Supply chain of everything: space, the final supply chain frontier

March 28, 2019 Matt Vermeulen

It’s been a busy few months in space news. This week, NASA scheduled the first all-female spacewalk in history and then promptly canceled it due to a lack of spacesuit availability. And recently, the SpaceX Dragon completed its first mission to the International Space Station. Both instances—one a failure and the other a success—illustrate that manufacturing and sourcing for the space industry is extremely complex, and supply chain management is critical. These stellar examples give us a chance to look at the challenges that come with a complicated supply chain.

For context, let’s look at another transportation industry: autos

According to Toyota, there are over 30,000 individual parts in a typical car, counting everything down to the screws. And car companies work with “hundreds of suppliers at once for each model line,” sometimes overseas, which means they have to deal with international laws and trade regulations.

Even more complexity: the airline industry

Then let’s kick it up a notch with the airline industry. A single Boeing 373 assembled in Renton, Washington is made with over 367,000 parts and hundreds of domestic and foreign suppliers. According to CNN, Airbus, Boeing’s competitor, uses over 4 million parts sourced from 30 countries for their Airbus A380. And both companies are able to put these jets together miraculously fast: each can produce a little over one plane a day—right around 400 per year.

Aerospace: the pinnacle of complexity

When we move to spacecraft, we’re dealing with a whole new level of complexity. NASA’s now retired space shuttle consisted of over 2.5 million moving parts weighing nearly 4.5 million pounds, and costing around 1.7 billion dollars. NASA and its partners used over 3,800 suppliers to help build their rockets, and it typically cost them $10,000 to put just one pound of payload into Earth’s orbit.

The sunsetting of NASA’s space shuttle program opened the door for private space transportation companies to compete for contracts with the US Government. SpaceX, arguably the most successful of them, made waves for shortening it’s supply chain and focusing on vertical integration.

As the saying goes, necessity breeds innovation. The problem for SpaceX and other private companies is that there just aren’t that many sellers for building space rockets. Generally that’s meant sky high prices for components. So SpaceX decided to turn inward for manufacturing, building out a simplified and in-house production factory. They’ve stated that over 70 percent of their components are made in their own manufacturing warehouses, allowing them to more closely monitor costs and time spent on manufacturing.

Their core principle that simplicity enables both reliability and low cost has allowed them to lower their cost per orbit to $1,000 per pound, 1/10th cheaper than NASA and still lower than China’s famously low-cost Long March rocket.

Reusability

But what SpaceX is perhaps most famous for is their groundbreaking work in reusable spacecraft. SpaceX landed its first rocket in 2015, and then reused its first booster in 2017. Their new Block 5 rocket will fly five to 10 times before needing refurbishments, and 100 times before retirement. All of these innovations allow the SpaceX team to save considerable costs on production.

So what can we learn from the supply chain of space?

First, start with a clear vision and an actionable mission: SpaceX has the audacious goal of making life possible on Mars, but their actionable mission is to develop the technologies to make it possible. Second, learn from the pros with hard-earned experience: from the start, SpaceX relied on a proven group of experts and industry veterans to build out their business.

Third, make simplicity of design your guiding mission: whether it’s streamlining supply chains or deconstructing departmental silos, or both, a simplified chain of command and process will help bring costs down. Fourth, build a resilient supply chain: In the case of SpaceX, that means making traditionally single-use products (like rockets) reusable. While the use case might be different for your company (maybe you want to make reusable coffee-pods), the lessons can still apply.

And finally, don’t be afraid to step outside of the status quo, especially when the technology is available to revolutionize an entire industry.

 

About the Author

Matt Vermeulen

Matt Vermeulen writes about B2B commerce for Tradeshift. Whether he's writing about Accounts Payable best practices or debunking AI myths, Matt enjoys making complex topics easy to understand and fun to read.

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