Dealing with components is a very delicate job not only because of ultimate risk and time management requirements in the field of aviation, but also for the significant added value it creates once it’s done properly. As MRO specialists, we are required to be able to deal with various types of AOG situations. It might be some fault discovered by a technician during a turnaround or a new crack found on the wheel hub by a repair shop. These kinds of circumstances require fast action and decision-making in order to get the right spare parts on time, and they also entail a lot of team-work, from anything from repair shops and MROs to freight forwarders and customs brokers. These unexpected circumstances can lead to certain changes in an operator’s flight schedule, which in turn can result in a direct loss for the operator.
What is the solution to this problem?
I’m not talking about the near future trends like drones and robots, which will take care of your spare parts transportation from supplier facility to the repair shop within minutes. Let’s focus on the more traditional and widely used way – transportation by air, land and sea. Besides, imagine the extra effort when the organization is not located in a geographically strategic region (e.g. the Estonia-headquartered Magnetic MRO).
Most of the MROs and repair shops try to store increasingly fewer owned spares in their warehouses to avoid negative cash flow in their businesses. And this may be one of the root causes of delays and work stoppages: no standard spare parts in stock, no consignment stock agreements, no planning, MRO cooperation with CAMO is near to null, no master planning and no statistics about the usage. When these problems meet AOG situations, life becomes even harder and we get to deal with it every day and night!
But how? How can we get spares into our shop faster? Are there any tricks or tactics for this? Like many growing and successful companies, Magnetic MRO also has certain pillars to follow in order to significantly minimize delivery times. Regardless of our location or limited resources, we have always managed to exceed our customers’ expectations by successfully applying the tactics below. We have kept our focus on these principles and ended up changing our reaction time noticeably.
Master Planning – In order to forecast the best future demand for spare parts, companies must develop proper master planning. Based on the master planning, all required materials can be ordered before the actual job starts. Hence, last-minute orders can be avoided. Master planning, however, should not be only based on the simple part number usage within the last few months. Every factor should be analyzed and included to come up with the best systematic response: Different A/C types in the hangar, NRCs opened during last C-checks, A/C age as well as other relevant ratios. Experience has shown us that even the origin of the operator may play a key role for a better prediction in terms of the country-specific standards used for maintenance and manufacturing.
The FIFO Method – Using the FIFO method we get to reduce the risk of component aging. Dead stock will not bring any benefit either to your clients or to your business. Therefore, it is important that the first goods purchased are also the first goods sold. The key thing here is to have a well-functioning stock program that offers customers’ property first if available, and then MRO/repair shop spares. Consignment stock should be offered first only if the first two are not available.
Aging is not an often discussed topic, but it plays a big role in the aviation business. Components in warehouses are originally high-value assets, but if the component does not move for years then the price drops due to market trends and to sell it with same price-tag after many years would be very challenging. Besides, new modifications are constantly becoming available and keeping components in stock for so long would end up risking both your company’s financial result and reputation.
Your Forwarders Network – Do not keep all eggs in one basket. Every forwarding company has its own strengths and weaknesses. Remind them of the sector we are working in and the importance of punctuality as well as impact, should they fail.
Customs formalities – Find out what special solutions your local customs and cargo terminals can offer. Simplified customs procedures may allow you to take out spares without making customs clearance right away but it can be done after few days. This might give you more hours or even a day, and the final result may be much better. Another solution may be to have your own customs warehouse!
Consignment Stock – It is a must that MRO is covered with quickly movable spares on consignment stock basis.
Shared Inventory – Smaller companies that are in the same area/airport are not always supposed to be competing companies; they can be also partners. Shared inventory might be new trend to minimize delivery time of the spares.
Cooperation Inside the Company – Do not let someone from the shop floor place an order two or three times. All info about the required materials must come fast and first – if possible.
If putting the material at the top of the order list is not possible, then they should order the more urgent spare parts first in order to avoid work stoppages.
Track and Trace – Never lose your focus on urgent incoming shipments.
Charter Flights – It can be expensive to deliver spares to maintenance departments or shops, but in the end it can be much cheaper compared to the costs when the A/C is not flying.
Coordinator – If your company can afford a dedicated person to coordinate 24/7 shipments and AOG requests, this is another option for minimizing delivery times.
3D Printing – Recent innovations are shaping the new industry trends as well as in-house capabilities for most MRO companies, including Magnetic MRO. Once this technology goes viral and spare parts start to be widely manufactured on site, then delivery times will be least thing to worry about.
KPI – How can all this be measured? What are the key performance indicators?
If your warehouse shelves are filled with material more than a year old without usage, it’s already a warning sign. We classify anything that goes more than one year without usage as “standing stock” and focus on getting it moving via our production process or in the open market. Everything over three years old refers to dead stock and can be seen as a potential loss.
Materials with shelf life (mainly chemicals) can be the biggest headache for every company dealing with short shelf life materials. In order to reduce the expired materials write-off, companies should look over their master planning and compare it with BOM and real usage. All the factors discussed above should be measured monthly to have the best data available.
The ultimate goal should be to lower the value of unmoving stock and increase the revenue from stock. Remember, less is more!
Consequently, technology and the world revolve around speed; tomorrow won’t be the same as today, and the same can be said for delivery times. ROUTINE, CRITICAL, AOG are gaining a new meaning every single day. One company’s AOG delivery time can be another’s routine delivery time.
So the arrival date and time be must always highlighted when we talk about time-critical repairs. Here the keyword is “planning.” Planning is always a much faster and safer way to deliver spare parts, which is why we can’t say that there is one way only for minimizing delivery times.
Logistics Manager of Magnetic MRO