Defense Manufacturing: Digital Transformation Crucial to Accelerate Production

Editor’s Note: In a recent Breaking Defense piece, U.S. Army officials were chafing at lower levels of production output from the defense industry than required for their needs.

“I am personally no longer interested in hearing about COVID. That time is over, okay? It is time to deliver and produce and meet the commitment or we are going to have to shift to another direction,” Brig. Gen. Michael Lalor, commanding general of the Army’s Tank-automotive and Armaments Command (TACOM), Detroit Arsenal (DTA), said Wednesday during a panel at the 16th Annual Ground Vehicle Systems Engineering & Technology Symposium (GVSETS) in Novi, Mich.

An answer to meeting stepped up demand is for the defense industry to more fully embrace digital transformation. But as we have argued elsewhere, doing so opens new possibilities for sustainable forces as well.

In the article that follows, Rob Mather of IFS provides an examination of the importance of digital transformation for accelerating defense production.

Overview

Demand is booming again for defense manufacturers! They need to hit the digital production pedal at full speed to meet the renewed demand

After scaling back operations due to reduced demand and shrinking stock levels caused the US defense sector to lose over 40% of its value, these same manufacturers are now struggling to match renewed demand and hit the production accelerator pedal at full speed.

Many of the challenges defense manufacturers are facing are external, but some are internal. Manufacturers are being held back by disparate internal manufacturing systems that they have never addressed, and inconsistent information sources that are hindering their ability to streamline operations and fast forward production.

Article

A recent Deloitte report pulled no punches when it argued that to unlock growth and efficiency in today’s growing defense market environments, A&D organizations had to take digital transformation seriously. “Modernizing and integrating processes and enabling technologies are some significant steps for the A&D industry to improve production throughput and cost efficiency. Embracing digital transformation can reshape A&D production processes at all stages, significantly reducing industrialization cycle times, improving efficiencies, increasing production yield, and elevating quality standards.”

This means a company-wide approach to software and information that connects the shop floor to the top floor so that they all operate efficiently to increase production, precision, and agility. This must start with moving away from siloed and inconsistent information sources to a single integrated management system that gathers data from the Manufacturing Execution System (MES) and Enterprise Asset Management (EAM) system to inform the Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) system—providing a single source of the truth!

Here are the four key operational trigger points where technology will enable defense organizations to achieve the high-performance manufacturing operations they need to take advantage of the boom years ahead.

1. AI enabled problem detection augments and de-risks lean operations

To help deal with surges in demand, defense manufacturers have reversed inventory strategies from lean and just-in-time principles to over-stocking parts to ensure inventory buffer. Despite reducing production risks, financial risks have been increased due to cost of purchase, storage, and tracking of materials and parts. To better balance risk, defense manufacturers can look to integrate operations and take advantage of demand-driven material requirements planning (DDMRP). This will ensure inventory levels match demand levels and supply chain variability. By looking at actual usage data, DDMRP can determine if the stock level for a part is sufficient to cover demand, making defense manufacturers more sensitive to supply chain disruptions, variations in demand, and production downtime.

The use of AI within defense forces and manufacturers is on the rise. With U.S. Department of Defense (DOD) budgeting $1.8 billion for AI applications, and stating that AI applications will be used to help defense forces and organizations recognize patterns, learn from experience, make predictions, and generate recommendations.

AI can help further de-risk production and financial issues. Manufacturers should look to combine anomaly detection and pattern recognition with real-time data correlation. The combination of AI anomaly detection and DDMRP can radically increase the speed and accuracy of problem detection throughout all aspects of the organization, and action potential chokepoints before they escalate into complex and costly problems.

2. Drive efficiency by integrating management platforms to unify planning and production

Defense manufacturing projects by their very nature are complex, with multiple production lines working to intricate assembly requirements. Project management, already a major challenge for defense manufacturers, is further exacerbated by this current ERP management software causing a disconnect throughout operations, alongside a lack of a skilled workforce readily available to defense manufacturers. Recent reports from Guidant Global highlight the workforce issues facing the UK defense sector, with key decision makers stating they’re already facing a lack of skilled manufacturers and mechanics.

Implementing integrated project management software will allow defense manufacturers to align their planning through their operations to optimize their production and increase efficiency. The use of IoT technologies such as integrated project management software allows for data to flow in real time so people, systems, and capabilities can be leveraged in every aspect of their operations.

The increased visibility brought by integrated project management software can allow for manufacturing teams to react quickly to new priorities. Ensuring workers and machinery are coordinated to maximize efficiency and capacity, and avoid time, money, and resources being wasted.

3. Increased organization-wide visibility with robust business intelligence to automate workflow triggers

One of the biggest challenges defense manufacturers are struggling to overcome due to rising demand levels is reducing lead times—in August 2023 the delivery time for production materials reached 87 days. Despite being reduced by 13 days compared to 2022, the average lead time has yet to recover to pre-pandemic levels. Integrated workflows can help defense manufacturers reduce this with its ability to provide all relevant parties with data so that people, machines, and asset’s time and skills are all optimized.

A key part of digital transformation within the defense manufacturing industry is to move away from siloed data to real-time data that flows from the shop floor to the top floor of defense manufacturers. Powerful Manufacturing Execution Systems (MES) with integrated workflow engines will allow for data to flow from end-to-end, so every worker has operational visibility of what’s happening and what needs prioritizing.

Utilizing powerful MES with integrated workflow engines brings far more benefits to defense manufacturers compared to typical ERP systems with data aggregators or business intelligence reports. Integrated workflow systems are accessible for all relevant parties—providing vital insights into ongoing work everywhere.

4. A single source of the truth keeps defense manufacturers on the right side of regulations

Defense manufacturers operate in an industry defined by regulatory requirements whether it’s supply chain, cyber security, sustainability, or employment—they all have their own regulations to comply with. This requires defense manufacturers to have fully traceable operations and processes which generate information that is readily available for regulatory reporting.

As regulations get stricter, current disjointed systems make it hard for defense manufacturers to meet requirements, with slow data compilation and increased risk of information being inaccurate or out-of-date. A real-time, single source of the truth is needed.

This means manufacturing management platforms should include integrated and automated templates for mandatory government reports that are ready to use when called upon. Combining MES and ERP in one place will also help them comply with the ISA-95 standard from the International Society of Automation (ISA). This ensures they are using these standardized data models and communications to enable consistent and accurate data exchanges throughout all business systems.

Conclusion

Within the defense manufacturing industry, some organizations may choose to partner with strategic technology partners to help them achieve their financial and production target. These partners can better understand the challenges that defense manufacturers are facing, and the integrated management platform they need to meet challenges, optimize operations, and increase customer trust and satisfaction.

This means focusing on moving away from siloed and disparate data to an integrated system and single source of the truth with data from operational systems such as MES and EAM systems being passed straight to the CRM and ERP system. An integrated management platform can help defense manufacturers deliver on increasing demands—but make the most of their existing workforce and stay compliant.

Getting this digital transformation right is critical for defense manufacturers to grasp control of internal challenges they are facing, and unlock the high-performance manufacturing needed to make the most of this recent rise in demand.

Rob Mather is Vice President, Aerospace and Defense Industries, IFS, 

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