How the space industry can conquer scaling production
US satellite launches may be increasing by huge amounts, but concerns are growing that manufacturers aren’t keeping up with the pace. Oliver Wyman aerospace, defence and government partner Miguel Smart…
US satellite launches may be increasing by huge amounts, but concerns are growing that manufacturers aren’t keeping up with the pace. Oliver Wyman aerospace, defence and government partner Miguel Smart and Kim Lord, a principal at the management consultancy’s aerospace and defence practice, share strategies to expedite a move to an assembly-line mindset.
There was a six-fold increase in the number of satellites launched by the US last year versus 2019 — and that statistic, as much as any, explains the challenge facing space enterprises today.
The US space industry is going through a manufacturing transformation — from primarily supplying large, highly bespoke satellites with decade-long build cycles to pumping out dozens of satellites at a time for constellation networks. Those two very different production models need to coexist side-by-side at companies wanting to service both traditional and so-called New Space requirements, and their supply chains must learn how to satisfy the demands of both simultaneously.
That won’t be easy. Already, many satellite manufacturers — along with their biggest customer, the US government — are agonizing over untenable supply chain complications and delays. But the real task ahead is much more fundamental than tweaking supplier lists or ordering components ahead of schedule. It requires a sizable overhaul of the industry’s operating model — one that makes space enterprises operate more like car companies and other large-scale producers than the custom-engineering-driven organisations that defined the last several decades of the space industry.
Rethink priorities in design and manufacturing
Obviously, there is a big difference between manufacturing a satellite and a sports utility vehicle or a refrigerator. But to deliver on time and, at the promised price, as well as to continue to outpace overseas rivals, the new US space industry will need a more modern, assembly line mindset. And that’s throughout its design-to-delivery process – especially in its supply chain.
Decisions need to be made with a much closer eye on delivery schedules and availability of parts rather than worrying only about pushing the design envelope. We’ve identified three strategies to help satellite manufacturers and their suppliers adapt faster to a new reality of fixed-price contracts.
First, supply chain and manufacturing executives must be given a full seat at the table with engineering when it comes to design of projects and bidding decisions. The experts with the best visibility into parts and production need to be directly involved from the start and given a voice of equal weight alongside design engineers in this new, more speed-centric world.
Simultaneously, space companies must improve their mapping of the supply chain and better define key performance indicators to boost visibility into the operations of second-, third- and even fourth-tier suppliers. There must also be more accountability from the immediate customer of each tier. While many satellite manufacturers don’t regard policing upstream suppliers as their responsibility, better understanding these risks will help companies construct more successful bids and give them a leg up with government and commercial customers.
Finally, and probably the hardest fix to implement, companies must re-think strategies and criteria for when to make components in-house and when to buy them — and be prepared to continually reevaluate those decisions. Companies like SpaceX err on the side of ultimate control, insourcing the production of most components. That’s not always financially viable or technically attractive for other space manufacturers. But these manufacturers can de-risk their supply chains through visibility into upstream operations and strategic partnerships with strategic component makers.
Get Started Now
There’s no doubt space supply chains pose unique challenges because of the extraordinary demands of operating in space. While increasing use of common elements — like satellite buses — has alleviated some pressure, many elements of the supply chain remain dominated by long-standing, sole-source relationships, high scrap rates, or low-run, custom-built components.
Security compliance, specialised labour pools, import controls, and order volumes add further complexity to the sourcing of space systems. Space companies must also compete with larger order volumes from commercial aerospace that leave smaller and less predictable space sector orders as the lowest priority for fulfillment.
Companies shouldn’t expect, or even try, to fix decades-old manufacturing processes and traditional hierarchies all at once. But they do need to get started immediately on addressable, near-term problems — and planning and building momentum to tackle bigger targets at a New-Space pace.Subscribe to the FINN weekly newsletter
