Is the A&D Supply Chain About to Start Revving?

I've heard from multiple sources that manufacturers within the A&D supply chain are abuzz with activity at the moment, thinking through contingencies to meet demand needs should conflict in the Middle East continue to mount (not to mention tension and defense spending in Asia). In an industry which has gone through significant Spend Management and operations transformation in recent years, increased demand will put additional strain on suppliers to meet aggressive delivery goals should the need arise. But unlike conflicts in the past, where OEMs and platform providers would often have at least some inventory on hand to meet immediate production needs, there's much less padding in the supply chain this time around, thanks to lean programs which have reduced inventory and waste. Given this, Israel's and Japan's potential needs alone could put the entire A&D supply chain in overdrive. Add to that a rise in domestic defense spending as well, and I'd bet on healthy demand in the coming years. The only question will be whether the supply chain can keep up. If this were on the commercial side, I'd sooner place my chips on Boeing rather than Airbus.

Jason Busch

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