Sustainability in Aerospace and Defense

For several days through the summer of 2007,environmental groups gathered outsideLondon's Heathrow Airport to rally againstplans for runway expansion. Two monthslater, a U.S. Air Force C-17 transport took tothe skies, its engines running on a coal-basedsynthetic fuel. These events, one an initiativeof environmental and community activists, theother an initial step toward addressing thesupply of a strategic military commodity, havediffering motives for sure. Yet both highlightthe growing attention to sustainability withinthe aerospace and defense (A&D) industry.1

For A&D companies, their customers' growingattention to sustainability presents asignificant new business opportunity. Engineand airframe suppliers are already workingclosely with commercial airline customerssuch as Virgin and Continental to launchbiofuel pilot programs. Looking further ahead,sustainability will be a key element in theirexpanding business of providing supportservices to their commercial and militarycustomers. Effective support services will restupon A&D companies' ability to provide highasset availability at a reasonable cost. In this

regard, sustainable business practices can helpto reduce costs, both environmental andeconomic. Two areas in which A&Dcompanies can impart a significant effectupon the industry's efficiency andsustainability are supply chain and IT.

Sustainability is becoming a core componentof high performance in A&D. Steps towardgreater sustainability reinforce those taken toincrease efficiency in manufacturing, supplychain and information technology (IT) and viceversa. Sustainability efforts are no differentthan other business initiatives. They should beprioritized based on their ability to createmeasurable business value and to align with"traditional" objectives such as growth, costreduction and the stewardship of the business.

A&D companies are engines of globalization,leaders in advanced technologies and partnersin maintaining international security. Forthem, sustainability presents a powerfulopportunity in all of these areas.

Challenges of the A&D Supply Chain:

The A&D supply chain is transforming. Underpressures of cost, speed to market and globalcompetition, A&D companies are shiftingaway from their historical stance as verticallyintegrated original equipment manufacturersto their emerging position as originalequipment providers, focused on managingasset delivery and life-cycle managementservices. As they become increasingly involvedin their customers' daily operations and supplychains, A&D companies will influence not onlytheir customers' efficiency, but also theirsustainability.

Many military programs are now being bidupon by consortia not individual companies.Similarly commercial aircraft manufacturersare delegating greater design and productionresponsibility to their suppliers. In formingthese consortia, A&D companies have tendedto defray manufacturing cost and risk byproducing components in differentgeographies and transporting them to a singlelocation for final assembly. While this modelshares the cost of production, it also increasesthe complexity of the A&D supply chain and

Sustainability in Aerospace and Defense

Energy

Materials

Water

LandSocial

Waste

Emissions ProductsandServicesWhat you sell

PhysicalAssetsWhat you own

OperationalExecutionHow you run

ProgramManagement

StrategicAnalysis

Leadership,Culture &Transformation

PerformanceMeasurement

Value Chain

StakeholderInfluence

CEOPerformanceImperatives

Protect Business Longevity

Grow NewBusinessReduce Costof Business

SustainabilityImperatives

ReduceDependencies

Generate NewRevenue

ImproveEfficiencies

Sustainability Levers

Process and Performance Changes

Enabling Tools

The Accenture Sustainability Framework - prioritizing opportunities based on their ability tocreate measurable business value

1. See the U.S. Air Force press release at http://www.af.mil/news/story.asp?id=123073293. These influences merge in the EU Parliament's vote on including combat aircraftemissions in its emission trading scheme. See http://www.defenseindustrydaily.com/eu-set-to-regulate-combat-aircraft-emissions-04214/?camp=newsletter&src=did&type=textlink

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may decrease its overall sustainability.Emerging issues consist of:

• New facility construction, increasing theconsumption of raw materials and power

• The use of environmentally or politicallyunstable sources of strategic raw materialsdue to more decentralized procurement

• Greater geographic spread of facilities,increasing inter-facility transportation

• The forward deployment of parts,components and the skilled technicians toinstall them in support of availabilityagreements further increases the possibilityof greater transportation and facility-relatedimpacts

The Sustainable Supply ChainOpportunity for A&D Companies

A&D companies will look to sustainability toimprove their own efficiency and help theircustomers generate their desired outcomes, bethey focused on shareholder value, nationalsecurity, or the environment. From logisticsnetwork design, to the elimination of

production waste, to transportation modeselection and beyond, sustainability touchesnearly all aspects of the supply chain.

As makers of some of the most complexmachines on the planet, A&D companies arelooking to make them more sustainable,serviceable and profitable. Sustainabilityinitiatives target financial benefits throughlower repair costs and higher revenues frommeeting service level agreements. Defensecustomers serve to profit from the availabilityof assets to achieve mission objectives, whileairline customers can attain higher aircraftutilization and seat-mile revenues.

The sustainability benefits of product designare derived from effective configurationmanagement across the product life cycle. Forexample, identifying and tracking componentswith hazardous content allows for their safeand sustainable disposal or recycling.Understanding the exact age and use rates ofpetroleum-fueled engine components permitsengines to be maintained at levels thatincrease their fuel efficiency, limit theiremissions and help reduce their operatingcosts. Investments in sustainable design can

limit the use and waste of strategic and scarcenatural materials, prolonging their availabilityfrom secure sources and extending thewindow to develop alternatives.

The means by which A&D companies sourceand procure materials and services can alsogenerate positive results in favor ofsustainability, shareholder value and customerservice. With production and supportconsortia becoming commonplace for majorprograms, sourcing and procurement areemerging as vital elements of financialsuccess. Yet financial benefits aside, consortiacomplicate sustainability and programexecution. The sourcing and procurementchoices that A&D companies make can limit aprogram's sustainability impacts whilemaximizing its financial performance andcustomer service benefits.

The A&D supply chain has become global, withgreater outsourcing of the design andmanufacture of components and even entiresub-assemblies, leaving prime contractors tomanage design, final assembly and life cyclesupport. The expansion of the manufacturingfootprint and requirements for inter-facility

Sustainable Supply Chain Strategy

Carbon - Neutral Supply Chain

Sustainable Sourcing and Procurement

Sustainable Product Design and Manufacture

Global Supply Chain Design and Transformation

Waste Management and Recycling

Environmental Assurance and Performance Management

Sustainable Supply Chain Modules

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transfers increase programs' emissionsfootprint and the consumption of localresources such as land, water and power.From a supply chain perspective, while sharingdesign and production responsibilities mayreduce initial investment risk, it adds risk toprogram cohesion and on-time delivery tocustomers. Yet A&D companies can take stepsthat increase sustainability and overall supplychain efficiency. These consist of workingwith suppliers to co-locate facilities to helpreduce emissions from inter-facility transfers,implementing leading transportation planningpractices, consolidating sourcing andprocurement to help reduce sourcing costs andenvironmental impacts and increasing the useof supply chain visibility and eventmanagement technologies to monitor andmanage adherence to sustainable sourcingpolicies and limit supply shortages.

Injecting sustainable practices into supplychain network design can also increase theefficiency of supply chain services and internaloperations. To meet life-cycle managementservice level agreements, A&D companies willdeploy inventory, tooling and personnel in amanner to ensure agreed-to levels of asset

availability. Supply chain network optimizationtechniques that determine the deployment offacilities and inventory, can help them mostcost-effectively meet service level targets.They can also increase supply chainsustainability. Reducing transportation coststhrough efficient mode and route selectionalso reduces transportation-related emissions.Deploying inventory in the quantity and to thelocations needed to satisfy customer servicelevel agreements limits rush shipments andinter-facility transfers, reducing extrashipments and the emissions they produce.

The "sustainable" supply chain has much incommon with the "efficient" supply chain.Accurately deploying inventory, limiting transit,employing local sources of supply andmanaging raw materials to help secure futureavailability are sound for business and soundfor sustainability. As A&D companies extendthe services portion of their businesses theymust:

• Understand the political, social and businessforces that influence their customers andmarkets

• Analyze complex issues such as climatechange and forecast future trends

• Develop solutions that balance all aspects ofsustainability

• Implement and manage change within theirorganizations and in cooperation withcustomers and suppliers

• Improve business operations to deliversustained performance improvements

• Seek to benefit the organization at the sametime as the environment and society

A&D companies have committed significanttime and resources toward developing newtechnologies such as more fuel efficientengines and lighter, stronger compositematerials that lessen the environmental impactof the products they build. Investments inefficient, sustainable supply chains can furtherthose gains, limiting the environmental impactof a rapidly growing industry, while increasingits efficiency and returns to stakeholders.

Strategy Execute MeasureBaseline Sustain

• Understand the forces acting on the organization

• Analyze complex issues and forecast future trends

• Develop solutions which balance all aspects of sustainability

• Implement and manage change

• Improve business operations, delivering sustained performance improvements

• Benefit the organization at the same time as the environment and society

As a result, the sustainable supply chain will:

Understand the forces acting on the organization

Analyze complex issues and forecast future trends

Develop solutions which balance all aspects of sustainability

Implement and manage change

Improve business operations, delivering sustained performance improvements

Benefit the organization at the same time as the environment and society

As a result, the sustainable supply chain will:

Social and BehavioralChange

Political Pressure

Business and Competition

SustainableSupply Chain

The Approach to the Sustainable Supply Chain

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The IT Challenge - Sustainability and theData Driven Business

The backbone of product engineering and life-cycle management services is the collection,management and analysis of productconfiguration and performance data. Sensorsthat collect performance data in real time,devices to monitor and update "as-maintained" configurations, networks thatmanage and transmit the data and analyticengines that translate data into decisions areall integral parts of this infrastructure. Whilethis investment requires know-how and effort,it also demands other resources thatchallenge high performance andsustainability.

The IT impact of the industry's shift toservices is significant. Strong applicationarchitectures and the data centers thatsupport them are the foundation of productdata management, asset performanceanalytics, field force provisioning, businessperformance metrics management and otheractivities that are essential to a servicesbusiness. Essential as data centers may be,their financial and environmental costs

The Approach to the Sustainable Supply Chain

cannot be ignored. Data centers arenotoriously energy inefficient. Not evenaccounting for cooling, the average power perserver nearly doubled from 150 to 400 wattsbetween 1996 and 2006.2 As A&D companiestie growth to their ability to manage data, aninability to address these costs will stand inthe way of high performance.

Questions of sustainability complicate thischallenge even further. Will power companiesneed to add additional capacity to the grid?Will the sources of this power be renewable,low in emissions and limited in their impact toland and communities? The data centerchoices that A&D companies make will have asignificant impact upon the total cost of datamanagement.

Power is not the only concern in balancingdata, high performance and sustainability. Theacquisition and disposal of equipment raisesnatural resource management and e-wastemanagement challenges. New computers andservers consume metals such as copper andmercury. At the end of their useful lives, themetals and other hazardous materials they

contain must be disposed of in a manner thatlimits the risk of these metals or theirderivatives contaminating air, water, or soil.Directives such as the European Union WasteElectrical and Electronics Equipment (WEEE)and Reduction of Hazardous Substances (RoHS)that mandate the safe disposal and recycling ofsuch materials underscore the growingimportance that governments and civil societyare giving to e-waste.

Phys

ical

Flo

wDa

ta F

low

Wireless Data Transfer

Real Time Performance Measurement

Real Time Problem Alerts & Readiness Updates

Decide to Repair

Move to Repair

Schedule Repair & Assign Technician

Core IT – Enterprise Resource Planning, PLM, CRM, Supply Chain Planning

Asset Management Data Supply Chain, Order Management, Customer RelationshipManagement (CRM) Data

Product Life-Cycle Management (PLM) Data

Repair

Documentation, Billing, & Feedback

Billing, CRM, Supply Chain Data

Job Facts

Orders to Field

Data management and IT infrastructure are at the heart of the shift to services in A & D

2. Source: Accenture Technology Labs

Asset Command Center Technician Customer

Sensor Telemetry Analytics Job Scheduling Field Force Support

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Solutions will incorporate both technologicaland physical components. Many of thetechnologies that contribute to the "green"data center are already in use today. Whileinitially designed to enhance computingperformance and improve IT cost efficiency,these technologies also help to lower thenumber of physical servers needed, decreaseserver power consumption and reduce coolingrequirements. Examples consist of:

• Business service management (BSM) andservice-oriented architectures (SOA): Theseapproaches can serve as the foundation ofsustainable IT. By aligning the managementof IT priorities with business priorities (BSM)and defining applications in terms ofbusiness processes (SOA), IT managers canprioritize, implement and run IT services toreduce power consumption and e-waste.

• IT process and infrastructure automation: Byautomatically shifting provisioning to meetcapacity demands and required service levelsacross a virtualized infrastructure, ITmanagers can improve asset utilization whilemanaging their consumption of computing,physical space, power and cooling.

• A predictive operations framework: Byinstituting and employing monitoring andmetrics technologies, IT managers can beproactive and predictive in addressingchallenges before they arise. These stepsreduce downtime, cost of quality and theresources needed to maintain highavailability.

A&D companies can also take steps to improvethe sustainability of the physical facilities thathouse their data centers. At a high level, theactions that A&D companies can take fall intothree categories:

• Facility Efficiency: increasing the efficiencyof cooling, power delivery and physicalinfrastructure

• Intelligent Refresh: extending theinfrastructure refresh cycle throughintelligent and sustainable approaches toequipment procurement and disposal

• Smart Redundancy: critically examining howavailability and continuity of service areprovided in order to eliminate "redundantredundancies"

The criteria for selecting facilities to housedata centers and other large capital facilitieshave moved far beyond the narrow focus onreducing rent and labor costs. Locatingfacilities in cooler climates, modularizing theirconstruction, optimizing internal airflow andconstructing them near renewable powersources can lead to immediate savings.Emerging technologies such as thermal loadbalancing and heat recycling may addadditional efficiency.3

The total costs of data center constructioncan be further reduced through the practiceof "intelligent refresh," the gradualintroduction of new technologies to lengthenthe operational lives and lessen theenvironmental impact of existing datacenters. Intelligent refresh policies examinethe entire data center life cycle from power,equipment and infrastructure procurementthrough their consumption and disposal. Ascompanies move through the data centerrefresh cycle, they can do so with an eyetoward managing redundancy thereby movingfrom a paradigm of designing for peak

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3. Source: Accenture research

performance to one of designing for averageperformance. While designing for peakperformance leads to excess capacity, cost andcarbon during normal business operations,smart redundancy approaches promoteefficiency during normal business operationswith the ability to scale as needed.4

As the industry embraces services, successfulA&D companies will be those that can collect,manage, analyze and interpret data in amanner that improves the business decisionsthat they make internally and for theircustomers. They will do so in a way that putssustainability at the center of a collection oftechniques designed to improve the efficiencyand manageability of their data strategies.When it comes to IT, sustainability, efficiencyand high performance are not mutuallyexclusive.

Moving to a More Sustainable Future

The aerospace and defense industry continuesto play a central role as a growth engine fortechnology and globalization. Today, thismeans not only addressing questions oftransportation, space exploration and nationalsecurity, but sustainability as well. Yet thetechnological advances behind new jetengines, lighter fuselages and alternative fuelsare only small pieces of the puzzle. Fromsupply chain efficiency to green IT, A&Dcompanies have the opportunity to increasenot only the sustainability of their industry,but also the economic value that it creates.The technologies to completely eliminateemissions and wastes may not be available forsome time, yet A&D companies can, andshould, work with their customers to takesubstantive actions toward sustainability andhigh performance today.

4. Smart Redundancy shares a common pool of ITcapability provisioned for the average case.Applications share the same failover capability thatis used for test and development when not needed.Within an application, these policies combinebackup and archive compliance.

The aerospace and defenseindustry continues to play acentral role as a growth enginefor technology and globalization.Today, this means not onlyaddressing questions oftransportation, space explorationand national security, butsustainability as well.

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