This article delves into the benefits of measuring the benefits between pure cash savings and savings that include these intangible factors. The article will aim to equip you, whether you are an airline or MRO, with the knowledge needed to make informed decisions and adopt strategies that not only enhance financial performance but also elevate your overall operations.

Why your current solution might cost more and not provide the best yields

When you are looking at your supply chain operations and material stock, how are you measuring your cost savings? If you are looking at it from a one-to-one parts cost perspective, it might lead to some nice upfront numbers on paper. However, doing so is disregarding your overall operation ecosystem in the long term. Taking a more long-term satellite view will allow you to assess your material storage, material usage, transport and overall cost of ownership, which can add up to a significant overall savings or loss depending on how you manage these factors.

In this section, let us do some self-reflection so that you can address any of the following questions that can apply to your business:

Do you have issues with inefficient sourcing and limited volume discounts?

Aviation supply chains often struggle with inefficient sourcing practices and limited access to volume discounts, resulting in increased costs and reduced profitability. Generally, we find this to be a problem more specific to MROs, where they face challenges in sourcing parts efficiently, leading to higher expenses. Additionally, the absence of favourable volume discounts hinders their ability to leverage economies of scale, limiting cost-saving opportunities.

Do you experience issues with pooling and warehouse capacity?

Pooling and warehouse capacity constraints present another challenge that you might face with your supply chain. The practice of pooling, or consolidating inventory, can be complex and demanding, making it difficult to meet customer demands efficiently. Moreover, limitations in warehouse capacity often restrict MRO companies from promptly responding to customer needs, leading to delays and operational inefficiencies. All of these factors contribute to your overall operation cost.

The relationship between airlines and independent MROs has an impact on your supply chain.

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Your supply chain: Measure savings between the tangible and intangible