When it comes to buying, stocking and using spare aircraft parts, airlines are trying to streamline their operations, putting greater demand on suppliers to have the parts when and where they are needed. The article below, which appeared in Aviation Week Magazine, InsideMRO explains how Sterling's just-in-time delivery and technology drive innovations in the parts supply chain:
In New MRO World Order, AOG Prowess More Valuable Than Ever
As airlines streamline operations without sacrificing key bottom-line metrics such as on-time performance, suppliers are finding more opportunities to expand services, and nowhere is the shift more evident than in how airlines buy, stock and use spare parts.
The trends touch every link in the parts supply chain and each phase of an aircraft’s service life. Airlines are taking fewer spares as part of new-aircraft initial provisioning packages, choosing instead to share high-dollar-value parts with others in pools. Used parts are flowing into inventories, providing more options for keeping aircraft flying. Airline network strategies are adding more point-to-point services, moving beyond hub-to-hub flying and connecting passengers to end destinations—but stretching their support networks in the process.
The common thread across the parts-support spectrum: Airlines are putting greater demand than ever on suppliers to have the parts they need, when and where they are needed. Mix in operators’ desire to stock fewer parts, and opportunities abound for nimble, innovative suppliers to expand their offerings.
During the past decade or so, aircraft-on-ground (AOG) specialist Sterling Global Aviation Logistics has been doing just that. A domestic-only, AOG-focused business two decades ago, Sterling has added service levels and expanded its core offerings to meet a shifting customer base. Ten years ago, most of Sterling’s work was directly with airlines, responding to AOG requests, says Executive Vice President Claus Engelbrechtsen. Today its customer base includes a healthy mix of OEMs and MRO providers.
“Airlines are owning less inventory, and OEMs are providing full component support,” he says. “Our type of service—the just-in-time delivery—can be key.”
Adding different types of customers has led Sterling to expand how it interfaces with them.
“Everybody in the supply chain has a different way of tracking,” Engelbrechtsen says. “Some like to call us, some like to use the website, and others like to use their mobile phones. People in the hangar like to get push notifications. Our technology platform allows us to provide shipment tracking details in real time.” Internally, a dashboard-like QuickBoard provides real-time updates on all shipments, ensuring visibility across the board.
Shifting airline strategies are driving interest in higher-end services as well, ranging from GPS tracking to dedicated charter aircraft to move a shipment. While the size of a part can dictate whether to charter an entire aircraft—think an engine—charter requests have gone up in the last few years as airlines have put a higher premium on keeping aircraft on time. A common scenario: an overnight charter to ensure that an aircraft can depart on schedule the next morning.
“Airlines are working harder to avoid delaying the first flight of the day, which can quickly turn into multiple delays for that aircraft throughout the day,” says Steve Wilson, senior director of business development. “What they realize is, the costs of doing things like charters is acceptable to avoid those delays.”
The drive to avoid cascading flight cancellations means that the most fundamental service in the airline business—hard AOG response—has never been more critical. And while getting a part from the warehouse to the stricken aircraft remains integral, the first step is finding the right part. AvAir has mastered this, leveraging its legacy as a parts broker to set up an AOG desk that has gone from five calls a day to nearly 1,500 in less than three years.
AvAir stocks more than 26 million parts at a 170,000-ft.2 Chandler, Arizona, facility that opened in 2015 and quadrupled its warehouse space. But having the right part is not what brings AOG customers to AvAir, says AOG manager Steven “Solly” Solomon. Rather, it is his team’s ability to locate it.
“It’s impossible to stock everything,” Solomon says. “Because we’re good at sourcing, they know we’ll find it, and fast.” AvAir AOG’s average response time is about 20 sec.
AvAir’s AOG desk, a nine-person operation that runs 24/7, is backed by business development specialists that forge relationships with parts suppliers, including many airlines that make their stock available for loan. Solomon says AvAir has about 20 such deals, with everything from small regional operators to global flag carriers that fly next-generation aircraft. His goal for 2018 is to double that number.
“We want networking and joint-venture deals with every major airline and many smaller airlines,” he says. “Availability is key.”
So are the relationships that underpin the business. While airlines will sometimes go to each other for parts in a pinch, it is more common—and often less painful—to source through a specialist. One reason: Airlines are more likely to gouge competitors than the AOG partner they will likely be turning to at some point. They also know that while the AOG business has a certain level of job security, it is competitive. AvAir’s business goes far beyond AOG support, so every request can be treated with an eye on the future as much as the bottom line.
“If we don’t have [a part] and can’t find it, we will steer the airline in the right direction,” Solomon says. “To me, it’s a relationship business. If you’re good at what you do and good to your customers, the revenue comes.”