Defence Industry demands more ERP flexibility to survive COVID-19

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The economic impact of COVID-19 and excessive budget cuts are causing the South African National Defence Force (SANDF) to lose its capabilities, which in turn, have threatened South Africa’s defence industry.

The need to work smarter and adapt efficiencies quickly in these extraordinary times has become a necessity for businesses, some of which are classified national security assets.

IFS has revealed that A&D manufacturers would consider changing their Enterprise Resource Planning (ERP) software system due to the lack of flexibility it currently provides.

In a poll taken at a recent webinar attended by a roll call of blue-chip aerospace manufacturers and aviation organisations, almost half of the respondents (46%) said that their current ERP platform was hindering their ability to adapt to changing market demands.

From a South African perspective, this survey comes hot on the heels of financially embattled State-owned defence industrial group Denel’s financial woes as it suffers from a lack of financial liquidity. Companies like Denel are crucial for the country’s economy and their downfall could cause the collapse of the entire national defence industry, resulting in the loss of essential national defence capabilities.

Matt Medley, IFS Senior Product Manager says, “The need for operational efficiency is key for the rest of the industry as it joins the rest of the world economy in the struggle of our time.”

During the webinar – which focused on the flexibility and agility that ERP platforms can give A&D manufacturers – manufacturers, consultants and industry bodies were asked to respond to a number of questions relating to their ability to cope during the COVID-19 crisis and the role their ERP platforms played.

When asked about the effect of the pandemic, just 8% of respondents had been agile enough to effortlessly adapt operations to manufacture high demand items such as Personal Protective Equipment (PPE).

In addition, 27% of the registered A&D decision makers said they had struggled to change operations to meet new market demand and 12% said they had found it extremely challenging to meet the timeline demands under the Defense Production Act in the US.

Another key finding showed a limited appetite for fully cloud-based ERP deployments. Just 3% of respondents said they deploy their ERP software only using cloud technology—whereas 64% said they use their software either on-prem only or a mixture of on-prem and cloud-based deployments.

“Success in the current climate and into the future will depend on an A&D manufacturing organisation’s ability to be agile in their operations and flex their business models—those who can’t adapt will quickly shift from leader to laggard,” said Matt Medley, IFS Senior Product Manager. “Ultimately, the choice of underlying enterprise software platform matters, this data shows it can either be your strategic enabler of change—or the Achilles heel.”

Learn more about how IFS supports customers in the aerospace and defence industry: https://www.ifs.com/za/industries/aerospace-and-defense/