{"id":8184,"date":"2026-07-28T12:30:10","date_gmt":"2026-07-28T11:30:10","guid":{"rendered":"https:\/\/newtonimpact.com\/?post_type=content_library&p=8184"},"modified":"2026-07-29T09:14:54","modified_gmt":"2026-07-29T08:14:54","slug":"fighting-fit-supply-chains","status":"publish","type":"content_library","link":"https:\/\/newtonimpact.com\/en-au\/content-library\/blog\/fighting-fit-supply-chains\/","title":{"rendered":"Fighting fit supply chains"},"content":{"rendered":"\n
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\n Take Me Back<\/a>\n\n

Fighting fit supply chains<\/h1>\n

By Newton<\/p>\n\n

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Blog<\/p>\n <\/span>\n \n \n

28th July 2026<\/p>\n <\/div>\n<\/div>\n\n <\/div>\n <\/div>\n <\/section>\n\n \n\n\n

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introduction<\/p>\n

Four ways to strengthen UK defence and aerospace supplier performance management for a world of persistent conflict <\/h2>\n <\/hgroup>\n \n
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Is your defence firm successfully managing supplier performance or simply recording it?<\/em><\/p>\n

A sense of shared purpose is one of the defence and aerospace sector\u2019s not-so-secret weapons. Companies in the supply chain are proud to deliver for their customers because they are protecting the country.<\/p>\n

That goodwill is critical as the UK races to ready itself for potential conflict in this dangerous era. Yet many of our defence and aerospace clients tell us they are stuck in awkward and unproductive supplier relationships just when the nation needs speed.<\/p>\n

Here, we explain why dashboards and scorecards alone won\u2019t fix this. Then we outline the four hallmarks of an effective system approach through which defence and aerospace contractors can make excellent supplier performance the default standard for their business.<\/p>\n <\/div>\n<\/div>\n\n <\/div>\n <\/div>\n <\/section>\n\n \n\n\n

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Why is current defence and aerospace supplier performance management failing?<\/h2>\n <\/hgroup>\n \n
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It measures what\u2019s gone wrong in the supply chain without managing the problem and tends to overlook customer-side failures.<\/em><\/p>\n

Most defence and aerospace contractors we work with are heavily dependent on supplier performance metrics, dashboards and quarterly reviews.
\nThis approach may suffice for peacetime procurement. But with defence and aerospace spending now surging around the world and with suppliers under pressure to ramp up production rate on everything from critical sub-components to airframes, it is failing for three main reasons:<\/p>\n <\/div>\n<\/div>\n\n <\/div>\n <\/div>\n <\/section>\n\n \n\n\n

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Lag dominates<\/h3>\n

Scorecards are almost entirely based on lagging indicators, such as on-time in-full (OTIF), quality defects and cost variance. In long-cycle aerospace and defence programmes, this means it can be many months before a red RAG indicator appears, highlighting that the same suppliers have underperformed in the same ways as last time. By then, it\u2019s too late to correct the problem and the measurements alone won\u2019t prevent the same failure happening again.<\/p>\n <\/div>\n

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Measurement skews priorities<\/h3>\n

When suppliers know they are being assessed on a fixed set of key performance indicators such as OTIF, they optimise for those KPIs. On-time delivery improves, but suppliers feel compelled to quietly abandon focus on late orders to concentrate on components that still have a chance of being OTIF. As a result, suppliers may be distracted from progressing delinquent parts, causing stress and confusion for the contractor. <\/p>\n <\/div>\n

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Customers overlook their own failures<\/h3>\n

The most concerning failure is when clients hold suppliers accountable for outcomes they don’t have the capability or conditions to achieve. Underfunded statements of work, late government furnished equipment (GFE), design authority bottlenecks and payment terms that starve working capital \u2013 these all sit on the customer side of the ledger. Yet they are felt as supplier failures.<\/p>\n <\/div>\n<\/div>\n <\/div>\n <\/div>\n <\/section>\n\n \n\n\n

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A successful system approach is characterised by designed-in incentives, early warning architecture, client-side accountability and structured intervention.<\/em><\/p>\n

Whereas a scorecard tells you a supplier is late, an effective performance management system reveals why latency is structurally likely. It facilitates proactive decision-making and rewards suppliers for working in lockstep with their customers.<\/p>\n

For defence and aerospace contractors, this means moving from performance reporting to performance architecture, where an enabling environment and productive customer-supplier relationship make good performance inevitable. The four hallmarks of the approach are:<\/p>\n

1. Designed-in incentives<\/strong><\/p>\n

Contracts can do some of the heavy lifting of performance management by rewarding suppliers for desired customer outcomes over the long term, not just outputs on delivery day.<\/p>\n

In civil aviation, the use of power-by-the-hour engine contracts is commonplace. It means the engine supplier is continuously incentivised to avoid engine downtime and its customers permanently avoid the financial pain of unscheduled maintenance.<\/p>\n

However, we only occasionally see this model in defence, and certainly not down the tiers of the supply chain. While the defence environment has clear differences to civil, this is still a missed opportunity, given the importance of readiness and availability. By making suppliers longstanding partners in operational availability, contractors will be better placed to cope with prolonged demand spikes in a war scenario \u2013 building resilience, not just readiness. Whether these models can be utilised in programmes with higher levels of risk-sharing and complexity, without creating unaffordable margins, is another challenge.<\/p>\n

2. Early warning architecture<\/strong><\/p>\n

Understanding your dependencies on single sources or regions is just the start of tackling fragility in the supply chain. Indeed, some challenges are collective problems that impact all participants and therefore demand a collective response across supply chain tiers, such as access to critical and exotic raw materials or advanced tooling ability. As part of healthy ongoing Tier 1 relationships, clients need hard evidence that their sub-tier suppliers are not going to buckle due to poor workforce capacity, cash flow, rate readiness and more. A deliberate set of leading indicators agreed at contract award would help them target resources efficiently to pre-empt problems or prevent them escalating, for example on:<\/p>\n