Being an Aerospace Engineer is easy. It’s like riding a bike, except the bicycle is on fire, you are on fire, and everything is on fire.

The outlook for the A&D (Aerospace and Defense) industry in 2023 looks at the most critical trends and ERP (Enterprise Resource Planning) digital innovation opportunities for the coming year.

As the A&D industry continues to recover from the recent economic downturn, companies will likely put more effort into developing new technologies and solutions, opening new markets, and creating more growth opportunities.

Engineers in Aerospace and Defense review ERP data in a manufacturing facility.

So what?

It means that as 2023 approaches, commercial air travel trends and customer order activity are rising – good news for the industry. The current state of the economy suggests that demand for small- and medium-sized planes will continue to grow and reach pre-pandemic levels. Also, the number of people flying is now much higher than in 2021 as we approach pre-pandemic levels, which means that aftermarket sales could go up a lot in 2023 as air travel picks up.

The trend toward digital and operational efficiencies will quicken due to new technology, shifting company models, and rising merger and acquisition activity. Specifically, digital thread and smart factories offer a variety of technologies that can speed up time to market and minimize cycle times by increasing efficiency and productivity.

Innovation-focused A&D companies will be the most prepared for 2023.

No one wants to be “Flying an airplane with only a single propeller to keep you in the air. Can you imagine that?” Captain Picard, Star Trek: The Next Generation

1. Wide use of smart factories and the digital thread 

“When the weight of the documentation exceeds the weight of the airplane, it’s ready to fly.” – Attributed to aviation pioneer Donald Douglas.

Companies in the A&D industry will use a digital thread and smart factories more widely by 2023. Implementing these will help them see where materials and parts are coming from, which is essential for ensuring efficient production and a faster time from design to delivery.

The digital thread connects the whole life cycle of an A&D product, from the first design to the finished product, gathering real-time feedback along the way.

It helps A&D companies speed up the time it takes to bring a product to market, lower the overall service cost, and stay flexible enough to meet customers’ ever-changing needs. Industry players will probably use the digital thread to streamline, design, adapt, and maintain products at every stage of product development.

The manufacturing ERP software advantage includes the capacity to manage inventory in real time and accommodate new orders accordingly.

2. Increase in aftermarket sales 

Aftermarket sales and profits dropped significantly because of the pandemic, so companies seek more value from aftermarket products as commercial aerospace recovers. Most of the time, the essential things for aerospace customers are to reduce the costs and time to resolution and to manage risks.

The top two reasons to use ERP among all businesses surveyed are to improve efficiency (35%) and save money (29%).

Aerospace businesses will invest in digital platforms in 2023 to improve insight into production and material systems, integrate applications across platforms, and link engineering data. Also, many companies will likely use digital technologies to offer proactive and predictive maintenance, as these digital services could give them a competitive edge and improve the customer experience.

3. Defense contractors develop better military technology and increase cybersecurity 

In June 2022, the House Appropriations Committee passed the  for the fiscal year 2023. The bill gives a total of $761.681 billion in funding, which is $33.207 billion more than in 2022.

Defense companies will continue to focus on building better fighter aircraft, space resilience, shipbuilding, and cybersecurity to drive growth. This new focus could be good for big defense contractors with record-high backlogs.

Today, organizations are afflicted by sophisticated, persistent cyberattacks that can destroy the operations and reputation of businesses, including Aerospace and Defense firms. The scope of company assets, like infrastructure, apps, managed and unmanaged endpoints, mobile devices, and cloud services are vulnerable to attack.

Cybersecurity dashboards monitor data and information about cybersecurity in aerospace, defense, and security.

4. Space-based services will continue to increase 

In 2023, changes in three key areas – the launch industry, satellite trends, and new technology – could lead to growth in space-based services that have real value for businesses, society, and consumers.

Innovations made it possible for next-generation satellite communications to reach many people. An explosion of small-sat constellations in 2022 changed how broadband internet is spread worldwide and made it possible to connect communities and places where it wasn’t before.

Also, observing Earth, satellites can capture more and more terabytes of detailed images across the planet daily. Over time, sophisticated software can use this data to develop insights that help organizations make decisions.

Mobile, adaptable, and scalable functionality are essential components of effective ERP software.

5. AAM companies will start to test and pilot their ideas 

Advanced Air Mobility (AAM) is becoming more common, especially as companies making electric vertical takeoff and landing aircraft continue to get much money from traditional aerospace companies and private equity investors. Several companies have already moved past the research and development (R&D) stage and are now testing and piloting their ideas. In 2023, certification, testing and evaluation, and putting out prototypes are likely to gain more traction.

Since the market for AAM in the U.S. alone is forecasted to reach $115 billion annually by 2035, competition is likely to be fierce. Companies in this ecosystem can get a leg up by being the first to market. AAM companies best develop a solid business plan now, while the industry is still changing, so they can run their businesses well in the future.

6. New technologies and decarbonization 

2023 could be when all companies promise to reduce the amount of carbon dioxide (CO2) in their operations and products.

Even though the industry has been at the forefront of using new and advanced manufacturing technologies to save more fuel, now is the time for A&D companies to use advanced technologies more than ever to drive innovation and help solve the sustainability problem. The industry will focus on making technological and operational improvements and developing new systems and alternatives to jet fuel to cut emissions.

An ERP system can keep detailed records of carbon emissions. Complex information regarding facilities, production lines, shifts, materials, and ingredients can be coupled with carbon information to provide carbon data for manufacturing products.

7. Mergers and Acquisitions (M&A) 

Companies with sound financial management will use mergers and acquisitions to drive growth in new technologies.

Corporate negotiations should stay high in 2023. Innovation, changing technologies, and changes in geopolitics and regulations will likely drive a robust deal environment in all industries.

As sector participants assess their portfolios and sell non-core assets, organizations with solid financial sheets will make sensible M&A decisions that boost shareholder value. In defense, geopolitical tensions could continue to drive deal-making.

With the proper ERP strategy after a merger /or acquisition, you can ensure that your firm continues to expand in the right direction.

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Consultants and software partners are also called upon to facilitate change management, technology assessment, business process management, software choice, post-implementation and benefits realization, digital strategy, auditing, contract negotiation, and M&A integration.

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About the Author

 Since 1991, SSG has been a leading enterprise resource planning (ERP) application and information systems consulting firm. It started as a group of partners who helped manufacturing and distribution companies improve the functionality of their ERP software systems through custom software development. Many older ERP software packages didn’t have enough features and reporting tools, so SSG had to make custom solutions to meet client business needs.

SSG still works with clients who use old ERP software, but it has also become an expert in ERP software packages that are the most advanced on the market. SSG is an expert at moving companies from older ERP programs to newer, more modern ERP systems.