7 Nov 2023
Exploring the potential advantages and obstacles associated with consignment sales for aftermarket suppliers in the aviation sector, ultimately sheds light on the path to informed decision-making. Within the aviation aftermarket sector, the question of whether to sell stock on consignment prompts reflection on both benefits and challenges
In the latest issue of Inside MRO, Director of Inventory Strategy Mark Elliott speaks to Keith Mwanalushi about the Group’s inventory management strategy and how AJW is mitigating supply chain issues in the aviation industry.
AJW Group has taken on more than 30 airframes on consignment since 2021, but the business rarely consigns material to other organisations, says Elliott.
“The reason our consignment partners give stock to us is because they’re generally not aviation experts or traders and often don’t have a viable route to market the aviation assets they have entrusted to us.”
Opting for a consignment arrangement to sell surplus material can present advantages like minimising initial investments and enhancing liquidity. Nevertheless, it does come with specific challenges that require consideration.
“If stock is held by the consignor, it is important to maintain live stock position electronic data interchanges to ensure units are not being quoted if they have just been sold by the consignor themselves, “ Elliott warns.
Experts agree that communication and collaboration with consignment partners are essential for success. It boils down to having an effective inventory strategy.
“AJW has successfully managed significant quantities of consigned material for partners for many years, but the focus is on AJW taking the consignment, not using consignments as a method of trading its components.”
Speaking about the Group’s inventory strategy under these circumstances, Elliott states, “Managing surplus inventory with precision is a balancing act that requires a careful evaluation of demand patterns, historical data, and lead times.”
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