In the recent past, watching the latest NASA shuttle launch on television (or, if you were lucky, in person) was something of a once-in-a-generation or so cultural event that brought inspiration and wonder to all. When you heard that a new rocket was preparing to launch, you stopped what you were doing and watched because you didn’t know when you might get another chance.
While becoming more common as NASA’s space program progressed, shuttle launches have remained relatively rare. A NASA astronaut has not launched their own mission since 2011, but before then there were only 135 total space shuttle missions since 1981 divided between just five space-worthy vehicles (excluding satellites). This scarcity gave them a sense of monolithic scale in the public mindset; it brought something extraordinary to what otherwise would be a normal day.
SpaceX today is accomplishing something equally extraordinary, but also very different than what NASA managed: While they have yet to launch a human being (which will change as soon as July) SpaceX, in fact, is normalizing the idea of a commercialized space industry. Just last week, the Elon Musk-owned company added another feat to their impressive resume by successfully launching the first commercially-built and operated American rocket and docking it at the International Space Station. Within just a few years, the prospect of a viable private-sector market for space equipment went from being science fiction to a very real possibility – and should this potential be realized, it will represent the single largest expansion of the aerospace industry since the Wright Brothers’ inaugural flight.
Despite the stringent requirements necessary to ensure an electronic component can operate optimally in the extreme environmental conditions of space, NASA’s supply chain has by and large resembled any other aerospace OEM with a reliance on commercial off-the-shelf (COTS) components found in other high-reliability devices. As a result, NASA is placed in direct competition with thousands of other electronic OEMs in markets such as automotive, industrial, and IoT that are seeing rapidly increasing demand. In 2017, for example, Mouser saw a 10 percent increase in the number of active customers, which lead to a 29 percent increase in total revenue for the distributor — but also component shortages, extended lead times, and price increases as high as 40 percent.
Traditionally, aerospace OEMs such as Boeing, Airbus, and the NASA have not been primary drivers of the electronic component market, and their ability to promptly source COTS components has been dictated largely by the ebbs and flows of market sectors they play no part in. The potential shown by new companies such as SpaceX, however, as well as new ventures such as the joint venture between Boeing and Lockheed Martin, imply that that might soon change. Projecting to the 2040s, Goldman Sachs predicts the space industry to grow to approximately $1 trillion (up from approximately $350 billion today), while Bank of America Merrill Lynch estimates value increasing to over $2.7 trillion. To achieve such numbers, the only path forward is to assume the creation of entirely new markets, which will enter into the same competition for reliable electronic components and semiconductors that aerospace OEMs are currently struggling with. If component manufacturers continue to post outputs that lag behind demand, shortages, extended lead times, and rapid price inflation are only going to become more commonplace.
To prepare, it’s time for aerospace OEMs to reconsider the currently reactionary structure of their supply chain. Instead of attempting to source electronic components as needed in an increasingly competitive market, OEMs can avoid these issues by simply committing to purchasing all the inventory their production run requires at the beginning of their product’s lifecycle. The EDX Last Time Buy Solution, for example, allows customers to secure their supply chain by doing just this, without any upfront loss of working capital or long-term storage concerns. EDX will buy, store, and fulfill even the most sensitive electronic components on our customers’ behalf for even the longest product lifecycles, leaving OEMs the physical and financial leeway they require to remain at the forefront of their industry.
Space certainly seems primed to be the next great frontier for the electronic component market, but moving forward without a proactive supply chain that prioritizes inventory commitment is not a risk aerospace OEMs should take. Implementing a Last Time Buy solution is one small step, and one great leap, toward an exciting new chapter for aerospace.