The supply chain for maintenance, repair and overhaul (MRO) is at the centre of a perfect storm of external and internal pressures, including the wider MRO capacity crunch, aviation’s staffing constraints, airliner and enginemaker production issues, and the effects of a parts scandal. How are MRO operators looking to resolve the issues? We sat down with industry experts to learn more about their strategies.
Sandra Nieuwenhuijzen, group director components and engine services at HAECO, tells us that, “firstly, there has been a notable increase in the turnaround times for part repairs. Secondly, we have experienced a limited availability of parts, which has further complicated the supply chain. Consequently, it has become more challenging to meet customer demands promptly and has impacted the overall service levels we can offer to our valued customers. Lastly, the price of parts has seen a noticeable increase and impacts our cost base negatively.”
Knock-on effects around parts availability further down the supply chain compound uncertainties and add challenges to the situation, with few patterns able to be identified — let alone predicted or mitigated — in how or when constraints will occur.
Thomas Böttger, vice president corporate purchasing at Lufthansa Technik Group, echoes these concerns: “The most prominent challenges we currently face pertain to the turnaround times associated with equipment and engine parts that we subcontracted for repair, as well as the reliability of certain original equipment manufacturers (OEMs) in terms of supplying new parts.”
Multiple factors feed into the situation. Globally, demand has returned to the longterm growth curve, and supply in terms of flight hours is attempting to match it. OEM production for both Boeing and Airbus aircraft is lagging behind in key areas for well-identified reasons that do not have easy or fast fixes. Some of the most impactful include regulator constraints on 737 MAX production, delays in certification of 737 MAX 7 and -10 aircraft and the A321XLR, and ongoing engine issues with the 787 and A320neo.
“While the supply chain is consistently striving to increase output each quarter, it’s important to acknowledge that some suppliers are even growing by double-digit percentages from quarter to quarter. In some other cases, the demand for new aircraft post-pandemic is nevertheless outgrowing them,” Böttger says. “Then there are factors such as natural disasters, geopolitical tensions, and the COVID-19 pandemic have impacted the production and distribution of critical components, leading to delays and shortages. Unforeseeable developments, such as attacks on vessels in the Gulf of Aden, add pressure to the supply chain. And last but not least, our industry often relies on a limited number of suppliers for certain specialised components. If a key supplier faces issues like bankruptcy, production delays, or quality concerns, it can significantly impact the entire supply chain.”
Strategies, including new technologies and AI, are being implemented
Operators are using a variety of tools within the proverbial toolkit to resolve supply chain constraints. These include a greater focus on acquiring and refurbishing used serviceable material in order to reduce parts pressure on OEMs, although this comes with a need for refurbishment time, resources and capacity.
Increasing component pools, and in some cases sharing pools between locations, can be a benefit, although this comes with the costs both of components and of their storage, warehousing — and in some cases subsystem maintenance — while also adding further pressure to the parts supply chain.
Increased collaboration and partnership working with OEMs can have an impact, although reticence to share intellectual property and the need to use scarce experienced staff resource, often at very senior levels, is a tradeoff and constraint.
Leaning on options like Designated Engineering Representative (DER) repairs and Parts Manufacturer Approval (PMA) parts where these are available is another option, but this naturally requires the expertise and certification to do so, and consumes the resources of experienced staff.
Improving the information chain around component requirements is another option, Böttger explains, with Lufthansa Technik looking to “forecast how many specific components, by Part Number (P/N), are required by the industry. It is imperative that we enhance the supply chain’s efficiency and assisting OEMs in optimising their operations by fostering improved and more precise predictions of our requirements. This encompasses forecasting material demand, as well as projecting the volume of devices destined for supplier-based repairs. In essence, the overarching goal is to achieve a more precise and reliable demand forecasting system.”
New technologies including AI may well provide some relief, but these are unlikely to be a panacea, Nieuwenhuijzen notes. “While the digital supply chain is not a major issue currently, HAECO acknowledges the potential of digital technologies in addressing supply chain challenges. We are specifically focusing on adopting AI to optimise operations and resource planning. However, it is important to note that AI may not fully resolve all supply chain issues.”
MROs are applying hard-won expertise to the problem, but it is a complex issue that will require strategic, holistic solutions that work deep within supply chains.
“We have dedicated teams working closely with our main (OEM) suppliers on a day-to-day, hour-to-hour basis to prioritise and work through these issues. At the same time, we have been actively looking for alternatives to build a more resilient supply chain, so as to mitigate the impacts of these challenges,” HAECO’s Nieuwenhuijzen explains. “Currently, our supply chain risk radar is focused on the lack of significant improvements and even worsening conditions in certain areas, despite initial expectations of a slow recovery starting in early 2024. Predicting the supply chain landscape by the end of 2025 is challenging due to the unpredictable nature of the environment. However, we anticipate an increase in aircraft deliveries, highlighting the need for a robust supply chain to support maintenance and operation.”
Looking to the future, added complications include growth within defence, private aviation, helicopters and the forthcoming advanced air mobility segment, all of which draw resources from a finite amount of industry resources — and a constrained number of supply chain players.
“Due to the aforementioned factors, namely the overall growth in various sectors, all of which are contingent upon the same production capacities, a return to a reasonable, pre-COVID level of supply chain performance may not materialise until well into the year 2025, possibly even extending into 2026,” Böttger concludes. “Since so many different factors contribute to the complexity and uncertainty of the development of the supply chain it makes it challenging to provide a precise forecast for 2030.”
Author: John Walton
Published: 19th September 2024
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