defining the problem and listing individuals within your organization who will be responsible for overseeing management of the risk. These individuals should be representatives of the various departments within the organization who may be affected by the potential risk. They should also work together to devise the techniques required to overcome the risk.

Risk Identification needs to be a continuous process in your organization, taking into account internal or external changes. For example, in identification of financial risks, changes in the costs of materials, tooling or machinery need to updated consistently. 

The next element is Risk Assessment. You need to ensure that everyone involved has a clear understanding of what the consequences can be and how severe the consequences can be on both the organization and customers.

For example, where a CNC machine breaks down the consequences can include a decrease in production output, delays in product delivery and even financial consequences where customers demand compensation for late delivery.

This leads into the next element which is actually managing the risk. At this point, the organization needs to have a clear plan in place to respond to various scenarios if the worst case was to happen.

For example, if a CNC machine broke down during production, what do you do? A potential solution is to have the necessary software that enables you to move the CAM file to another machine to continue manufacturing.

One software solution is ICAM’s SmartPath, part of the SmartPack software suite. With SmartPath, you can re-post the original CAM programme to an alternative machine, reducing delays in production.

Ultimately, managing risk should be an integral part of any organization’s plan’s within the aerospace and defence industry. Developing a systematic and comprehensive plan to respond to potential risks could save your company a lot of hassle and a lot of money.

For more information about improving performance in the aerospace supply chain, download the eBook 'Aerospace supply chain: Real world strategies for surviving and handling growth'.

Download the Aerospace Supply Chain eBook

Topics: Aerospace