The aerospace industry measures itself against multiple benchmarks, but none more important than fleet availability, or fleet readiness. Aerospace and defense (A&D) support and maintenance operations require optimal supply of spare parts to provide the highest levels of aircraft and system uptime, and the least amount of parts-related disruption.
Balancing the unique complexities of the global service supply chain while delivering the highest level of service in A&D requires a holistic view of the entire supply chain, and a robust service parts management solution. Why does the A&D industry call for a comprehensive approach to managing service parts?
Performance Based Logistics Requires Advanced Forecasting
Uptime and fleet readiness have become the way that service levels are being measured in the A&D industry, and they’ve driven the way service contracts are now being written, specifically with a move toward Performance Based Logistics (PBL.) The revenue model from these types of contracts is now similar to Power by the Hour, hinging on hours of use. With PBL contracts, service parts inventory management becomes even more important, requiring sophisticated forecasting models, advanced inventory optimization, and the ability to correlate stock levels with financial implications, projecting forward several years.
Advanced Assets Require Advanced Solutions
Given the dynamic nature of the A&D industry, including fluctuating fleet sized and changing operation hours, as well as variable configurations over time, a service parts management solution must be able to accommodate these variations to create more accurate forecasts. Because of the particular challenges in A&D, there is also a unique need for causal-based forecasting, and techniques for sparse of intermittent demand service parts. These abilities further help with a firm foundation on future service parts inventory decisions.
Translating Inventory Decisions into Dollars
As PBL contracts become the norm, in A&D and similar manufacturers operating assets across the globe, these contracts don’t measure fill-rates or fleet availability alone, but a host of other metrics, such as aircraft-on-ground time, length or number of backorders, length of service delays, etc. To maintain a profitable contract, the A&D industry must be able to translate its service parts stocking levels into possible financial values and implications. A comprehensive service parts management solution will be able to calculate what the potential costs, penalties, or rewards could be under different operating policies. The ability to project these financial implications is a huge benefit, especially during the proposal or negotiation of PBL contracts.
Unique Challenges to A&D Part Fulfillment
Many of the crucial service parts related directly to equipment or fleet uptime tend to be expensive, complex, and repairable. When a service organization is seeking to optimize which parts to carry, it is necessary to consider not only the part hierarchy, but also the part location. Aerospace and defense manufacturers look to Multi-Indenture Multi-Echelon (MIME) capabilities, with advanced optimization algorithms that can help correlate stocking levels of service parts to levels required by each type of contract. In addition to this, a great service parts management solution can compute the benefit of stocking parts at separate indenture levels, an ability that can simply not be matched by an ERP system.
As your organization learns more about evolving your service offerings and capabilities, you can learn more about service parts management solutions built specifically for Aerospace and Defense manufacturers. Watch our short video series, presented by PTC’s Sanjay Jagdale, VP of Service Lifecycle Management Solutions here.