After years of outsourcing the production process, today’s aerospace leaders are finally adopting vertical integration as a corporate strategy. This transition is mainly to help secure the supply chain, which industry insiders called “fragmented and stressed” in March 2024 due to labor shortages and financial constraints exacerbated by the COVID-19 pandemic. For rising supply chain professionals, the growing preference for vertical integration signals immense opportunity.
An industry trend toward vertical integration could spark a surge in hiring, making aerospace logistics professionals more attractive in the job market. To become an even more competitive candidate, rising professionals can obtain a relevant Master of Business Administration (MBA). Programs with a specialization in aerospace logistics, such as Southeastern Oklahoma State University’s online MBA with a Concentration in Aerospace Logistics, can put graduates on a fast track to management.
Importance of Logistics Efficiency in the Aerospace Market
Logistics efficiency will likely be a top priority for aerospace companies for years to come due to the complexity of the aerospace supply chain. Several major challenges facing the aerospace supply chain include:
- strict regulatory requirements
- long lead times due to the complicated manufacturing process of parts
- risk management for geopolitical issues, natural disasters, supplier bankruptcy and technological obsolescence
- pressure to keep costs down despite the high cost of materials
- a globalized supply chain dependent on stakeholders in different parts of the world
In addition to these issues, modern companies also face labor and financial shortages that stem from the pandemic. The number of challenges in the aerospace supply chain highlights the need for efficiency. To achieve this, some large suppliers are turning to vertical integration.
What Is Vertical Integration?
Vertical integration is when a company takes ownership of two or more stages of its supply chain. According to NetSuite, vertical integration helps aerospace companies do the following:
- reduce operating costs
- respond quickly to changes in product specifications or market demand
- take more control over operations
- own more of the intellectual property associated with their offering, such as product or parts designs
In the aerospace industry, vertical integration looks like Boeing’s recent acquisition of its key supplier, Spirit AeroSystems. This acquisition will give Boeing more control over the production of its jetliners. Acquisitions like Boeing’s are just one way companies can achieve vertical integration. Companies can also achieve vertical integration via self-construction, mergers, holding or equity participation.
Will Vertical Integration Take Over the Aerospace Industry?
Vertical integration has many perks. However, this doesn’t mean it is the right decision for all aerospace companies. There are two main schools of thought within the industry: vertical and horizontal integration.
Vertical integration involves owning more of the supply chain, which gives a company more control over its production process, sometimes leading to higher-performing products. Horizontal integration involves outsourcing production, which gives companies a leaner business model with lower capital investment costs and makes it easier and cheaper to develop new products. Regardless of which strategy emerges as the most popular in the coming years, rising professionals can set themselves up for success by obtaining an MBA degree.
Advancing Your Career in Aerospace Logistics
Obtaining an MBA is one of the best ways for mathematical or scientifically oriented students to diversify their career path options. This all-encompassing degree teaches students everything they need to know about business leadership and management.
For aerospace professionals, Southeastern’s online MBA in Aerospace Logistics program provides the best of both worlds, enriching their knowledge of aerospace logistics and business. The program offers several logistics-specific courses, including the following:
- Implementing Logistics: Acquisition & Program Management. This course gives students experience in the practical applications of implementing the systems acquisition process.
- Logistical Strategies in Aerospace Administration. Students learn the modern requirements for applying logistics strategy in aviation and aerospace administration.
Graduates of this program enter the job market with an advantage over their peers, ready to advance quickly in their careers. Students can complete this program in as few as 12 months, gaining crucial vertical integration skills that positively impact aerospace efficiency.
Learn more about Southeastern Oklahoma State University’s online Master of Business Administration with a Concentration in Aerospace Logistics program.