Aviation is expected to be one of THE growth industries for the next decades naturally leading to high competitive pressure for all players in the aviation value chain. Typically companies strive to avoid competing on cost but on differentiation. However,, achieving cost advantages is a very popular topic in the aviation industry right now and. many aviation enterprises, as well as conglomerates with aviation divisions, are trying to achieve economies of scale.

My organization has a unique perspective in this. DHL is in the fortunate position of serving customers in multiple industries, and we can often take lessons from customers in one industry and share these new insights and concepts with customers in another. Aviation can learn a lot from this ‘cross-pollination’ of knowledge and best practice. In this case, our aviation and aerospace customers are learning how DHL’s large-scale automotive customers achieve economies of scale and drive efficiencies by exploiting connected and integrated supply chains. These new supply chains require a fundamental adjustment to relationships along the value chain, leading to more collaboration with suppliers and service providers.

 

“These new supply chains require a fundamental adjustment to relationships along the value chain, leading to more collaboration with suppliers and service providers.

 

More than a decade ago, the automotive industry formed manufacturing clusters in key regions. This is now also starting in the aviation industry, with clusters already appearing in Poland, Mexico, and Canada. By concentrating business activities close to key suppliers, research institutes, universities, trade associations, and others in a single geographic area, all involved parties can aim to improve efficiency, effectiveness, innovation, and flexibility. The idea is to benefit from physical proximity by jointly using infrastructure, knowledge, and a shared pool of skilled labor.

In future, we should anticipate the strengthening of manufacturing clusters in the aviation industry, and aviation companies are likely to collaborate (yes, even with competitors!) to drive economies of scale with shared suppliers. DHL has recently published some fascinating research on this and other related topics – click here to download our white paper.

Published: May 2016

Image: DHL