How Aerospace in Germany Can Future-Proof Its Supply Chain

Supply Chain Optimisation: The Top Priority for 2025

In the recent Aerospace Pulse Check Q1/2025, capturing the views of 141 aerospace executives and experts, primarily from the DACH region, on the impact of the German elections and the looming tariffs, supply chain optimisation—especially regarding performance and stability—emerged as the top priority for 2025, with 37% of respondents citing it as their main challenge.

This marks a significant increase in urgency compared to Q4 2024.

Suppliers Feeling the Squeeze. And with good reason.

In our recent Strategy Paper “Aerospace Tier 1 to X: Mastering Supply Chain Optimisation”, one issue continues to emerge: mid-tier suppliers are increasingly caught in a "sandwich position"—squeezed between rising material costs from upstream providers and mounting demands from downstream manufacturers.

These suppliers often lack the bargaining power to push back. They face higher input costs they can’t easily pass on, eroding already thin margins and threatening their financial health. At the same time, they must meet stringent quality and delivery standards, typically without room to negotiate more flexible terms, which drive up operational costs and inefficiencies.

This pressure stifles their ability to invest in innovation, sustainability, and long-term resilience, further straining the aviation supply chain.
A crucial aspect of this is understanding the non-linear structure of the industry’s network.

Unlike traditional, hierarchical supply chains, aerospace suppliers often serve multiple roles across different areas. A single supplier could be a Tier 1 provider for one component, while acting as a Tier 3 supplier for another. This creates a complex web of interdependencies, where the performance and stability of one link can directly impact multiple others. As a result, disruptions can have a cascading effect throughout the supply chain.

Building Resilience in the Aerospace Supply Chain Network

To navigate these complexities, Tier 1-X suppliers must build agile, resilient supply chain networks rather than the linear supply chains of the past. This will ensure that they remain competitive and resilient in the dynamic aircraft building industry.

Agile supply networks can quickly adapt to changes in demand, supply, and external factors, ensuring operational efficiency and responsiveness. Whereas linear supply chains tend to rely on a single path from supplier to consumer –if one link breaks, the whole chain can be disrupted - a network allows for multiple suppliers, routes, and partners. 

This flexibility enables companies to pivot during unforeseen events, such as geopolitical tensions or natural disasters, minimising disruptions. For example, during the COVID-19 pandemic, suppliers with agile strategies could adapt their sourcing and production processes more swiftly than others.

But agility goes beyond flexibility. It involves deferring key decisions until the last responsible moment to ensure they are based on the most accurate, up-to-date information. Agile supply chain management also means proactively managing risks, adjusting quickly to market shifts, and fostering continuous collaboration to address disruptions and maintain competitiveness. 

Key to this approach is advanced forecasting, supplier diversification and leveraging technologies like real-time analytics based on shared information, AI, and machine learning. These tools improve visibility, enhance decision-making and help optimise inventory and logistics to better anticipate and mitigate disruptions —especially when supported by integrated data across the supply chain network.
 

Navigating the Squeeze: The Path to Resilient Supply Chains

Many suppliers are feeling "sandwiched" between escalating material costs and increasing demands from both upstream and downstream partners. The solution lies in agile supply chain management. By building flexible, resilient supply chain networks, suppliers can more effectively navigate disruptions and remain competitive.