Airlines depend on the aviation supply chain to ensure their aircraft are on the ground for as short a time as possible, but the parts supply chain has been under stress recently. Bernie Baldwin reports on the ways in which obstacles are being overcome.
AOG. The aviation industry is awash with initialisms and acronyms, and for an airline the one which means ‘aircraft on ground’ is one of the most disturbing. It means lost revenue alongside the cost of rectification and the longer the AOG event, the more it hits the airline’s finances.
Key to ensuring that AOG costs are kept down is the supply of parts and components to effect the repair. It is also vital, of course, for planned maintenance events. If the right parts aren’t in the right place at the right time, turnaround times lengthen and again, the aircraft is not in the air generating revenue.
Since the Covid pandemic, global supply chains have often been below their most effective. Scott Symington, chief commercial officer at parts supply specialists AJW Group, has been assessing how things stand currently for maintenance, repair and overhaul (MRO) companies in getting parts and components from OEMs, OEM-approved suppliers, as well as PMA (Parts Manufacturer Approval) and used serviceable material (USM) providers.
“Prolonged logistic lead times, exacerbated by pent-up demand for travel and increasing passenger numbers for airlines, have resulted in inefficiencies in inventory forecasting and demand planning,” he begins. “This has impacted the suppliers’ ability to meet customers’ needs effectively, especially with the additional challenges brought about by Brexit, with tariffs and increased border checks putting further strain on the supply chain.”
“To address these challenges, MRO companies such as AJW are adopting strategies to enhance regionalisation in their sourcing approach,” Symington notes. “OEM centres are collaborating globally to mitigate capacity constraints and understand supply chain vulnerabilities, aiming to improve resilience and responsiveness. However, OEMs and suppliers face hurdles in their performance environment, including shop processing time constraints and the high cost of raw materials and labour.”
In response to these dynamics, AJW is diversifying its supply chain by incorporating third-party suppliers alongside OEM sources. “We employ a sophisticated pooling approach, strategically positioning inventory around the globe to ensure easy access and distribution to our regional customers,” he reports. “Through well-developed stock management and logistics solutions, the company meets the operational demands of its global customer base.”
“Our strong partnerships with OEMs, and extensive inventory stock holding across the globe, enable us to provide reliable logistical support to our customers while navigating the complexities of the MRO sector,” Symington adds.
Leon Kouters, vice-president–sales and marketing, Fokker Services Group (FSG), believes the entire aviation sector has rebounded more swiftly than anticipated. “Conversely though, a scarcity of raw materials is impacting every player in the industry,” he observes.
“For repairing components, we do experience delays in the OEM value chain affecting the supply of piece parts. Likewise, a surge in flown hours is exerting greater pressure on repairing components, as airlines are forced to fly older aircraft for longer, increasing the demand for parts to maintain these aircraft,” Kouters adds. “At Fokker Services Group, however, we have outstanding agreements with OEMs such as Collins, Honeywell and Gables, to name a few, which give us best access and a certain priority in this time of scarcity.”
“In terms of using USM or PMA for repairing components, it is a must to return the component back to our customer in a timely manner and there are no other options available. Often, the reliability of a USM or PMA part is as good as a new part in making the repaired component airworthy again,” he emphasises.
“This is how we help operators uphold the highest standards of quality while running their operations efficiently. Repairing with USM — or PMA and DER (Designated Engineering Representative) — is part of the expertise we utilise to assist our customers, and despite the challenging context, our programmes operate seamlessly as we do not depend on third parties to a very large extent,” Kouters states.
At AAR, Paige Immordino, the company’s vice-president and general manager, distribution–commercial, declares that the supply chain — from an OEM perspective — is still strained but showing signs of improvement. “Our OEM partners struggled with sourcing after many smaller businesses closed during the pandemic. As a result of this, many have developed alternate source options to alleviate risk moving forward,” she remarks. “As a whole, we see improvement in delivery times, but there are still certain components that are severely delayed and full recovery is still months out on those components.”
There are many challenges for companies like AAR as they work to help airlines keep an optimum inventory (just-in-time) level. For Immordino, the most challenging aspect is forecasting accurately.
“Airline purchasing is often sporadic, especially coming out of the pandemic,” she notes. “We want to provide just-in-time inventory for customers, but using their purchasing history alone makes it very challenging to plan our inventory levels. To mitigate this, we utilise our relationships with the airlines to understand better the historical buying patterns and work on a more accurate forecast for future demand.”
“Delays in product delivery add another layer of complexity to inventory planning, but we maintain very close communication with our OEM partners to alleviate their delivery constraints by cushioning our inventory levels on difficult-to-procure products. This helps the airlines receive their products on time despite OEM delivery delays,” Immordino reports.
AJW’s Symington agrees that the biggest challenge is managing an airline’s inventory levels and access to that inventory. “Our global sales and MRO management teams have extensive experience and a deep understanding of the market, which enables them to make informed decisions and deploy strategic solutions that are tailored to the needs of our customers through programmes such as our Power by the Hour (PBH)-type offering,” he comments.
“By continuously monitoring market trends and anticipating demand fluctuations, we can proactively adjust our inventory levels and allocation strategies, thereby enhancing our ability to support the airlines in every situation to avoid an AOG,” Symington adds.
Leon Kouters reports that the single most challenging aspect being experienced at FSG at present is long lead times for parts and components, caused by capacity constraints and supply chain shortages throughout the industry. “In turn, this creates a situation in which we need an even bigger inventory pool to support our programmes and our customers, just to maintain the same level of performance,” he states.
“At Fokker Services Group, we have the right level of capabilities and expertise to cope with this challenge without imposing additional constraints on our customers. We have control over our programmes with large in-house repair shops, enabling us to help customers prioritise their most urgent repairs and avoid no-stock situations, whilst also maintaining extensive stock levels for additional support,” he declares. “Additionally, FSG can repair or manufacture parts affected by supply chain issues. Having the right Part 21J and 21G certifications gives us the option to manufacture alternative solutions for piece parts.”
“In our programmes, we take care of holding inventory and assist customers whenever they need a component. If the component is unavailable, we will source it from the market. In other words, we make the operator’s burden our own, allowing the operator to focus on their core business of flying while we utilise our capabilities, extensive network of vendors and traders, and OEM agreements to source parts and line replacement units (LRUs), producing a suitable solution for the operator,” says Kouters.
Alongside engineering approvals, IT innovations — including the use of artificial intelligence — are helping to develop the supply chain and either reduce the costs to a part’s users or help them to budget better. Kouters confirms that FSG is developing its capabilities in this area.
“Warehouse automation is key here, as it not only saves time, but also enhances accuracy in our warehouse operations. Additionally, predictive maintenance helps us anticipate parts needs and to streamline inventory management, reducing downtime and costs for our customers. Finally, advanced analytics is used in many parts of our organisation,” the VP reports.
According to Paige Immordino, AAR is implementing a new forecasting and inventory planning tool to help the company account better for actual experienced lead times. “It will also create a predictive model that will tell us when something is likely to be delayed before we even place our order,” she explains. “This helps the supply chain flow to continue without interruption and allows us to schedule orders with our OEM partners, making their own production lines more predictable.”
“The distribution team has also worked with AAR’s digital, technology and analytics team to develop better tools for quoting customers instantly, including our e-commerce platform and enablement of auto-quote EDI (electronic data interchange) features. This helps airlines manage their costs by making it easier to buy from AAR,” Immordino elaborates.
Scott Symington, too, believes that IT innovations, particularly those leveraging AI, are driving significant advancements in MRO operations, leading to cost reductions and improved budgeting capabilities for parts users. “Predictive maintenance, powered by AI algorithms, stands out as a transformative technology, enabling airlines to anticipate maintenance needs by analysing datasets from aircraft systems,” he contends. “This proactive approach minimises downtime and reduces costs associated with unscheduled maintenance, ultimately benefiting the operators by ensuring efficiency and reliability.”
“Augmented reality (AR) technology is another key innovation impacting the aviation MRO sector,” Symington observes. “By overlaying digital information onto physical aircraft components, AR facilitates maintenance tasks and provides real-time guidance to technicians. This enhances efficiency and accuracy in maintenance procedures, contributing to cost savings for airlines.”
The CCO also points out that digital solutions, like AI, automation and data analytics, are streamlining MRO processes and optimising the use of resources. “Automated fulfilment solutions, for instance, are revolutionising inventory management and procurement, leading to cost reductions associated with inventory holding and procurement inefficiencies,” he says.
“Additionally, IoT (Internet of Things) tracking and smart sensors are providing real-time visibility into the location and condition of component parts throughout the MRO process. By detecting deviations from planned routes and monitoring environmental conditions, these technologies enable timely interventions to prevent damage or loss, especially for time-critical or high-value shipments.
“AJW Group is embracing digital transformation across all operational aspects, from customer-facing sales systems to back-end enterprise resource planning systems (ERPs) operational tools. These transformations enable greater agility, efficiency, and customer satisfaction. By digitising processes and leveraging advanced technologies, we are optimising operations, reducing costs, all benefiting our customers — the operators — through improved service quality and cost-effectiveness,” Symington declares.
Ensuring that any unplanned time an aircraft is on ground is kept to a minimum remains a challenge, but with the efforts of these and other companies, airlines will gradually feel less anxious about the threat of an AOG.
Author: Bernie Baldwin
Published: 29th August 2024
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