Sector profile / Digital Aerospace Embracing bracing foR digitization By Chris Thatcher all it e-factory, smart factory, connected factory, intelligent manufacturing, or Industry 4.0: Whatever your preferred term, the digital transformation of the industrial workplace has the potential to disrupt the aerospace supply chain in ways few com- panies anticipate. And the implications for those who fail to grasp what digital means could be severe—ask Kodak. “Top decision-makers are still underesti- mating the effects of digitization, especially the disruptive impact on their top line,” global aerospace consultancy Roland Berger wrote following a 2016 market survey of aerospace and defence executives. “Many are stuck with the belief that the impact will be mostly on bottom-line efficiency. Many com- panies just don’t have the right skills and per- sonnel to think of new business models and conduct the right analyses to determine what to do in this fast-changing environment.” Aerospace has long been regarded as a sector with high barriers to entry. Not long ago, few would have imagined a start-up with innovative software could do to the industry what Uber has done to taxi ser- vices or Airbnb has done to hotels—all without owning a single car or hotel prop- erty. But as SpaceX continues to shatter our perceptions of rocket science, many compa- nies across the sector are rethinking what “going digital” truly means and are seeking better ways to capitalize on the wealth of data their manufacturing facilities generate. Amazon has not closed all bookstores, Uber has not done away with cabs, and Airbnb has not replaced the hotel chain. But all three have forced traditional players to radically reshape their business models. C 16 SKIES Magazine | May/June 2017 Aerospace won’t be easy to disrupt, but its model is “ripe for disruption,” Van Espahbodi, co-founder of Starburst Accelerator, a Los Angeles-based accelera- tor for sector start-ups, told the fourth annual Global Supply Chain Summit in Montreal on April 4. The barriers to entry have “significantly lowered” and non- traditional players from Silicon Valley and elsewhere are “seeking to capitalize” on aerospace technology. “Money from inves- tors outside of this industry has signifi- cantly increased,” he observed. The event, hosted by Aero Montreal as part of International Aerospace Week, was dubbed “Breaking Through the World of 4.0,” and captured much of the change that is affecting companies of all sizes, from original equipment manufacturers (OEMs), to Tier 1 systems integrators and large structures providers, small parts sup- pliers, and forging and casting shops. All are awash with big data generated by their machines, processes and customers, and as more of their devices become connected and their processes digitized and integrated, much of that information can be analyzed and harnessed to improve decision-making and operations throughout an organization. Industry 4.0 seeks to knit together big data, analytics, automation and robotics, artificial intelligence, cloud computing, cyber security, additive manufactur- ing, simulation and augmented reality in a corporate milieu in which humans and machines “collaborate digitally and communicate seamlessly through inte- grated processes,” said Hany Moustapha, a former executive with Pratt & Whitney Canada and now director of AEROETS, an engineering program for aerospace edu- cation and research. “4.0 is not only about the factory, it is the total enterprise.” Jim Vounassis, Bombardier’s chief trans- formation and procurement officer, who has been leading a change agenda since 2015, pointed to a convergence of an increasingly competitive marketplace, diversity in the supply chain, and rising customer expecta- tions with respect to digitization that have created enormous pressure to transform. “One of the key success factors for us is to be able to understand the dynamics of our industry, and how to incorporate not only continuous improvement but also disrup- tive technologies like Industry 4.0,” he said. Done well, digitization could break down the conventional silos of product develop- ment, manufacturing, sales and so forth that predominate most organizations, revealing a unified view of corporate data. It could also connect a manufacturer with its suppliers and customers, finding patterns in disparate data that might not otherwise surface. “4.0 is based on collaboration,” explained Eric Leduc, senior sales manager for Microsoft. It “uses low cost technology to break barriers and silos between your manu- facturing process, your suppliers, and your customers and really integrate them into the processes. . . [We’re] now able to digest a huge amount of data and make sense of [it].” As with previous revolutions that have fundamentally transformed industry—the introduction of steam and mechanized processes, the dawn of electricity and mass production, and more recently the advent of computers and early automation—merely surviving the journey amid rapid change can be half the battle.