Your Supply Chain: Measure savings between the tangible and intangible

Supply chain | Aug 28, 2023 | By Satair | 4 min read

We all know that in the ever-evolving aviation landscape, Airlines and MROs are constantly seeking innovative ways to enhance efficiency and elevate customer experience. Regardless of where you and your business sit on that spectrum, the importance of measuring ROI is the same, and has never been more critical. As interconnectivity and globalisation begin to ramp back up to 2019 levels, it is important to understand the nuances between quantifying the tangible and intangible factors.

In a bid to streamline operations, airlines and MROs have traditionally focused on “cash savings,” a tangible aspect that directly impacts the bottom line. Cash-savings is the easy one to measure. Not much nuance there—primarily involving the reduction of immediate expenditures and procurement costs, driving financial gains that are easily quantifiable.

By contrast, it’s in the intangible factors where things get more nuanced. These encompass a broader spectrum of efficiencies that extend beyond monetary gains, and for the sake of upfront clarity, this is where the majority of this article will focus. From streamlining your supply chain to optimizing your workforce utilization, it’s important to factor in the non-tangible and less tangible.

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.

Regardless of which side you are on, the relationship between airlines and independent MROs can also play a significant role in supply chain inefficiencies. The fragmentation and complex dynamics within the aviation industry often result in suboptimal coordination and communication between these entities. This lack of alignment can impede the smooth flow of parts, information, and services, further exacerbating the inefficiencies within the supply chain.

Find the right Supply Chain Solution

Several providers can help you maximise your supply chain with their solutions, including us. Some underscore their adaptability and preparedness amidst shifting market dynamics, others focus on their efficiency and reach, and others wrap theirs around warehousing and transport services.

Without getting too deep into the weeds about all the product-specific features of our peers in the industry, we would be remiss if we were not honest in stating that each of these providers offers something unique to supply chain optimisation. The specific needs of your business might sync better with any one of these providers, however, let's look at what we provide in our solutions.

Satair Supply Chain Solutions: The Efficient Option

We believe that addressing the above-mentioned challenges that you might face in your supply chain requires more than just an innovative solution. It also involves a strategic partnership. And this is the core driver behind our supply chain solutions—to be your strategic partner. We help streamline sourcing practices, negotiate competitive volume discounts, optimise pooling solutions, and offer comprehensive logistics services, to transform your supply chain landscape.

Serving both airlines and MROs, we aim to bridge the gaps in current aviation supply chains to achieve cost savings, improve operational efficiency, and enhance overall supply chain performance.

The implementation of our supply chain solutions not only addresses the existing challenges but also takes into account future disruptions such as labor/material cost management. This proactive approach ensures a resilient and optimized supply chain that aligns with the evolving needs of the aviation industry.

How to Streamline Your Aviation Supply Chain with less manpower

Streamlined sourcing and competitive volume discounts

We recognize the significance of efficient sourcing practices and the impact they have on cost reduction. By streamlining the sourcing process and establishing strong partnerships with suppliers, we provide airlines and MROs access to a wide range of high-quality parts while negotiating competitive volume discounts. This approach empowers our customers to achieve greater overall cost savings and enhance their overall profitability.

Learn more about our Supply Chain Solutions

Optimized pooling solutions and efficient warehouse management

We understand that pooling, the consolidation of inventory, is a complex process that can be challenging to execute effectively. Satair excels in optimizing pooling solutions, allowing MROs to efficiently manage their inventory and respond promptly to customer demands or for airlines to optimise their maintenance and repairs. Through efficient warehouse management, we ensure that inventory is strategically located and readily available, reducing delays and enhancing operational efficiency.
What to Consider

As the aviation industry continues to evolve, you may have felt that measuring the ROI of your supply chain initiatives has become more of a critical aspect—especially when seeking more efficient operations. While Cash Savings offer quantifiable financial gains through reduced expenditures and procurement costs, Operational Savings delves into broader efficiencies and long-term non-quantifiable gains. Understanding the nuances of both metrics can unlock substantial advantages for your business.

To optimize your supply chain, it's essential to take a comprehensive view that assesses material storage, usage, transport, and overall cost of ownership. There are several providers on the market and any of them can provide you with a comparable job of providing you solutions to address these areas of your supply chain. The most important thing is to take action towards addressing them because inaction is going to be the most detrimental to your overall ROI.