Over the last few years the growth in commercial aviation and demand for new ranges of aircraft have also created concerns about capacity constraints in the supply chain as well as the ability of maintenance, repair, and overhaul (MRO) organizations to meet their customers’ ever higher expectations for quality and delivery.
At the same time airlines and aircraft operators have become leaner and are demanding higher quality and reliability, conscious that every hour their aircraft are grounded, revenue is lost. Rolls-Royce’s newly launched `Zero Defects program reflects these changes in the market. It draws on the company’s heritage of striving for perfection in everything they do and demands this mind-set from its suppliers if they want to continue to be part of the Rolls-Royce supply chain. Customers are also increasingly focused on sustainability, which has led to higher emphasis on maintaining existing assets and enabling repair loops, to maximise in-service life rather than replacing with new.
For parts suppliers and supply chain providers, the commercial drivers are to manage inventory and the associated working capital while meeting both manufacturing and MRO capacity. Accurately forecasting and meeting a customer’s demand for parts at the right time and in the right place is a key area they have to address if a `Zero Defects' service is to be achieved. Forecasting also has to take into account the contrasting demand profiles of manufacturing, which is predictable, and MROs and the aftermarket, which is more unpredictable and thus has a different set of challenges to delivery of high levels of “off the shelf” availability.
A PwC report `Spares forecasting - a commercial aviation perspective on value chain maturity and best practices` conducted in 2011 identified two key drivers for improving demand forecasting: the need for more effective collaboration and sharing of information (e.g. fleet data, engineering change orders, part reliability, service bulletins, etc.) across the supply chain; and the aggregation of software enabling capabilities to ensure best practice for bills of materials (BOMs), in the spares planning process.
Developing the Team
Around the same time as this report was published, Pattonair, now the global leader in supply chain solutions for C class parts, recognized it needed to invest in developing its forecasting and inventory management capability and developed a global team of specialists dedicated to forecasting, planning, and inventory activities, to work closely with each of the customers. The 25 plus strong team comprises highly skilled forecasting managers, Demand planners, senior data analysts and inventory analysts. Headquartered in Derby, UK with facilities around the world, Pattonair provides end-to-end supply chain solutions tailored specifically to each customer’s requirements.
The next step was to create a suite of bespoke systems, tools and techniques. The available off the shelf inventory management systems were geared to the repetitive patterns of production by OEMs and were unsuitable for wider deviations and unpredictable inventory demands of aftermarket and MROs.
The technology strategy was to take an off the shelf supply chain management system and tailor it to meet the specific business needs of its OEM and MRO customers. Standard tools that came with the system were enhanced to mirror the best in class alternatives, proven through the use of its more manual bespoke systems such as the forecasting and inventory management tool; this was replaced and then extensively customised to become Pattonair’s patented `Akrivis Approach` forecasting and inventory management service.
This chimed with PwC’s finding on best practice. A collaborative approach to planning and information sharing was introduced, amalgamating consistent internal and external data into `Akrivis.` This allows multiple data sets to be compared and contrasted, such as supplier lead times, customers’ historic forecasts, and their demand profiles of actual consumption, along with identification of unusual demand, seasonal items, and market intelligence. `Akrivis` delivers a constantly updated and real-time demand forecast for each customer and its accuracy has been a key factor in the company now achieving 99 percent on-time delivery, the highest in the industry.
Another important factor is to align the forecasting tool to each customer’s way of operating so it synchronises with their individual ordering patterns and planning processes. This knowledge combined with their data inputs informs their forecasts.
Depending on the maintenance program the MRO cannot always be sure which parts need repair or replacing until the aircraft is inspected therefore demand forecasting for MROs continues to be a challenge for the customer and the parts suppliers. Enhancing forecasting for this area has become a priority for Pattonair as it has seen a significant shift from five years ago when OEMs accounted for approximately 85 to 90 percent of global forecasted accounts to its current portfolio where spares, MRO, development, repair and AR&O solutions account for 25 percent of forecast accounts and this continues to grow. From all these accounts 52 percent of part lines have the potential to be unscheduled demand that is not managed through a specific customer schedule, forecast, or engine bill of material build programme.
In this market sector, utilising enhanced forecasting systems and methods alone is insufficient to meet the demands from today’s customers for off the shelf availability of unscheduled parts. Highly technical safety stock modelling and parts replenishment solutions, taking account of demand patterns, service levels, supply lead times, and part criticality, is also required. For example, safety stock and other methods of inventory modelling is supported through continuous demand and inventory data analysis, interpretation, and very high levels of master data accuracy in such areas as stock integrity, forecast part scope, bill of material accuracy, and systems static data accuracy. Using this approach, alongside “Right First Time” principles, Pattonair is improving inventory safety stock modelling and stock replenishment and systemising and integrating this with its Akrivis Forecasting as the next stage in its maturity journey.
The key principles needed to achieve effective forecasting and supply chain management to provide the high level of support demanded by customers are a `Zero Defects` culture underpinned by `Right First Time` initiatives. To achieve the better delivery times and quality standards customers expect requires robust systems to meet scheduled and unscheduled demand and a specialist team of people with a collaborative ethos to sharing information.
Michelle Carter is forecasting, planning & inventory director at Pattonair. She joined Pattonair in 2012 as a supply chain manager within the Rolls-Royce team. Her background has been predominantly defence and aerospace and former roles included programme planning manager at Airbus and supply chain manager, Land Platforms at BAE Systems. She has a master of science degree in supply chain management from Cranfield University and is a member of the Chartered Institute of Purchasing and Supply. For more information on Pattonair visit http://www.pattonair.com/.