Like every other industry, Aviation has spent the last several years settling back to normal following the effects of the pandemic. For commercial aviation, most markets were back to 2019 levels by 2023. Increased flight hours result in increased maintenance requirements, and MRO’s are scrambling to find ways to meet these rising demands.

MRO’s are faced with seemingly divergent requirements: ensuring mechanic training for newer aircraft while retaining experience to support established but aging fleets; pressure to lower costs while lowering turn-around-times; minimizing inventory investment while having spares at the ready; leveraging connected aircraft platforms generating terabytes of data per flight without spending too much time or money on data acquisition.

Winds of Change

MRO’s have always faced market, business model and staffing challenges. Predicting repair scope and timing is a perennial problem, as is predicting spare parts availability and lead times. There is continued pressure on turn-around time (TAT) metrics not only because of increasing demand but also because demand is outpacing repair capacity, creating shortages of repair slots. Talented analysts, inspectors, and mechanics are also always in short supply. Technology in MRO operations continues to evolve, but that can be expensive and the ROI is not always clear.

What is different recentlyis the rate of change, compounded by the interconnectedness of global markets and supplier networks. MROs participate in such networks where component requirements crossing markets creates unique risk considerations. Need an integrated circuit for that on-board data recorder? Get in line behind the automotive, plasma TVs, and electric bikes.

Supply network risks, whether driven by products, markets, or natural causes, are more and more out of a company’s control. This suggests the need for high fidelity foresight and high resolution hindsight in order to prepare and respond Risk management is evolving from relatively simple risk avoidance and mitigation to sophisticated supply chain resiliency and agility strategies.

MRO’s are considering how they can buffer themselves against risks and how they can recover quickly in the case of disruptions, all while growing top and bottom lines. The conversation goes something like this:

Finance: We are hearing about more frequent and higher intensity market disruptions; we need to be more agile and resilient. Who has ideas?

Supply Chain: Spare parts availability suffers during disruptions; I’d love get stronger there.

Sales: Great idea! I like having enough stock.

Supply Chain: Ok, we can definitely look at increasing inventory levels on key parts.

Finance: What do you mean by “increasing”?

Supply Chain: Well, carry more spare parts to help buffer us…

Finance: And impact working capital?

Sales: We have contractual turn times to support; this is a critical area.

Finance: But what is this going to cost? We already have too many slow moving parts that we thought we’d need but haven’t used.

Supply Chain: We will have to do the analysis and let you know, but that will take some time.

CEO: (rolling eyes) This is worse than the E&O discussion last planning cycle. Will someone call ForeOptics and have them straighten this out?

Saber rattling aside, the point is this: How can MRO’s balance operational metrics and maximize agility? How can an MRO improve resiliency without blowing up the balance sheet?

Manage The Manageable

Managing the manageable is about developing cross-functional plans to identify and respond to supply chain events.

For MRO’s, this includes improving foresight through demand planning, supply and inventory management, and continuous improvement of core operational capabilities. ForeOptics can help.

Demand Planning

Forecasting is hardly new. Thomas Bayes wrote about forecasts (predictions) in the 18th century and all he had was a quill pen and a few candles. What we have that he didn’t is an incredible library of forecasting methodologies, large data sets and relatively cheap computational capability.

Bayes suggested that forecasts required some historical context or prior knowledge and some idea of what could be. MRO’s have at their disposal decades of flight and repair data and mean time between failure (MTBF) analysis on all aircraft platforms.

What they don’t generally have is the ability to stitch all this data together and, on a regular cadence, generate a forecast for what demand will be showing up on their doorstep or when.

While most organizations have the capability to generate naïve forecasts and linear regressions, they don’t generally have the ability to apply best-fit methodologies for each data set for each period of a forecast. As an example, if historical part replacement for some part shows some trend through summer and a different trend through winter (as is usually the case within Aviation), that part demonstrates strong “seasonality”. Should you forecast that part in the same way you forecast a part that is replaced ten per month for the last seven years?

Additionally, how should an MRO incorporate information from sales and marketing teams? What will happen to demand with the latest marketing campaign? How will fuel prices impact flight hours and will those hours impact maintenance check schedules or replacement rates?

Incorporating these elements into forecasts requires more sophisticated analysis than what most MRO’s have in-house.

ForeOptics offers a demand forecasting analytics suite that incorporates historical data with external data with best-in-class modeling and blending methodologies to develop high-fidelity demand forecasts. When used as part of an coherent SIOP planning process and in conjunction with inventory strategies, these forecasts build resiliency and agility in an organization.

Inventory Management

Inventory is as much about the “which” as the “how much”. Which parts should be carried or stocked as well as quantity. How should they be replenished and what is the trigger? Often, MRO’s experience both stock-outs on parts and growth in inventory, indicating a mix problem.

MRO’s need to identify which parts they should carry, where, and in what quantity. This analysis should be done regularly to manage working capital and should reflect the the risks associated with both demand uncertainty and supplier delivery. This is a form of inventory optimization that is critical to building and deploying a supply chain resiliency strategy. ForeOptics specializes in these approaches as part of its FOSTR optimization toolkit.

Focus On Core

MROs succeed by supporting their customers to keep aircraft flying. They do this by relentlessly focusing on providing better and better engineering and repair capabilities. It is also critical that these services are provided on-time and at a competitive rate.

Demand planning, inventory planning, and procurement activities, while not core, are important pieces in managing MROs. ForeOptics is positioned to support these functions as a managed service allowing the organization to concentrate on what it does best: keep aircraft flying.

By leveraging ForeOptics’ Supply Chain and SIOP expertise, one MRO company saw an 11% increase in customer OTD, a 10-day reduction in TAT, and 6% annualized savings in material cost as part of a SIOP and Supply Chain optimization engagement. ForeOptics’ approach provides MRO’s with fast and affordable access to experienced Supply Chain practitioners and cutting edge Supply Chain technology. Additionally, it provides access to the skills and toolsets to increase supply chain resilience and agility.

Connect with ForeOptics at ForeOptics.com and see how we can help you.
MRO’s need to identify which parts they should carry, where, and in what quantity. This analysis should be done regularly to manage working capital and should reflect the the risks associated with both demand uncertainty and supplier delivery. This is a form of inventory optimization that is critical to building and deploying a supply chain resiliency strategy. ForeOptics specializes in these approaches as part of its FOSTR optimization toolkit.