Aftermarket is not an afterthought at AlliedSignal Aerospace. Just the opposite, in fact.

"It is a primary business for us," Joe Leonard, president and CEO of AlliedSignal Aerospace Marketing, Sales & Service, told Show News. "We're on target to achieve $4.6 billion in revenues this year in aftermarket repair, overhaul and services and parts," he said, accounting for more than half the total revenues of $7.5 billion at AlliedSignal Aerospace.

The latest twist in Leonard's company's strategy to become a total source of solutions to companies in aerospace is the purchase, announced this week, of the Canaan Group consulting firm of Park City, Utah. "This will put us in consulting; we will set up a firewall and run it as a separate subsidiary," he explained. Leonard believes there is significant advantage in offering Canaan's expertise to solve his customers' business problems (such as developing maintenance programs at airlines), while AlliedSignal can infuse its own wealth of aftermarket technical expertise as well as additional resources.

Five years ago AlliedSignal Aerospace, a manufacturer of auxiliary power units, propulsion engines and other aerospace equipment, adopted a strategy of making service a business. "We were all over everybody's airplanes, with repairs, spares, technical training, manuals and consulting services. There is a significant demand for these services, and there was no one capable of providing them in a big way as a business," Leonard noted.

Under vice chairman Daniel Burnham-who was named president and COO of Raytheon in July-AlliedSignal Aerospace embarked on a determined drive to, in his words, "become the most admired supplier to the aerospace industry." It reduced turntimes on component overhauls to eight days, on APUs to 26 days, and achieved a 93% complete satisfaction fill rate on customer orders measured by on-time delivery of exactly what was ordered. Said Leonard: "We pursued those strategies really aggressively; now that we've implemented them we're turning them into businesses by putting a laser focus on them."

For example, AlliedSignal Aerospace purchased the hardware business of Banner Aerospace early this year and became the largest supplier of aerospace hardware by a factor of six or eight. "But we took a conventional business-hardware-gave it half a turn and turned it into a service." Now hardware is just a part of a logistics management operation that involves forecasting, planning, warehousing and just-in-time delivery of hardware and parts.

Last year AlliedSignal Aerospace teamed up with Caterpillar Logistics to offer sophisticated, and large-scale, inventory management services. "The logistics business continues to grow," Leonard said. The company is on the verge of signing its first two major deals involving Caterpillar, one with a major airline, and one with the military for an all-inclusive logistics management program involving forecasting, planning, warehousing and infrastructure.

It doesn't stop there. AlliedSignal Aerospace has 400 APUs and 700 propulsion engines in a rotatable pool as part of its OEM service to customers. It plans to operate that as a business and move it into other products as well. "We're exploring a flexible power lease arrangement that would create lease APUs as well as powerplants," said Leonard. "This will create a business instead of just a service, with significant growth potential."

AlliedSignal Aerospace also has a lot of training expertise. "We're pretty good at it, and there will be a need for many more mechanics to be trained on our products. We see that as a business as well."

In another development, AlliedSignal has just contracted to teach Six Sigma practices to a customer "because we are expert at it," Leonard noted.

"We are taking advantage of our size and scope to be the source of all business solutions," said Leonard. "We want as broad a portfolio of services as we can."

By John Morris