Supply Chain Management in the Aviation Industry
Supply chain in 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:
- Technology partnerships to manage MRO processes and wider supply chain
- 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.
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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.
