Digitalization of the buying process for the space industry (Credit: mbtmag.com).
Sick of waiting for days to get a response from a supplier? Struggling to figure out how to compare suppliers and their products? Unsure how to navigate the complex supplier landscape to guarentee high quality, short lead times, and optimal cost? The buying process in the space industry is broken and it is stifling growth. For the space industry to move forward, a new approach is necessary to capture the dialogue between buyers and suppliers at a global scale.
Digitals tools and processes are transforming the way procurement, sourcing & acquisition are managed in a plethora of industries, including automotive, chemical, and shipping. A similar approach can help to transform the way stakeholders interact across the global space supply chain, bringing the power of software, analytics, and intelligence to a burgeoning sector desperately in need of digital transformation.
For the space industry to move forward, a new approach is necessary to capture the dialogue between buyers and suppliers at a global scale.
Our mission at satsearch is to democratize access to the global space supply chain by bringing the power of software, intelligence, and the cloud to an industry that has traditionally managed relationships offline.
The buying process
So what exactly does the buying process encapsulate? According to Wikipedia, there is a difference between procurement, which is “the process of finding, agreeing terms and acquiring goods, services or works from an external source, often via a tendering or competitive bidding process” and is generally tactical in nature, and sourcing, which is more strategic and can be defined as “the process of identifying sources that could provide needed products or services for the acquiring organization.” In this article, the buying process encapsulates all of the transactions between buyers and suppliers, whether tactical, strategic, or operational in nature.
The complex nature of the buying process (Credit: scm.ncsu.edu).
The buying process in the space industry is tremendously complex, with many different systems and stakeholders needing to interact to arrive at a decision. Traditionally, the buying process has been locked into legacy relationships that enable the Airbus’, Lockheed Martin’s, and Boeing’s of the world to maintain significant advantage of new entrants. In this sense, traditional procurement in the space industry has relied on government cost-plus contracts, where private players assume little to no risk.
This stifles growth and results in a propensity to steer away from proven solutions to democratize access to the supply chain, rendering the whole sector impotent. To effect change in the buying process, the end-to-end workflow has to be rebuilt from the ground up, stripping away the legacy, localized, siloed supplier relationships that hold back the industry as a whole. This is particular important, given the trend towards a global, private, commercial future for the space industry, in which fixed-price contracts become the norm, and global competitiveness drives innovation, risk reduction, and profitability across the board, forcing suppliers to rethink their entire approach towards business.
So where does digitalization or digital transformation fit into this? There is a lot of hype around the idea of industry digitalization, so you’re not wrong in thinking that this is yet another fancy trend being pushed by expensive consultants. If you dig a bit deeper though, it turns out that digitalization really touches on some of the core aspects of business, both internal and external to an organization. Standardizing processes and data formats, and leveraging digital tools to manage end-to-end data flow across the supply chain is core to digitalization. Digitalization of the buying process promises to drastically improve the way we:
- identify or anticipate material or service needs
- evaluate potential suppliers
- select suppliers
- release and receive purchase requirements
- continuously measure and manage supplier performance
Standardizing processes and data formats, and leveraging digital tools to manage end-to-end data flow across the supply chain is core to digitalization.
The buying process in the aerospace & defense sector is undergoing similar transformation to other sectors. In particular, in the aviation industry, digital transformation is leading the way forward and helping to reduce risk, optimize cost, and develop strong supplier relationships built on data-driven trust. Platforms like AirSupply aim to increase collaboration and communication between suppliers and customers through digitalization.
Similar advancements are occurring in the space industry; for instance, space agencies are rethinking the way tender and bid systems operate. ESA-STAR, ESA’s renewed online System for Tendering And Registration launched in 2016, is positioned as “a move by ESA toward more digital tools for business.” This is a good sign for the industry as a whole, and is a significant hint towards the future of government contracting. Such digital systems in the space industry are still typically regional and/or proprietary walled gardens; for digitalization to make a significant mark on the industry, an open, transparent, global approach is necessary.
The way forward
With rapid growth of NewSpace, there is growing interest in the adoption of digital processes and tools for supply chain management in the space industry. The emergence of digital transformation for supply chain management is pivotal to our long-term aspirations, including permanent settlement on Mars, deep-space exploration, and commercial mega constellations.
As a stepping-stone towards digitalization for NewSpace, today we announce the launch of our Request for Information (RFI) engine, also internally dubbed slash-request. Our RFI engine enables users from all over the world to contact suppliers within our global network in a few simple steps; a preliminary step towards digitalizing the buying process. Through software and human intelligence, we have already helped users reach out to a variety of suppliers, streamlining and standardizing transactions across the supply chain.
satsearch.co: Request for Information engine.
We have a lot more to achieve before the Industry X.O vision can be fulfilled within the space industry. We believe that these first steps towards building a digital engine to support the buying process is core to turning this dream into our reality.
Interested in learning more? Free free to email me your suggestions and feedback.