Aviation Supply Chain ManagementAviation firms are emphasizing on efficient supply chains to reduce pertaining maintenance costs, while providing top notch service. The supply chain decision makers in aviation sector are keen to identify and rectify performance gaps within supply chains. In order to perform well in the competitive aviation sector, the supply chain must maximize delivery performance, while decreasing cost. Again, supply chain must be in a position to counter contingencies while managing the critical constraints of the aviation sector.
According to industry experts, benchmarks for aviation service organizations are still not developed. There are several reasons for that including:
- Aviation assets are constantly on the move, developing a distinct service supply chain scenario.
- The inventory value is maximum in rotable parts.
- Significant amount of distinct part numbers without any value.
Ensuring parts are available to the mechanic/technician for planned/unplanned maintenance is the main objective of the aviation supply chain. This can be complicated since demand for service-pertaining supply chains is less accurate than in manufacturing/retail. Delivering exceptional service levels to the technical personnel may be accompanied by high cost of low inventory turns, if not handled efficiently. In an industry where profit margins are slim and cash management is critical, careful consideration must be given to achieving the right balance between service level and inventory of rotable/expendable parts.
According to a research conducted by aviation experts, there is a correlation between inventory efficiency and the capability to cater to aviation sectors requirements. Airlines with less bin inventory accuracy would in all probability face greater parts related delays and cancellations (D&Cs) than companies managing their stocks efficiently. The top performers in the aviation sector accomplish >99% accuracy, but under performing companies accomplish 60% to 80% accuracy.
In several instances, the real value of gross bin accuracy (a supply chain metric) is covered by the airline’s preference to quantify net inventory accuracy (finance metric). Utilizing net inventory accuracy misrepresents the management’s thought process by netting out overages and shortfalls, thereby diminishing the correct value of parts in the bin. Net inventory accuracy indicates more than 90% accuracy, while actually the number of bins with a correct record of parts is lesser. If certain parts are present in the bin, any incorrect record of stock levels would not have an impact, but since most of the parts in stock rooms have no usage, they have low target stock level. In fact, most of the parts are in a “zero-bin” state, while the inventory record signifies that parts are in stock.
Accomplishing adequate levels of inventory efficiency needs new practices. The most significant practice is to monitor gross bin inventory accuracy instead of emphasizing on pertaining financial measures. Complexity of aviation supply chains vary due to many factors - number of fleet types, destinations, and maintenance network design. According to industry experts, high network complexity impacts the amount of inventory needed to assist M&E operations along with the inventory velocity.
At the time of aviation consolidation, the post-merger airlines have enhanced the total fleets and destinations flown. Finance and M&E experts are keen to understand the inventory outcome on the maintenance network. Supply chain personnel must identify different methods to overcome the cost and reliability impact of critical supply chains including executing an amalgamated supply/demand planning process for rotable repairs utilizing different material planning methods - MRP planning for scheduled maintenance.