The 2014 Global Aerospace and Defence (A&D) Outlook suggests that the coming years will see collaboration between products and services, research and development (R&D) plus market access. This will fundamentally change the way A&D organisations operate. This report examines how A&D organisations are focusing profitability and cost visibility, building new partnerships and taking new opportunities to use existing products and services.
As A&D organisations come under increasing top-line and bottom-line pressure, many are now focused on improving their visibility into their profitability and costs. However, almost half of all A&D respondents admit that they are only ‘somewhat effective’ at determining their profitability and just 12 percent categorised themselves as being ‘very effective’.
Partnering to achieve innovation
With pressure mounting on A&D organisations to reduce costs and improve top-line revenues, many A&D respondents now suggest that they are building new partnerships and investing more of their revenue into R&D in order to drive bottom-line growth and enhance innovation. Investment expectations are high with three-quarters of A&D respondents saying that they would spend between 2 to 3 percent of revenues on R&D over the next two years and 16 percent saying they would spend between 4 to 5 percent.
Taking the supply chain global
Seeking new opportunities for growth, many A&D organisations are now focused on entering new markets and taking advantage of suitable opportunities to leverage their existing services and products into adjacent markets. Not surprisingly, this year’s survey shows that A&D organisations are struggling to adapt their supply chains to serve these potential new markets.
This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK.