Desiree Garcia, global marketing and communications manager at aircraft parts distributor Kapco Global, discusses why the right partnership and value chain analysis can help MRO's run efficiently and on time.
In the commercial aviation MRO industry, timing is everything. An MRO provider must be nimble, competent, consistent and capable of rapid turnaround to provide the quality services that airlines require. On its own, orchestrating the typical daily maintenance and repairs unimpeded by the variables of seasonal upswings and “moment’s notice” on-offs is no easy task.
To do so while maintaining a healthy balance sheet, high employee morale and efficient systems can be downright daunting. Add in the fact that MRO’s operate within an ever-shifting landscape of environmental challenges, economic influencers, global expansion and technological innovation, and the coordination of all variables is a feat of unparalleled scheduling, analysis and constant revision.
To top it all off, for commercial aviation MRO providers, success is determined in real time. There’s no resting on yesterday’s wins. Delays in the hangar don’t stay in the hangar and the chain reactions, if serious enough, can be felt around the world in the form of late flights, bad press and lost profit.
Keeping the MRO machine operating smoothly begins with careful supply chain management (SCM). According to supply chain experts and global aerospace parts distributor, Kapco Global, “SCM involves the analysis and improvement of operations starting at the point of service originating at the supplier side.
A high functioning SCM system starts with MRO component and part distributors that have the appropriate inventory available in the necessary quantities located at facilities positioned for rapid turnaround.”
But having the necessary parts and supplies readily available is only one side of the equation. The MRO industry does not exist in a vacuum, and external factors play a huge role in supply chain demands. Because of this there is also a critical need to analyze and account for fluctuations within the value chain as well.
While a supply chain is concerned with the top down flow of goods and services from supplier/distributor, to MRO provider, to timely implementation and delivery, the value chain views the system from the bottom up and takes into account first and foremost the needs of the consumer (the demand).
For MRO’s this means, among other things, keeping watch on what is going on with the oil market, as it directly impacts commercial airline demand and the easing of its capacity discipline strategy. The price of oil has fallen from $115 per barrel in June, 2014 to below $45 per barrel in October, 2015.
These economic factors are contributing to more air travel, which in turn, is contributing to airlines adding capacity in the form of more routes and aircraft, which then increases demand for MRO services.
The drop in oil prices coincided with one of the commercial airline industry’s busiest summer travel seasons on record. MRO companies who are keeping an eye on value chain developments can position themselves to be ready and able to meet the needs of their customers.
A recent New York Times article exploring the reasons for such a precipitous drop in oil prices over the last 16 months indicates that prices will likely start to stabilize/recover within the next two years, but the article also notes that experts believe it will be a long time before oil hits the $90-$100 a barrel mark again.
They note that the average North American household will have $750 more dollars this year that would have gone to fueling their cars and heating their homes a year before. A MRO value chain analyst can combine information like this with actual consumer order information to project what the airline industry’s MRO needs may be up to a certain point in the future.
But as we all know, projections can be wrong and the impact of inventory gluts and supply side over-ordering can result in major profit losses. It is at this point we come back around to the importance of a strategic supply chain. Distributors and suppliers, who assist in supply chain and inventory management, can help ease this risk by keeping inventory on their side until the MRO needs it.