Supplier Culture Basis for Sustainable GrowthTue, 03/26/2019 - 18:07
Having the necessary certifications and an attractive product offering can go a long way to entering the aerospace industry. These factors, coupled with strict financing discipline, a reliable management software system and a down-to-earth supplier culture, make up the recipe for sustainable growth rarely seen among Mexican suppliers, says Roberto Corral, President of InnoCentro, a supplier of interiors and components for aircraft and trains.
“Serving the aerospace sector is no easy feat due to strict quality and traceability requirements uncommon in other manufacturing sectors,” says Corral. However, the challenges Mexican companies face to migrate into this industry are not necessarily in their installed capacities but in corporate culture issues that hamper their development.
Aside from basic requirements, such as quality management certifications AS9100 and ISO:9001, Corral says financial education is the most significant challenge that small Mexican aerospace suppliers face. “Prudence is key when investing resources and using credit,” he says. “Companies need to look for ways to self-finance new projects and effectively control their organic growth.” This strategy has helped InnoCentro act as its own bank when it comes to financing projects.
The lack of a supplier culture is a common issue that harms both local aerospace SMEs and the Mexican sector in general. According to Corral, Mexican suppliers tend to believe they can take on production of any aerospace component, even when these projects are outside their core business or area of expertise. Mexican aerospace SMEs also tend to neglect the possibility of developing a manufacturing project in tandem with foreign aerospace clients, which harms their growth opportunities in the sector. “Mexican suppliers must be honest when evaluating whether they can take on a production project, so they do not lose face by failing to deliver,” says Corral. “Companies that try to take on projects beyond their capacities are not doing anyone any favors, neither for themselves nor the Mexican aerospace sector in general.”
Adoption of a management software system in the form of an ERP or similar can be a great advantage for aerospace suppliers to control their processes and ensure sustainable growth. “In the case of InnoCentro, the use of the BlueStar ERP enabled the company to triple its sales,” says Corral. “Having a robust ERP enables aerospace suppliers to manage projects efficiently and to keep tight control of on-time product deliveries to uphold commitments to clients.” BlueStar helped InnoCentro control its production and delivery times as well as its organization modules, which ignited the creation of five sister companies in 2018 that support new sectors, including real estate and connectivity.
Although the company does not expect to reach the triple-digit sales growth it enjoyed in 2017, it hopes for modest progress powered by demand in the aftermarket segment in the short term. “It is naturally difficult to maintain the 300 percent growth we achieved in 2017, which means that 2019 will be slower compared to previous years,” Corral says. InnoCentro has also put its plan to offer MRO services on hold while consolidating its new acquisitions. In 2019, InnoCentro acquired a German company that focuses on passenger cabin components and tests strategic systems for Airbus’ wings. InnoCentro will transfer part of the technology used by that company to Mexico to complement its offering in the country and leverage new opportunities to supply for airlines and OEMs in the Mexican market.
As a founding member of FEMIA, InnoCentro also helps other Mexican SMEs enter the aerospace sector. Corral says Mexico is on track to meet FEMIA’s annual aerospace export goals for 2020 and that the country remains an attractive market for aerospace FDI but highlights that Mexico still has a long way to go to develop its supplier base with talent shortages being a key challenge. “Mexico needs to train the certified technicians the country’s aerospace industry needs,” he says. MROs based in Mexico, in particular, will face new opportunities following the modernization and expansion of AICM’s terminals and the construction of a new airport in the Valley of Mexico. “There is space at AICM and other Mexican airports for players interested in offering MRO services, as long as they have the technical, financial and labor resources that such projects require.”