Insights: The aerospace industry is embracing AI amid supply chain challenges

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 The aerospace and defense industry is experiencing a transformative shift as executives recognise the potential of artificial intelligence (AI) to revolutionise their companies and increase market share. However, this optimism is tempered by ongoing supply chain challenges that have disrupted operations and constrained revenue growth. At the Dubai Airshow, we saw executives showcasing how they’re using emerging technology while discussing with peers how these tech investments can help address industry challenges.

AI: A game-changer for aerospace

 According to our recent CxO Pulse of Change survey, C-suite executives across the globe believe in the power of emerging AI technology like generative AI, and expect it to be transformative for their organisations. The integration of AI is seen as a way to increase market share and drive innovation. Eighty-one per cent of executives we surveyed expect AI to provide business benefits within the next three years.

More specifically, executives expect the technology to support faster time to market for new and updated products and services, new revenue opportunities and increased productivity across a range of processes. They also understand the pressing need to address AI-related concerns around ethics, trust, data governance and legality, to capture that value.

Supply chain challenges and resiliency

At the same time, the industry has faced significant disruptions in its supply chain, resulting in missed opportunities for additional annual revenues. We found that companies missed out on $41bn in additional revenues due to disruptions in engineering, supply, production, or operations.

Despite being the most resilient industry in these areas, companies still have a long way to go in addressing supply chain and manufacturing challenges.

These supply chain issues are persistent. executives continue to express concerns that supply chain issues, including engine shortages, raw material shortages, and semiconductor shortages, will continue until 2024. The industry is grappling with delays in parts procurement, with some parts taking months to arrive.

Rising prices, such as the doubling of stainless-steel prices since September 2022, further exacerbate the supply issue.

To address business disruptions and enhance resilience, companies are leveraging digital capabilities and data. Executives also anticipate increasing investment in emerging AI technologies, recognising their potential to improve efficiency and worker experiences.

Positive outlook for aerospace recovery

Despite supply chain challenges, the aerospace industry is on a path to recovery. The Middle East is similar to other regions in this recovery. Overall commercial aerospace revenues globally are projected to grow by 11 per cent year-over-year in 2023, bringing the industry close to its pre-pandemic levels.

This positive outlook is supported by increased demand for new aircraft sales and aftermarket services. Airlines are renewing their fleets, and air traffic levels are steadily increasing.

Despite challenges such as elevated fuel prices and a tight labor market, the industry is experiencing a resurgence.

The aerospace industry is at a critical juncture, embracing AI as a transformative technology while grappling with ongoing supply chain challenges.

As the industry navigates these challenges, the integration of digital capabilities and data-driven solutions will be crucial in building resilience and ensuring long-term growth.

The writer is Accenture’s Aerospace and Defense Industry Sector lead.