Report: "Growth Continues, but Supply Chain Bottlenecks Pose the Greatest Risk"
"Supply Chain Innovation Needed Through Digital and AI... Next Three Years Will Determine the Future"
The global Aerospace and Defense (A&D) industry, which has experienced unprecedented growth, is now facing a major turning point due to structural constraints such as supply chain limitations, geopolitical risks, and workforce shortages, according to recent analysis.
On December 29, Samil PricewaterhouseCoopers announced, "We have released a global report titled 'Top 10 Growth Strategies for Aerospace and Defense Industry Leaders to Watch in 2026,' which outlines strategies for A&D company leaders to achieve sustainable growth."
"Excessive Production Backlog... Severe Supply Chain Bottlenecks and Production Delays"
According to the report, the biggest dilemma currently facing the A&D industry is, paradoxically, 'too many orders.' There are approximately 10,000 commercial aircraft awaiting production, and at the current production rate, it would take 10 years to fulfill them all. In the defense sector, the order backlog has reached 747 billion dollars (about 1,079 trillion won), but severe supply chain bottlenecks and production delays persist.
Additionally, shifts in the geopolitical environment are driving a surge in defense demand, while artificial intelligence (AI) and digital technologies are rapidly transforming business models across the industry. The report states, "While the growth trajectory of the A&D industry is clear, if supply capacity cannot keep pace with rising demand, the opportunity cost could be enormous." It emphasizes that "to secure sustainable growth and competitiveness, it is essential to clearly establish priority initiatives and make bold investments."
The report notes, "The strategic direction of the next three years will determine companies' future competitiveness," and presents 10 strategies that A&D leaders must implement in a timely manner to overcome these constraints.
Expansion of Supply Chain Productivity and Strengthening of Program Management Capabilities Needed
In the commercial aviation sector, the top priorities identified are: ▲strengthening supply chain capabilities to expand production, and ▲proactively responding to competition in next-generation aircraft development. From the perspective of supply chain innovation, the report advises investing in digital capabilities such as predictive supply chain analytics and digital twin-based mapping to identify vulnerabilities in advance, and establishing data-sharing systems between original equipment manufacturers (OEMs) and partners.
Given the backlog that would take more than 10 years to clear, the report also recommends mitigating partner risks and stabilizing the supply chain through long-term contracts and clear commitments. In the defense sector, the key priorities presented are: ▲restructuring portfolios in line with rapidly changing defense priorities, and ▲innovating procurement systems to match commercial standards. In addition, six common strategies for both sectors are proposed: ▲building next-generation program management capabilities, ▲strengthening global partnerships, ▲improving supply chain resilience, ▲expanding workforce investment, ▲modernizing based on digital technologies, and ▲implementing strategic initiatives using AI.
Kim Taeseong, Partner and Head of the Defense Industry Center at Samil PricewaterhouseCoopers, stated, "While demand in the A&D industry continues to grow amid geopolitical tensions and military modernization trends, supply chain constraints remain the greatest risk factor. Beyond simply expanding facilities and workforce, it is crucial to reorganize processes to be agile and efficient based on digital and AI technologies, and to secure supply chain visibility in order to build a resilient system. This is the key to quickly gaining a competitive edge."
Further details of the report can be found on the Samil PricewaterhouseCoopers website.
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