Lessons in A&D and Auto Supply Chain Strategy, Part 1: Supply Chain Challenges

by KPMG’s George Odden & Vincent Pavlak

In July 2010, Vincent Pavlak, a partner in KPMG LLP’s Transactions & Restructuring service group, contributed an article to Defense Industry Daily, titled, “Lessons from the Automotive Supply Chain: Surviving a Downturn.” At the time, the automotive industry was enduring one of the worst economic periods in history, and there were concerns that the aerospace and defense industry could suffer a similar fate. Ultimately, the automotive suppliers that endured the downturn have emerged stronger, due in part to critical efforts undertaken during the crisis. Meanwhile, the aerospace and defense industry has experienced a post-crisis divergence of paths, with commercial aerospace companies enjoying a resurgence parallel to the automotive industry while the defense sector has suffered declining revenues and prospects. Despite differing outlooks now facing each industry, supply chain enhancement presents opportunities for increased competitive advantage for aerospace, defense and other industries across varying economic cycles.

Part 1 deals with the key challenges facing these industries’ supply chains.