Preparing the aviation supply chain for the challenges of tomorrow

Supply chain | Feb 01, 2020 | By Satair | 8 min read

Are aviation supply chains ready to cope with the huge increase in aircraft deliveries scheduled in the coming years? And how are maintenance departments planning to handle current aircraft once all the new aircraft come into service? Read along, as we investigate the potential supply chain challenges of the future.

2017 was yet another record year for commercial aircraft deliveries, and the trend is set to continue in the years to come. Indeed, these are prosperous times for the industry as a whole, but the influx of new aircraft coming into service is creating new challenges for MROs and airlines that have to plan and maintain an increasingly diversified fleet.

Collaboration and transparency across the aviation supply chain seem to be key for independent MROs and airlines in the future as volume rises and complexity increases. But how exactly are some of the world’s leading MROs and airlines preparing to cope with the challenges of tomorrow, and what are the key considerations that need to be addressed?

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This and much more was discussed by a diverse group of industry experts at MRO Europe 2018. These are the highlights of the debate.

These are the biggest aviation supply chain challenges

One of the major aviation supply chain challenges that the panel sat down to discuss was whether or not MROs and the affiliated aviation supply chain are ready to handle the expected increase in volume. Across the panel, keywords in this discussion seemed to be collaboration and used serviceable material (USM). 

»If you look at the issues today, you notice that the upward supply chain stream is very non-transparent right now. We don’t know what all the MROs are preparing. But if you look downstream, toward the airlines, we seem to have a much more transparent system. I think this is one thing we have to tackle in the future,« argues Vincent Metz, Head of Strategy, Air France Industries KLM Engineering & Maintenance. 

For Air France KLM, the strategy for the future seems to be focusing on both optimizing their existing supply chain as well as developing alternatives. 

»What we try to do is to look at the microeconomics. There’s a huge amount of new aircraft orders and a lot of production capacity being committed to producing new parts and, of course, we’re worried what will happen with the support of the aftermarket as a result. We try to prepare ourselves by optimizing what we have,« Vincent Metz explains and continues: 

»We’re trying to make the best of our current supply chain efforts as well as develop alternative solutions; such as repairing more than replacing, and then we have an active approach in regards to used serviceable material. We dismantle our own aircraft to make sure we have different sourcing options and meet the supply chain demand.«

Alistair Dibisceglia, Technical Procurement and Supply Chain at Alitalia, believes that planning is going to be even more important in the coming years, as there’s most likely going to be a shortage of certain parts and limited maintenance slots.

»At Alitalia, we’re at the very end of the supply chain. For us, the most important thing is to predict and pre-plan what’s going to happen next. We need to make sure we have the slots and material ready, and we can best do that in collaboration with the OEMs and MROs. If we do this in the very last moment, we will fail, because there is a shortage of everything today,« he says. 

Stephen Emmert, Director of Business Development with Boeing Global Services, represents the OEMs in the discussion. He also believes collaboration is key.

»From an OEM standpoint, we try to collaborate with our airline and MRO customers, and then we also focus more on including significant aftermarket support. The more insights we can get from the customers and their needs, the better service we can provide,« he says. 

The part demand is changing

A record number of aircraft are coming into service during the next decade, at the same time, the industry is expecting a huge increase in aircraft retirements. This is changing part demand patterns, but also offers new opportunities for MROs who are able to adapt quickly.

»From a component perspective, there’s a divide between the legacy fleets of today – where material is largely available – and the new platforms, which are slowly coming into service now. As we move into the new platforms, like the A320 family, where you don’t have USM availability, it’s going to be crucial to have partnerships and work closely with the OEMs to control lead times,« says Colin Craig, SVP of Integrated Solutions at AAR. 

Vincent Metz and his team at Air France KLM are preparing for the transition by actively seeking out planes they can dismantle. 

»We buy planes to dismantle, and we also dismantle our own planes when we feel that they can serve a higher purpose. This is a huge advantage for us since we are a multiple product MRO. We can then use the components, the engine parts and almost all aspects of the aircraft in our own processes. One benefit of this is the availability of parts, but it’s also a huge cost saving activity to use USMs. For new platforms, where used serviceable materials aren’t available, we’re focusing on repairing, instead of replacing as well as collaboration with OEMs,« he explains. 

As complexity and material costs rise, airlines and MROs are facing two different scenarios. Airlines see the trend as a danger for their costs and thus something they must address in their strategies. For MROs, further down the aviation supply chain, it provides new opportunities for growth. 

»From the airline perspective, it’s a threat for our costs. But as an MRO, we recognise that it provides an opportunity for us. Our business is to optimize the supply chain and when the cost of the system becomes higher, optimization brings more value to the customers. This is probably why we’re seeing that an increasing amount of customers are outsourcing to professional partners, and we can obviously benefit from this trend,« Vincent Metz explains. 

Aircraft retirements set to skyrocket

Improving forecasting with predictive maintenance 

When it comes to maintenance, the main challenge has always been to have the right parts, at the right place, at the right time. Experts collectively agree that some of the key drivers here will be transparency in the aviation supply chain, regionalization and predictive maintenance.

»For us, sharing information and transparency is very important. We identify the most important parts for each location and employ part pools regionally in the most strategic positions. Most likely, you won’t be able to have the key parts in every airport, but then it’s a big advantage to have parts close by within an hour’s flight,« explains Alistair Dibisceglia, Technical Procurement and Supply Chain at Alitalia. 

Vincent Metz and Air France KLM have had good results so far with using predictive maintenance to improve their forecasting capabilities. 

»We focus on predictive maintenance as a tool to optimize our supply chain, and we’re seeing very promising results. It is making it possible for us to predict when certain parts are going to fail, several flights in advance, and if you have that kind of lead time in your predictions, it’s much easier for optimize the supply chain. The technology is still maturing, but it’s looking really promising in the long run, « he says and adds: 

»We also have a lot of partners. We are, for example, working with a French partner that helps us optimize the way we allocate parts worldwide. With this partnership, we’re achieving the necessary availability levels with much less inventory.«

Across the panel, digitization of the aviation supply chain seems to be a core area of focus. Alitalia, for instance, is also testing the prospects of new technologies. 

»We are going through some very similar processes. We’re investing more in new tools, such as Airbus’ data platform Skywise. We want to move from a reactive to a proactive supply chain, and tools like that can help us achieve that,« Alistair Dibisceglia, Technical Procurement and Supply Chain at Alitalia. 

Predictive maintenance & the road to a proactive supply chain.

Capacity and labour issues on the horizon

The panel also discussed other potential challenges in the future, the most pressing of which seems to be engine maintenance capacity and an expected labour shortage. Engine maintenance slots have been under pressure lately and, according to the experts, it’s set to continue to increase stress on the aviation supply chain.

»We’re seeing a huge shortage in regards to capacity and manpower on the engine side, especially on certain engine types. It’s very difficult to find a slot and it’s a big issue for us right now. We certainly have more capacity on the airframe side,« says Alistair Dibisceglia from Alitalia.

Although it doesn’t seem to be a challenge that will resolve itself in the short term, there is hope for the future. 

»It has been like this for the last 1-2 years, but it will improve eventually. We are seeing that shops are starting to invest in their capacity, but I don’t think we’ll see an improvement in the next 12-24 months. It’s a long-term process,« Alistair Dibisceglia explains. 

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Demand for more than 550.000 new aircraft maintenance engineers

Studies from Airbus and Boeing estimate that there will be a demand for 550.000 – 679.000 new maintenance engineers in the next 20 years. Studies also show that quite a few aerospace graduates end up in other industries when they finish their degree. 

»It’s definitely a big focus area for us and we need to work together as an industry to attract new talent. We need to work closely with schools and universities and we have to think outside of aerospace to find new people in the future. There just isn’t a single silver bullet for this,« says Stephen Emmert, Director of Business Development with Boeing Global Services. 

On top of this, the aviation industry needs to find a way to attract new people such as data scientists, who can drive the implementation of new technologies forward. People, who are in high demand in other industries as well. 

Vincent Metz, Head of Strategy at Air France KLM, gets the last word:

»At Air France KLM, we are seeing a shortage for certain skill types. This is especially true for new skills such as data analytics, which is very wanted in the market and not just in the aviation industry. When the economy is doing good – like it’s the case now – these people have a lot of options, so as an industry we need to make sure that we’re on their radar.«

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