Beyond software: How ERP is a strategic growth enabler of India’s aerospace and defence sector

Enterprise resource planning (ERP) has evolved into a crucial enabler for India’s aerospace and defence sector. As industries become more complex, ERP systems have emerged as the “secret sauce” that empowers manufacturers to maintain a competitive edge. The integration of ERP solutions enhances operational efficiency, ensures compliance, and streamlines supply chain management, making it an indispensable tool for modern enterprises.

In a recent webinar, industry leaders Aiyappa Muthanna, Senior Solutions Engineer - Epicor, Karthik Krishnamurthy, COO, Mahindra Aerospace, and Yashawanth S M, Product Lead, AgniKul Cosmos, discussed ERP adoption challenges, regulatory compliance, and how ERP enables seamless collaboration across organisations. Titled ‘From Compliance to Profit: How ERP is Revolutionising India’s Aerospace and Defence Sector’, the discussion underscored a shared vision—ERP is not merely a software solution but a strategic enabler.

In her eighth consecutive budget speech, Finance Minister Nirmala Sitharaman allocated ₹6.81 lakh crore for defence expenditure in FY25, reflecting a 9.5% increase from the previous fiscal’s budget estimates and 6.3% from the revised figures. The Ministry of Defence continues to receive the largest share, with ₹681,210.27 crore, including a substantial ₹1.8 lakh crore for Capital Outlay on Defence Services.

The role of ERP in engineering and manufacturing

Ayappa Muthanna, Senior Solutions Engineer at Epicor, emphasised the significance of ERP in achieving operational excellence. According to Aiyappa, “ERP, combined with other applications such as Manufacturing Execution Systems (MES), Business Intelligence (BI), and Artificial Intelligence (AI), plays a key role in enhancing industry efficiency.” He elaborated on how ERP aids engineering processes, particularly design integration and manufacturing Bill of Materials (BOM) creation.

To illustrate this, Aiyappa shared his experience from the Aero India Show, where he witnessed the precision and agility of fifth-generation fighter jets. He highlighted how ERP ensures stringent quality control, efficient design integration, and proper documentation management for aerospace components, all essential for meeting compliance standards.

Enhancing supply chain and inventory management

The aerospace and defence industry relies heavily on a global supply chain, making visibility and efficiency paramount. “ERP provides real-time tracking of material flows, supplier relations, and delivery schedules,” Aiyappa noted, referencing the disruptions caused by the COVID-19 pandemic and geopolitical tensions. ERP-driven demand forecasting, aided by AI and ML, allows manufacturers to optimise inventory levels and minimise disruptions, ensuring timely production and procurement of essential components.

Karthik seconded Aiyappa’s insights, highlighting how ERP mitigates long procurement lead times and demand fluctuations. He shared a compelling case study on inventory mismanagement, emphasising how ERP minimises the risks of overstocking or understocking.

Further detailing the impact of ERP, he underscored the role of automated tracking systems. “In our company, we have over 2,000 BOM items. Without ERP, tracking these manually would require an army of people. With ERP, everything is tagged with a QR code, allowing us to generate real-time reports on inventory status, aging stock, and supply chain bottlenecks.”

Ensuring compliance in hazardous waste management

Another pressing issue in aerospace manufacturing is the disposal of hazardous electronic waste. Yashawanth S M, Product Lead at Agnikul Cosmos, highlighted how ERP enhances compliance in waste disposal. “ERP acts as a bridge between people and processes. It ensures that hazardous materials are stored, monitored, and disposed of according to industry regulations.”

Yashawanth further stressed the importance of ERP in tracking accountability. “Each disposal action is recorded—who disposed of it, when, and in what quantity. This level of traceability is vital for regulatory compliance and environmental responsibility.”

Meanwhile, Karthik and Yashawanth agreed that ERP adoption will continue to expand, especially among small and medium enterprises (SMEs) looking to scale their operations. “Smaller companies need to realise that ERP is not just for large corporations. It provides structure, compliance, and efficiency, which are critical for growth,” Karthik remarked.

Overcoming barriers to ERP adoption in SMEs

The Union Budget has reinforced India’s push for “Make in India” and “Aatmanirbharta” in defence. In 2024, the sector saw record-breaking indigenous production worth ₹1.26 lakh crore, while defence exports soared to ₹21,083 crore, marking significant progress toward self-reliance, underscoring the significance of the SME ecosystem.

Despite the advantages of ERP, SMEs often face significant challenges in adopting these systems. Aiyappa highlighted key barriers, including infrastructure costs and the complexities of implementation.

“The first step is to embrace ERP as part of daily operations,” Aiyappa emphasised. He elaborated on how cloud-based ERP solutions help SMEs by offering scalability, flexibility, and cost-effectiveness through a Software-as-a-Service (SaaS) model. “With cloud ERP, manufacturers can manage their systems from anywhere, reduce IT infrastructure costs, and improve collaboration,” he added.

Yashawanth agreed with Aiyappa, pointing out that “resource allocation remains a key barrier to ERP adoption for SMEs.” “Rather than automating everything at once, SMEs should take a step-by-step approach, introducing ERP in phases,” he suggested.

Ensuring regulatory compliance through ERP

In heavily regulated industries such as aerospace and defence, ERP plays a crucial role in ensuring compliance. Karthik illustrated this with a real-world example from Mahindra Aerospace:

“For export controls, we configure our ERP to block shipments exceeding approved quantities. If any shipment details do not match the pre-approved terms, ERP automatically prevents invoicing, ensuring compliance.” He also described how ERP systems track regulatory approvals, send early warnings when re-approvals are needed, and integrate with quality assurance processes.

Aiyappa seconded this perspective, explaining how ERP helps in document management, audit trails, and workflow automation. He highlighted its role in linking non-conformance issues to corrective action plans for audit readiness.

Enhancing collaboration and real-time visibility

In industries where projects are long-term and involve multiple stakeholders—such as defense and aerospace—ERP provides a structured approach to collaboration. Yashawanth stressed the importance of integrating ERP with external stakeholders, including OEMs, suppliers, and subcontractors. “ERP fosters traceability and collaboration by allowing real-time tracking of project progress and enabling external partners to interact within the system,” he said.

Expanding on this, Karthik pointed out that “the entire input to ERP comes from demand forecasting.” At Mahindra Aerospace, ERP helps manage procurement, supplier performance, and production planning in alignment with real-time demand. “By setting up customised workflows, we ensure that external collaborators and internal teams work seamlessly,” he explained.

The future of ERP in India’s aerospace and defence sector

With the increasing complexity of aerospace manufacturing, the adoption of ERP is no longer optional—it is essential. Aiyappa highlighted how ERP is becoming the backbone of digital transformation in the sector. “A unified platform enables companies to streamline operations, gain insights, and enhance customer experiences. At Epicor, we are focused on addressing industry-specific challenges through tailored ERP solutions.”

The discussion reinforced that ERP is not just a tool but a strategic enabler for manufacturing industries. While SMEs face adoption challenges, cloud-based and modular ERP solutions offer flexibility and affordability.

As Aiyappa concluded, “ERP is no longer a luxury but a necessity. The more manufacturers embrace it, the more they benefit from its long-term impact on efficiency, compliance, and collaboration.”