PAN-PAN, the international standard urgency signal aircrafts (or other vehicles) use to declare an urgent situation, which currently does not pose an immediate danger. A 1996 study reported by the New York Times concluded that smart aircrafts “were overstated, misleading, inconsistent with the best available data, or unverifiable.” More than a score later, the pursuit for smarter aircraft continues—be it in defense or commercial flights—but failure remains constant. Over these two decades, shortcomings in the aerospace and air transport industries include the 47% failure rate of the Ground-based Midcourse Defense (GMD), a 67:70 ratio of failed tests conducted among Transportation Security Administration (TSA) agents, among others. The airline industry is highly capital-intensive. Aircraft assets take a big chunk of this capital—and accounting for these assets has a substantial effect on the finances of airlines. These are high-cost, long-life assets that contain numerous individual components, and orders for such assets are made several years ahead at prices that may include complex mechanisms. This is why it’s imperative for aircraft, as much as possible, to fail as little as possible. The financial risks are high, and here, we give you an early warning of the issues that may pose a great threat if left unattended. Legacy Ways to Manage Supply Chain Supply chain management is considered the second biggest threat in the aviation industry in 2020 —and the years to come. Even amidst COVID-19, aircraft deliveries are set to keep the supply chain busy in the next decade by moving passengers and cargo. Supply chains must ramp up efforts to ensure timely deliveries while maintaining quality and keeping costs at a minimum. And during the current pandemic, this is a challenging task that will leave suppliers financially vulnerable. The smallest mistake and slightest delay can lead to chain reactions that impact budget and schedules. With such a vast network of suppliers, issues in work specifications and quality of supply or customer concerns may also arise. This kind of complexity is aggravated by the use of legacy systems in the aviation industry, systems that are usually hard to integrate with the systems of other suppliers in the market. Suppliers have to manage multiple data streams from individual systems to gain total supply chain visibility. Niche Parts and Suppliers in Low-Cost Countries For materials such as composite components and wing skins, the aviation industry depends on a small group of minor suppliers, leaving airlines with little options and no plans B or C in case of disruptions. To address this, the aviation company must work closely with the suppliers to realize stability, and identify possible interruptions before they occur and turn into more serious failures. Meanwhile, airlines are forming new connections with local suppliers in low-cost countries. Although working with local suppliers has significant cost benefits, it may still expose this niche of the aviation industry to critical issues, such as IP violations, delays, and quality issues. Funding New Programs and Technologies The implementation of new programs and technologies entails significant capital. The cost to develop new initiatives, and even new protocols, must be recaptured on volume production and quality precision. However, the initial investment may leave companies more financially vulnerable, thus posing a risk to the entire aviation supply chain. Presence of Data Silos Data silos, or the divisions that are created between people, are at the heart of why companies make big mistakes—and the aviation industry is no exception. In a span of more than 20 years, many failed events in the aircraft sector can all be attributed to data silos. Running a company in silos is a big risk as it “allows risk specialists within a business unit to work in physical isolation and inhibit collaboration with other business units.” Problems that may arise from having siloed functions in a company include gaps in the analysis of risks, lack of a process, and an absence of sharing risk information across the organization. All these things can make any company—even the smartest aircraft of the future—at risk. Streamline Your Asset Management Detailed sourcing contracts and customized process flows allow you to save time on procurement, while comprehensive inventory controls ensure accurate real-time visibility for your inventory. EmpowerMX provides a complete solution for your aviation company. Allowing you to manage your resource flow and assets more seamlessly, EmpowerMX’s Material Manager helps to reduce costs by streamlining the sourcing and ordering of materials, as well as right-sizing inventory and improving turn rates. By using thorough Planning, Forecasting, and Automatic Replenishment features for your maintenance needs, the Material Manager will ensure uninterrupted production schedules. For more information on this smart aircraft solution, contact EmpowerMX.