Most aerospace and defense manufacturers are struggling to keep up with rising demand and rapid technological change. A select few have found ways to safely break old paradigms, however, rapidly rewiring their operations to match the current pace of change in the sector. With this approach they are consistently achieving rate increases of 50 percent in months, with little to no capital cost, measurable increases in quality, and improved frontline engagement.1
The global aerospace and defense (A&D) landscape has entered a period of significant innovation, disruption, and demand growth. Geopolitics is driving demand for defense systems, commercial aviation is experiencing unprecedented innovation, and disruptor companies are scaling up.
In the defense sector, major powers have responded to heightened tensions with extensive rearmament plans. The US expects to double its production of missiles from 5,000 to 10,000 per year, for example, while the European Union’s White Paper for European Defence calls for additional defense expenditures of €800 billion ($900 billion) across the bloc in the coming years.2 Between 2030 and 2054, production of military surface ships, submarines, and amphibious vessels is expected to be 50 percent higher than it is today.3
Growing pains
For A&D players, the recent surge in demand has created significant challenges. Working in a highly regulated, safety-critical business, companies in the sector have built their operations with a well-deserved risk-averse posture in critical areas such as safety, quality, and product performance. However, this risk aversion has often bled over into places where calculated risk-taking is warranted, and even healthy, such as operational improvements and cross-functional coordination. That has led to rigid processes that are now unable to adapt to the higher production rates demanded of them.
Additionally, organizational, commercial, and technological considerations have contributed to the sector’s poor flexibility. Many businesses rely on highly skilled, specialized teams that operate in silos with limited cross-functional collaboration. Contract structures, such as the cost-plus approach common in defense procurement, have created little incentive to pursue operational efficiency or productivity gains. And the ever-increasing complexity and configurability of these products compound existing manufacturing and supply chain challenges.
Yet there is plenty of opportunity to improve. In our experience on the front line with A&D manufacturing teams, the ratio of time spent working on products (touch time) to time spent on other activities is less than 50 percent. Products being built (work in process) often spend 90 percent or more of their time sitting idle on the factory floor. Companies can tap into this opportunity without asking their teams to work longer hours, rush, or cut corners, and without making costly investments in facility expansions. Instead, they can focus on "rewiring" their operations to remove constraints, eliminate waste, and optimize end-to-end flow. Getting that right can deliver significant returns, increasing throughput potential by 50 percent or more in a matter of months, without compromising safety or quality, and often at no additional cost.
A&D organizations that have adopted this approach find that it requires them to make uncomfortable, fast, and focused changes to their operations, but that doing so unlocks bigger improvements than can be achieved with legacy operational wiring (exhibit).
The rewiring imperative
Many A&D organizations have already tried various strategies to improve the productivity and speed of their frontline operations. Too often, these efforts failed, resulting in a proliferation of meetings, charts, and new metrics, and no meaningful change.
In our experience, these prior transformation efforts typically went wrong because they attempted to run new ways of working through the organization’s existing operational wiring. That trapped the transformation efforts in a culture of intense risk aversion, siloed teams, heavy bureaucracy, rigid processes, and a focus on large, sweeping solutions that take years to design and implement.
Breaking with the past requires companies to recognize that different aspects of operations require a different approach to risk. While areas such as design, quality assurance, and product testing will always demand strict risk controls, there are other areas of operations that need an open, nimble approach and a willingness to experiment.
That second category of activities includes actions that can transform manufacturing throughput: basic operational improvement, cross-functional coordination, and the selection of metrics that drive decision-making by the front line, for example. In these areas, trying new things, learning, failing, and trying again are healthy behaviors.
Operational rewiring, from the frontline back
Done right, operation rewiring allows A&D organizations to tap into their full productivity potential, creating a virtuous cycle of operational improvements that can boost throughput by 50 to 150 percent, according to our analysis. The organizational circuitry necessary to support such improvements must be built from the ground up.
Successful companies embed their change efforts directly into frontline operations, working backward from real production constraints to ensure they focus on the problems that matter most. This approach prioritizes rapid results over theoretical perfection, addressing priority issues rather than trying to fix a whole site or system at once.
To crack organizational siloes quickly, rewiring should be cross-functional from the start, involving people from different functions and working across departments to find solutions. It should be intensely pragmatic too, working with resources that are available today instead of waiting for new tools or future capital. Teams should be willing to experiment wherever it is safe to do so. They should implement quick wins and use them to prove to colleagues that change is possible, helping to build momentum for further improvements. And rewiring should focus on people as well as processes, giving frontline teams ownership of outcomes, and equipping them with the knowledge and skills to keep identifying opportunities and implementing improvements, turning operations into a driver of growth rather than a constraint.
Rewiring in the real world
A&D organizations that have rewired their operations in this way are already capturing significant improvements in productivity and throughput. Let’s look at two recent examples.
A steel fabrication facility in a complex network had been behind schedule, over budget, and a consistent network bottleneck for a decade. Its processes couldn’t keep up with the increasing complexity of the parts it made, the supply chain was not delivering, and managers believed their workforce was no longer sufficiently skilled to be productive. The company was planning a multi-year expansion project to increase throughput, while also outsourcing to local fabricators.
When the company decided to rewire its operations, it immediately found significant improvement opportunities. Cross functional teams working across the manufacturing front line identified 21 initiatives with the potential to transform throughput. They included:
- Establishing a central command center and running cross-functional daily shop leadership huddles to break down silos
- Building a manual map of work in process (WIP) and using colored magnets to mark constraints. That low-tech approach filled a critical information gap that an ongoing three-year project to build a digital twin of the plant had failed to fill.
- Iteratively testing a new material management system to develop a stable, reliable approach, starting with colored tape and bows to mark material before graduating to a digital solution
- Working directly with welders to identify a chronic constraint not captured in the data—variability in the locations on the production floor where quality inspections were performed—and standardizing these locations to improve flow
The facility moved quickly to implement these and other initiatives, achieving a 55 percent rate improvement in the first month, building momentum and breaking down legacy ways of working. After six months it had doubled throughput and eliminated its backlog of work. The plant has sustained the performance since, becoming a catalyst for improvements across other facilities in the company’s network.
Another company, a manufacturer of complex aerospace electronics, faced similar constraints and initially believed performance issues were largely external, including the challenging design of the components, the limited footprint of its site, and its supply chain. Plans were underway for a large-scale facility expansion.
Working from the front line back to rewire its operations showed the company that many of its difficulties were driven by self-inflicted issues, especially poor alignment between organizational siloes. It tackled those issues with a set of quick-win actions, including:
- Redefining the standard hours for key operations to uncover and eliminate baked-in waste
- Conducting a rapid quality analytics sprint to identify and prioritize a small set of issues that had an outsize impact on production delays
- Improving its supply-chain material forecasts using simple dashboards that pulled data from existing databases. This filled an information gap that managers had attributed to the delayed implementation of a major new enterprise resource planning (ERP) system.
Those initiatives and others helped the site boost production rate by 30 percent in four weeks and by 60 percent in just ten. After a few months, output was up by 80 percent, a rate that it has now sustained for several years. The site has shifted its role within the wider organization from a bottleneck to a lighthouse for productivity and operational excellence.
As demand surges and innovation accelerates, aerospace and defense manufacturers can no longer afford to rely on legacy ways of working. The path forward requires bold action: rewiring operations from the ground up, empowering frontline teams, and fostering a culture of thoughtful experimentation and accountability. Organizations that embrace this challenge will not only meet rising demand—they will define the next era of industrial excellence in the sector. It’s time to think bigger, move faster, and rewire for the future.
