Risk Management Strategies For The Aftermarket

By Robert Trebilcock
Source: Aviation Week & Space Technology
December 09, 2013
Credit: AFI KLM

There is more to parts management than having the right part at the right place at the right time. The best MROs have contingency plans for Murphy's Law.

Most materials managers focus on how many parts they will need, what they will cost and where they will be deployed when they create inventory.

For Ralf Noether, technical director for European Air Transport in Leipzig, Germany, there is another dimension to parts availability for its older Boeing 757s and 767s and Airbus A300-600s. Some rotable parts are no longer manufactured. “With older aircraft, there are some rotables that aren't available for sale and are too expensive to rebuild,” he says. That puts his fleet at risk of being grounded because the right part is not available when it is needed.

European Air Transport has taken several steps to manage that risk. It has bought available spares on the market, established a reliability control board that includes members of the engineering and logistics teams to measure the reliability of parts and meets with suppliers every 4-6 months to see if there are repair and scrap units that may be torn down and mined to keep other parts operable.

These steps are part of a supply-chain risk-management program. That is a different approach to parts management from a conventional inventory management plan, which is typically focused on the four “R”s of inventory: having the right part at the right time at the right place and at the right price.

The four “rights” assume that nothing goes wrong in an MRO provider's supply chain. As we all know from Murphy's Law, however, things happen that may be out of a supplier's control. For example, a supplier may not be able to obtain the raw materials it needs to produce an order or may be unable to access credit to keep its operations going while they fill your order. It may not have the capacity to fill your order and a competitor's order at the same time—and it may favor your competitor over you. Environmental events—such as Hurricane Sandy, eruption of a volcano in Iceland or tsunamis in Southeast Asia and Japan—can bring a supply chain to its knees.

The best fleet operators and MRO organizations have a Plan B for Murphy's Law. FedEx Express, for instance, keeps a few used aircraft at its disposal so that it does not have to worry about not being able to find a specific part when it is needed. The cargo carrier builds contingency plans for large-scale events such as a hailstorm that might damage aircraft at a hub location, and it disperses parts at locations around the world where it can reach them quickly rather than storing them in one location.

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