Aerospace Long Term Relationships Play a Key Role in Mitigating Risk

There are many challenges we face as an aerospace/space/defense contract manufacturer. Our aerospace industry is one of the most complex, regulated, and capital-intensive sectors in the manufacturing ecosphere.  Within our aerospace environment there is a vast network of linked and related suppliers and customers, all utilizing cutting-edge technologies and operating under very stringent safety standards. To ensure operational continuity, maintaining the highest quality, and delivering products on-time requires among other things effective risk management. In aerospace long term relationship plays a key role in mitigating risk. We recognize the value of mitigation in our supply chain universe and work very diligently toward that end.

Risk Management in Aerospace

At Intrex we have adopted a structured approach to our risk management. We are continuously identifying and assessing the mitigating factors that could adversely affect our throughput and output performance, our cost, our delivery schedule, our safety and our regulatory compliance. Broadly categorized some of our risk mitigation efforts are focused in the following areas:

• Technical risks – Given the long development cycles and technological complexity in aerospace, requires working closely with our customers and suppliers, as new products are developed. There is very little short-term perspective. Long term familiarity, transparency and trust are critical.

• Financial risks – There is some degree of risk in all business ventures. Because of the long-term product development cycles mentioned above, working with a trusted partner becomes most critical. Some things are many times beyond our control (currency fluctuations, interest rates, global material availability, etc), however mindful of some of these financial factors that impact cost, by collaborating with our customer and supplier partners, reviewing past order histories, we many times can anticipate future needs, secure materials, shore up deliveries and lock-in pricing, thus mitigating several risk factors.

• LTA’s (Long Term Agreements) – Much of our business is conducted under an LTA rubric. These agreements are negotiated between our customer, our suppliers and ourselves. They define the scope of work, the volumes, pricing, length of term and delivery expectations. There is also provision for buying off our customers raw material contracts which gives us pricing advantage (in some cases longer term fixed costs), which we pass along to our customer, and this gives our customer a volume negotiation advantage with their supplier, thus helping to reduce costs. Successful LTA’s require working closely with our trusted customers and suppliers over a long period of time.

• Regulatory and compliance risks – These are critical elements due to nature of the aerospace/space/defense products produced. We are ISO 9001 and AS 9100 certified, and ITAR compliant. Much of our risk mitigation efforts begins with our AS 9100 AS 9100 is the international Quality Management System standard for the Aviation, Space and Defense (AS&D) industry, created by the IAQG. The overarching goal of AS9100 is improved quality, cost, and delivery performance. The benefit of implementing a quality management system (QMS) based on AS9100 is “addressing risks and opportunities associated with its context and objectives.”

• Geopolitical risks – There are always and will always be factors local, national and global that to some degree are beyond our control. As of late one of the most publicized factors are tariffs. Because of the nature of the aerospace/space/defense markets, and the diversity and complexity of raw materials, and dependency of related products and services, can have a significant impact on pricing and availability. In anticipation and to mitigate these types of situations we have sourced most of our raw materials and special processing in the USA. This has been our practice for many years. We also have in-place long term pricing on many of our raw materials (see LTA’s above). These mitigations helps minimizes much of our supply chain disruption.

Conclusion

Effective risk management and strategic sourcing are fundamental pillars of resilience and competitiveness in the aerospace sector. At Intrex we are mindful of global uncertainties and are constantly assessing both risk preparedness and sourcing agility. Because of the strong partnerships we have built and maintain with our customers and suppliers, we are confident that we can be responsive to their supply chains moving into the future.

If you would like more information about Intrex please click here.