Air Transport World

From just in case to just in time.(airlines streamline services)

THE AIRLINE INDUSTRY HAS MADE LARGE STRIDES in improving the efficiency of its maintenance, repair and overhaul materials supply chain but much work remains to be done, say experts, particularly in comparison to performance of other industries. Progress can be measured by the fact that the MRO spares inventory has not increased over the past decade despite the growth in the fleet.

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A study conducted in 1996 by The Canaan Group calculated that the commercial airline fleet, which numbered 12,000 transports at the time, was supported by $44 billion worth of parts. Kevin Michaels, who worked with Canaan on that study and now is a principal at AeroStrategy, recently estimated that the value of inventory has remained static while the number of transport aircraft has risen to 17,000. According to AeroStrategy, this represents a 30% rise in efficiency, or 50% if adjusted for inflation. Looked at another way, in 1996 each aircraft was supported by $3.6 million in inventory compared to just $2.5 million today. Arguably, the leading factors behind these improvements are the increased reliability of engines and components and the fact that carriers no longer can afford, nor do they desire, to warehouse large stocks of inventory.

"The commercial aftermarket is making a shift to accelerated outsourcing of services, including many functions related to parts procurement and inventory management, in order to reduce cost," observes John Staer, president and CEO of Copenhagen-based Satair.

"When we go in and talk to a traditional airline, they tell us that 30% of their inventory is very active, another 30% is slow-moving but still necessary to have on hand and 40% is pretty much dead," says James Clark, group VP-Aviation Supply Chain at AAR Corp. …

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