31 Aug 2023
In the face of escalating component repair expenses, the aftermarket industry is encountering the need to explore innovative solutions, potentially revitalising cost-effective alternatives for component overhaul. What strategies are industry stakeholders implementing to deal with escalating costs?
In the latest issue of LARA magazine, aviation journalist Keith Mwanalushi speaks to Louis Mallette, Senior Vice President and General Manager of Operations AJW Technique, who says the current inflationary environment is causing OEMs, in particular, to significantly increase their prices for repairs and spare parts catalogue pricing.
Furthermore, AJW is seeing a substantial increase in the cost of raw materials across the supply chain and labour inflation is having an impact on businesses in the sector who are leveraging this to increase labour rates.
Others in the industry are saying they are struggling under the cost of component repairs which is at times up by a few hundred percent. These figures are above the global average interest rates and are driven by supply and demand.
While the aftermarket supply chain continues to deal with labour shortages, delayed deliveries, and material shortages, MROs and repair shops are finding new ways to mitigate these challenges. Creativity is how stakeholders are coping and this is driving innovation. By diversifying their supplier base and looking beyond business as usual processes and procedures, companies are finding ways to change their business operations in the face of circumstances.
The MRO sector is finding it tough, but Mallette believes businesses will adapt their operations to face the challenges but can survive. “AJW Group has and continues to read the market by listening to our customers and what it is they need to operate efficiently and effectively,” he says. By managing costs and TATs effectively, one is better positioned to meet repair and supply chain demands, he continues. AJW is finding new ways to meet operational requirements to mitigate labour shortages and material lead times.
One way this independent company deals with the challenges is by increasing its provisioning orders and placing orders up to a year in advance of requirements for critical components. The Group is also working closely with OEMs and distributors to prioritise resources. Where possible, Mallette says, AJW is reviewing possible alternatives when there is a supply chain problem with particular products.
The SVP & General Manager of Operations predicts that while the Group is researching and finding solutions to the challenges, it is likely the spares and labour problems will last into 2024.
Operators entering arrangements such as the Group’s PBH (Power By the Hour) contracts, are looking to find a balance between their commercial and operational needs and consider things such as contract duration, pricing structure, consigned inventory, warranty provisions, and the reputation and track record of the repair service provider.
Mallette discusses the reasons for the popularity of component repair and how AJW continues to invest its operations to mitigate supply chain disruption caused by increased shop processing time.
The article discusses alternative solutions to current challenges and delves into a discussion with others in the industry about PMA (Parts Manufacturer Approval) and DER (Designated Equipment Manufacturer) repairs.
Mallette is of the view that there is a potential demand for PMAs and DERs but not in any great form due to a historic scepticism about safety and quality standards. He says attitudes appear to be shifting out of necessity, cost savings, affordability, ongoing testing, and current approval by the FAA.
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