Printed headline: FedEx Express
How do you track the health of your fleet’s aircraft to know which will need different parts?
We have a great team of maintenance, engineering and material experts who are focused on this every day. Integrated efforts are the only way to solve that complex puzzle of figuring out which airplane needs which parts. We use OEM support health-management tools such as Boeing’s Airplane Health Management (AHM) and engine condition-monitoring tools that help us understand our airplanes and how they compare to the overall global fleet.
We also have in-house teams who review our particular component failures and our historical demand—with a nod to trying to figure out what is real information and what may be just noise in the data. We’re looking at failures, stocking reports, our big rogue-parts management and elimination program, and lots of other things to really examine the failure histories of these parts. We’re also working on prognostics—our internal teams take components off before they fail. We keep those under the magnifying glass as they go through the repair cycle so we can double-check our success rate in finding those about-to-fail parts and make sure we’re spending the right amount of money. The good news is that we’re getting high-accuracy predictions.
What’s the accuracy rate of the parts that you’re pulling in advance of a failure, as a percent?
I’d estimate that we’re making progress [above] 80[%].
It would be hard to break it out as a percentage because we pile all of that knowledge together. We are big AHM users: All of our Boeing products are in the AHM tool, and all of our engines are in condition-monitoring tools. But we don’t end there—we track each rotable component by part and serial number through the repair process as well. Since we combine those things, I can’t break out in-house versus outsourced. We combine all of that to our best advantage.
What’s your material management strategy? How do you find the right parts at the right price and get them to the right place at the right time?
The cultural thing about FedEx is that service is all we have to sell. We’re the reliability people, and therefore we put a lot of energy into supporting our maintenance customers, who have to get those aircraft off on time. We are leaning heavily on internal resources. As an example, I have inventory at 175 airports around the world to support our operation.
We continue to refine what we do at those locations by using IT modeling tools to help us get the right part to the right place at the right time. We’re reallocating parts based on changes to flight schedules, weather, part reliability—so we are always evolving what we stock at each location.
We also have a big program in place to take advantage of the opportunity when we have maintenance that can be deferred—things that can be managed with a minimum equipment list or configuration deviation list activity. So we have a really strong process to marry the part with the airplane when we have one, three or 10 days to get the part and the airplane together in the same location where the maintenance will occur.
We also have a lot of folks who are constantly looking at prices. We have a structured sourcing program so we don’t wait for something bad to happen or someone to go out of business before we test the marketplace. We’re in the market continually, issuing requests for proposals to try to capture the innovation and creativity that the MRO market has to offer.
What IT systems and tools do you use to help with this, besides AHM and the others you mentioned?
Our internal MRO tool is called Workbench: It’s updated and internally developed by FedEx from Maxi and Merlin, but modernized. Maxi and Merlin were pretty good tools, including the business process, but the IT infrastructure was terrible, so we updated it. We’ve been using Workbench for the last few years.
We also use FedEx’s SenseAware to track critical AOG shipments by having real-time tracking and reporting as they move around the world. We also are a member of the Aeroxchange, founded almost 20 years ago by a group of airlines, to help buy, sell and repair parts. We’re still a big proponent of and user of Aeroxchange services, and we also use some third-party tools for inventory optimization.
How much of the material management process is digital?
We use a lot of information management tools so that we get great data collection and great record-keeping. We have good information to try to squeeze that next level of reliability, on-wing time or cost reduction. I tend to stay away from saying we’re 100% digital because there are still exception processes that are too hard to do via computer. We have a lot of subject-expertise staff who are handling the thorny problems, but the routine ordering, tracking and receiving processes are done digitally. Our data storage and retrieval tools are available electronically, so other than what’s required from a regulatory standpoint, we don’t have to move a lot of paper around our system.
How much parts inventory does FedEx own, versus consign, pool or lease?
It’s hard to put an exact dollar figure on it. I can say it’s a lot of inventory, and we do own and manage the overwhelming amount. We have some limited pooling through the International Airlines Technical Pool and some similar arrangements. We do have loan and borrow programs. We will lease if we have a surge in demand for a particular part, but by and large, we own most inventory.
What projects are you working on to make this more efficient? What’s in development?
Here at FedEx, we have a continual-improvement culture—so we are always looking for ways to be better. The great thing about continual improvement is that as soon as you solve a problem, you find two more to make you even better. We refine allocation models on a regular basis because we get smarter as the airplanes get smarter. We learn how to use the information to better manage, remove and replace.
We do a lot to improve component on-wing times: We’re not looking for the lowest cost to repair, we’re not looking for the lowest inventory, we’re not looking at any one thing. We’re making sure we have the best mix of on-wing time, safety and performance across the board. We use tools like RFID to track where parts are and where they are going and are always looking for ways to convert more of this data coming off the airplane into better information so we can make better decisions. We’re now starting to make recommendations from that information, whether recommending parts for an aircraft maintenance technician or repair recommendations to a maintenance ops control specialist. The systems are getting smart enough to make recommendations to our experts, too.
Your busy time is the early winter. As the holiday season approaches, what tactics do you use to keep the operation running smoothly?
We understand the importance across the country and across the world of helping to get all of these holiday packages where they need to be. With our maintenance partners and programs over the last few months, we’ve been getting ready to fly these airplanes pretty hard over the coming weeks. We’ve completed our winterization program to make sure we are ready for cold-weather operations. We’re starting to look at operation tempos to make sure we have enough staffing onboard. We’re trying to make sure the parts bins are as full as we can so our mechanics can work on the aircraft whenever that limited opportunity appears. We should be in good shape as we approach our peak season.