You hear about major trends every day—the trends that will have a lasting impact on your maintenance and material life.
But among the deep analytical thinking of the brightest minds, there lie what I call sleeping trends, ones that are less “glamorous” yet impact billions of dollars a year.
There are many of these sleeping trends, but here we’ll look at three within procurement. In our world, the procurement stakes are high.
Today, procurement is mostly a means to an end—a commodity position. It is a throw-out-a-low-offer, go-with-the-lowest-price job. Customer service and sales are suffering the same fate. But procurement in aviation is much more than sourcing and cutting purchase orders, and it is more than ensuring you have 10,000 rolls of toilet paper, SKU 1234, in stock. There are millions and billions of dollars at stake.
Procurement in commercial aviation MRO is a professional, skilled role. Poor purchasing can siphon cash from profitable ventures and projects. Excess inventory means wasted money, and parts shortages in an aircraft-on-ground situation mean customer dissatisfaction and delayed revenue. Unskilled procurement professionals focus on sourcing, looking for cheap solutions from anywhere, rather than focusing on total material costs and their impact on the operation’s value stream.
A cheap solution from a poor performer is a lot more expensive than a fair price from a reliable, trusted source. That said, no college student is dreaming of a job in procurement. It’s not a “glamorous” venture.
A University of Tennessee study found that 90% of CEOs believe they should be doing more to attract supply chain talent.
By 2020, the jobs needed in the supply chain will grow 26%. As of 2016, the demand-to-supply ratio of jobs to qualified individuals was 6:1, according to a DHL white paper.
Aviation procurement and supply chains need to bring the “sexy” back. Young workers need to learn how to build supplier relations and think outside of the box.
Working on a multimillion-dollar deal is fun, exciting and challenging— especially in purchasing.
According to DHL’s white paper, “The job of supply chain has grown from being a logistics operator responsible for shipping to being a supply chain engineer. Our people need good skills in operations research, supply chain engineering, statistical process control, data analysis and simulation. And they need emotional intelligence—the ability to manage relationships with internal and external customers and suppliers.”
So my challenge to you and your operation is: How are you going to help develop procurement and supply chain talent?
The average adult makes 35,000 remotely conscious decisions every day, according to an article in Leading Edge Journal. How many choices did you make to get your 35,000 decisions? 100,000?
Choice overload is an ongoing trend in material purchasing. Many purchasing departments focus on price to help make choices, with a heavy hand coming down from finance. So procurement teams go out and source the cheapest price, often neglecting total material costs. Frequently, this approach leads to increases in total material costs and reduced productive work.
To combat choice overload, improved procurement and sourcing skills must be taught.
In addition, closer collaboration among stakeholders will move the conversation from price to total cost. With a total-cost mindset, you can extract value from sourcing to delivery. Price plays its part, but it falls somewhere in the middle.
Someone at a large distributor recently told me that the company’s customer service functions are an afterthought. Management is pushing to have more orders placed online and is focusing less on customer service.
Yet the more I hear this, the more complaints come trickling in. We hear from clients that e-commerce has its place, but it is a pain for our industry, given its complex products and international supply chain.
Sure, ordering gaskets online is smart. But when you need 22 other items—a mix of rotables, expendables, and consumables—it becomes more complicated.
Moreover, e-commerce leaves out the human side of sales. Trusted material advisors are needed to help customers make the right choices and achieve results. That can lead to loyal relationships. Procurement and sales are allies if both are done right.
E-commerce certainly has its place, but it does not always help you make the right decisions and cannot act as a trusted material advisor for complex aviation situations.
Paying attention to “sleeping” trends like the three discussed here can help you achieve better results. Make minor changes and watch the results pour in.
Nate Anglin is president and CEO of Skylink, a 32-year-old aircraft maintenance material care firm. He’s also helping leaders grow their mind, body and career on his website.