Image courtesy Vendigital

With product innovation flourishing, manufacturers could be forgiven for innovating first and thinking about whether their value chain is capable of bringing it to market later. Yet taking this approach could be selling themselves short and repeating mistakes of the past.
 
There are many factors driving innovation in the sector. In the defence industry, most of the demand is derived from global instability and the battlefields of Ukraine. This is driving short-term tactical innovation and creativity to solve problems being faced on the ground now. There are also some major long-term R&D programmes underway, notably the Global Combat Air Programme (GCAP), involving makers in the UK, Japan and Italy, which is developing a new fighter aircraft for launch in the mid-2030s and the AUKUS collaboration, which over time will extend beyond its initial maritime focus.

In the civil sector, much innovation activity is focused on developing technologies to support the challenge of decarbonisation and other non-CO2 emissions. Government support for decarbonisation in particular is spurring innovation in areas such as hydrogen propulsion and electrification. The eVTOL market is also gathering momentum due to growing interest in the future of urban transport and the advantages it could bring for both industrial and consumer logistics.
 
While all this innovation activity is bringing buoyancy to the sector, some OEMs and Tier 1 manufacturers could fall into the trap of innovating first and thinking about how to industrialise their invention too late. For example, there is a great deal of focus in the UK and Europe currently on composite technology, as OEMs and supply partners collaborate to develop materials that are lightweight and durable to improve fuel efficiency. Bringing these technologies to market will require deep long-term collaboration - from fibre and resin, to final assembly - and ensuring the whole end-to-end value chain has the financial capability or access to support to make it through the journey.
 
Bringing innovation to life requires the support of a fully functioning, well-equipped value chain and this is not something that can be constructed overnight. This not only means considering engineering capacity but access to finance and the capability to design, build and operate the required manufacturing processes. OEMs and top-tier suppliers that are investing in innovation need to see things from an end-to-end value chain perspective and invest in capacity and capability from the start. Instead of taking their innovation to a supply partner that may never have worked with such materials or technologies before and expecting them to produce parts to meet their requirements, a more collaborative approach is needed.
 
Step 1 – Strategic review
OEMs or top-tier manufacturers investing in innovation should start by understanding the strategic options within their supply chain. For example, they could import the skills needed to make an innovative product themselves or acquire a technology business to do it for them. Joint venture partnerships are also an option, where businesses are willing to share the commercial rewards. Selecting suppliers that are equipped to meet the production challenge is vital and this could involve supporting them in upskilling employees to work with new technologies.
 
Step 2 – Cost and value engineering
Building a prototype of a new product and showing it works is one thing but mass production is another. Innovators should employ cost and value engineering to develop solutions that are both viable and scalable by design. A detailed understanding of the lifecycle cost of each component is required, along with its carbon footprint. This combined with high-level manufacturing requirements can enable early stage business cases to be generated. Building models that combine accurate emissions and cost data will enable OEMs to make the right decisions and configure their supply chains accordingly.

Advertisement

Step 3 – Strategic delivery
Arriving at the right strategic solution may require a change of mindset. For example, the OEM should consider ‘Who would this work for?’. Bringing an innovation to life will probably involve working with new supply partners who will be taking a risk based on projected demand. Making sure that the risks and rewards are balanced evenly is essential to establishing a robust value chain. This may also involve engaging alternative sources of finance in partnership with the supply chain.
 
Step 4 - Engage suppliers
Assuming this innovation pathway has been followed, the OEM or top-tier manufacturer is ready to engage suppliers. Understanding the capability required to mass produce a novel component and working with suppliers to achieve that, will require a collaborative approach from the start. In areas such as digital technology, it may be necessary to go to market to find the right capability and negotiate new supply agreements.
 
Seeing innovation as a one-off project to be carried out behind closed doors, is short-sighted and unlikely to generate value. OEMs must give early consideration to how to bring the innovation to life by harnessing the end-to-end value chain, as this approach will mitigate risks and optimise rewards.