Aerospace & Defense What we do Optimizing portfolio strategy. In a time of decreasing government spending, aerospace and defense industry players need to engage in decisive portfolio management if they are to continue to create shareholder value. We have significant experience in helping companies optimize their product and R&D portfolios from supporting exhaustive analyses of current investments and identifying divestment opportunities, to developing strategies to redeploy capital and resources to new, high-potential segments, products and service offerings and technologies. Driving growth. In light of the current economic cycles and pricing pressures from customers, aerospace and defense prime and sub-contractors need to make bold efforts to identify growth opportunities. We help companies identify international markets in which to extend their traditional capabilities, develop services in adjacent sectors, and expand within the aerospace and defense verticals. Working with functional and industry experts from across the firm, we can help companies identify attractive white space areas in the defense and security industries and to capture these new business opportunities. Improving program affordability. Aerospace and defense contractors face an affordability imperative. This requires strategies to weather the retrenchment in government spending in the short-term while building capability to be competitive in the long-term. We help companies achieve both objectives, with the overall goal of improving their agility and market responsiveness. Our current work includes developing processes for significantly reducing costs of direct labor, direct material, and indirect costs to achieve lean, cost-efficient operations. We help organizations to improve affordability by adopting design-to-value principles and redesigning critical processes and capabilities, including product development and production models, supplier relationships, and program operating models and risk management. Transforming operational performance. We help clients design and implement manufacturing processes to increase plant performance and improve supplier coordination. This includes in-depth evaluation of network configuration, capital productivity, and plant-level information and communication flow. Working with McKinsey experts in operations and supply chain logistics, we help aerospace and defense manufacturers build their capabilities in areas such as modular manufacturing, green manufacturing and IT-enabled manufacturing to reduce cost, increase efficiency, and enhance growth opportunities. Increasing supply chain agility. Commercial aircraft and defense contract manufacturers are continually looking for ways to reduce the cost of inventory and increase responsiveness. McKinsey supports manufacturers by bringing best practices in supply chain management and lean manufacturing. Our work extends from performing basic scenario evaluations to complex optimization analysis of entire value chains, including the impact of achieving different economies of scale and employing varied production technologies.