Question

Describe the general supply chain of an airline/aviation company such as american airlines.

Answer 1

Supply Chain in Aviation Industry: An Overview

Supply chain in the aviation industry is essential to save costs of business operations. The success of the business depends on the fact of how well a company adopts supply chain strategies. In view of low yields and low traffic airline, cost-cutting strategies are mounting pressure on the supply chain. Outsourcing is one of the major reasons which has reduced the profit margins of MRO. Low tier suppliers are facing fierce challenges from top suppliers who are offering flexible aircraft programs to the airlines and their MRO suppliers.

The bright side is Maintenance Repair and Overhaul (MRO) businesses are set to witness unexpected growth in the near future. For MRO markets, the Indian aviation industry is highly promising and is carrying above 10% growth annually. India is expected to become the world’s third-largest aviation market by 2020. Current Indian MRO market is estimated around 800 million. It is growing at a pace of 8% against the world’s annual MRO growth of 4%. According to a recent Ernst and Young study, Indian MRO market is expected to grow at a pace 15% annual. However, in the aviation industry, they must navigate an uncertain landscape to thrive. It’s because the aviation sector handles items that are capital-intensive, and require more attention for efficient management. Read on to understand various MRO supply chain challenges for the aviation industry.

MRO Supply Chain Management Challenges for the Aviation Industry

Emerging Markets

A rapid increase in the global share of aircraft is expected to come from Asia. The Asia-Pacific region accounts for more than 20% of the worldwide MRO market. Due to low labor costs in the MRO, it is expected to grow in the future.

These growing markets can cause problems. Emerging markets with rapid fleet growth tend to be fragmented and uncoordinated. Additionally, greater globalization comes with various challenges like inexperienced workforces, regulatory oversight, and immature logistics networks. These challenges affect how aircraft operators make decisions regarding their MRO supply chains.

Increasing Customer Base

With the rapid fleet growth, customer expectations are rising as more competitors are entering the market and offering numerous choices to customers. Downstream customers including passengers and governments now expect reduced flight disruptions.

The aviation industry needs to be aware of approaching shifts in the market. They quickly need to adapt these changes to deliver high customer expectations and position themselves to take advantage of these shifts.

Deep competitor research, knowledge of new technologies and customer behavior enable businesses to connect to customers and suppliers. Businesses can build trust and loyalty from trading partners and customers by being attentive to their needs.

Strategic Global Partnerships

Aviation industries can succeed in times of rapid international growth by building and cultivating global partnerships with reliable suppliers, technology providers, and logistics. Over the past years, there have been various successful strategic global collaborations that have proven to beneficial to both suppliers and traders. Some of them are:

1. Technology partnerships to manage MRO processes and wider supply chain
2. Augmented reality is used to train MRO mechanics on repair practices

While working with strategic partners, MRO providers should stay informed, responsive and agile to keep abreast of changes in the aviation landscape. Some of the important changes that affect MRO providers are evolving planes and designs, efficient engines, more durable parts and new schedules of maintenance.

Inventory Management

Inventory management is a critical aspect of the aviation industries. If an aviation company has too many supplies, they can find themselves with an excess of antiquated aircraft parts as technology changes. On the contrary, too little inventory can lead to severe delays and can result in expedited shipping that can waste a lot of money.

MROs can identify a course of action to balance their inventory holdings in an efficient manner. Predictive analysis is an approach used by MROs to solve the issue of inventory management. It is a growing and tested technique for managing inventory efficiently. The data collected from this analysis enable providers to develop time frames and figures for restocking based on the project requirements.

Avail Benefits of Supply Chain in Aviation Industry with Oodles

We can provide custom flight scheduling system software including scheduling, dispatching and events monitoring for medium to large level airlines, helicopter, and other aviation sub-industries. Our ERP development team also provides custom reporting modules like log forms, quotes, trip sheets, invoices, and quotes. We provide scheduling and dispatch modules for managing crew, flights, passenger logistics, and aircraft.

Our supply chain planning solutions enable the client to track the lifecycle of the aircraft through predictive alerts. With our supply chain services, clients can maintain accuracy levels in managing bills, stocks, and invoices. Supply chain in aviation industry enables our clients to plan ahead for the future by creating dashboards and identify key performance indicators.

We provide custom MRO aviation solutions to streamline station procedures like maintenance, safety, supply chain, and compliance. At Oodles, we develop applications to formulate custom reports for parts based on current usage and predetermined usage limits. Our supply chain software development solutions improve the operational efficiency of aviation industries.

Example of supply chain in aviation industry

American Airlines adds value to the cold chain

On the eve of the annual meeting of The Council of Supply Chain Management Professionals (CSCMP) annual meeting this week, American Airlines Cargo division announced the expansion of its cold-chain service.

ExpediteTC will include a new solution for the requirements of cold packaging during transit.

The new solution, called ExpediteTC Passive, supports ambient temperature control using state-of-the-art cool rooms, expedited handling processes and high-visibility monitoring to ensure cargo is handled within desired temperature ranges. This offering augments American’s current service, ExpediteTC Active, which utilizes dry ice and battery-powered containers to actively regulate temperature levels, regardless of ambient conditions.

“Our new ExpediteTC Passive cold-chain service provides our customers with another important option for moving time- and temperature-sensitive cargo,” said Dave Brooks, president of American Airlines Cargo. “The worldwide rollout of this service is supported by extensive training to provide a consistent, reliable service across our network.”

Preparation for launch of the new service included a pilot program and training of 2,400 ground and warehouse employees around the world. The service integrates American’s proprietary high-visibility system with distinct processes used by employees to support temperature control during handling.

American Airlines has been an innovator in this technology from the very beginning,” said Brandon Fried, executive director of the Air Forwarders Association. “It comes as no surprise that they are continuing to refine their technology.

Shippers may access online tracking and receive notification alerts via e-mail or mobile phone. ExpediteTC is supported by a 100 percent money-back guarantee that the shipment will be flown on the routing for which it was booked. In addition, a help desk is available for the service 24 hours a day, seven days a week.

Conclusion

The aviation industry is facing unprecedented challenges in terms of reducing maintenance costs, delivering high levels of service and maintaining inventory levels. To effectively address these challenges, aviation industries are now availing the benefits of supply chain solutions. Supply chain in the aviation industry in enabling service providers to forecast customer requirements, determine the accuracy of stocks and analyze demand patterns. Implementing effective supply chain solutions enable aviation service providers to track maintenance in terms of the cost associated with time, components and labor materials.