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Overcoming Supply Chain Challenges - AviTrader MRO

25 Jun 2024

A shortage of raw materials and a diminished workforce appear to have become everyday challenges in the MRO sector. Are these challenges affecting the entire aviation supply chain, and if so, how are stakeholders adapting? AviTrader MRO approached industry experts to gain insight into the impact of the struggling supply chain on their businesses.

Speaking to Scott Symington, Chief Commercial Officer at AJW Group, David Dundas asks what triggered the current supply chain problems.  

When the industry shut during the Covid-19 pandemic, says Symington, large parts of the labour force, including skilled technicians, were lost to aviation. “The subsequent ramp-up required sourcing and training of new staff, resulting in a time lag on material supply.” 

He adds that “The delay in aircraft deliveries and in-service issues resulting in grounding new-generation aircraft has compounded the issue with older generation aircraft not retiring as expected. This has created the perfect storm.” 

Dundas moves on to discuss the most common supply chain challenges encountered currently in the MRO industry. Symington observes that on the supply side, the industry is facing lower production of new aircraft, longer shop processing times, and a reduced feed of stock into the part-out market.

Simultaneously, on the demand side, delayed production and grounded Neos have increased the need for parts to keep older aircraft operational longer than planned.
 

Elaborating, he comments that “The issues above are the material supply and demand issues, but we must continue to meet the challenge of passenger demand, with RPKs surpassing pre-pandemic levels by ~5.9%.” 

“The issue of component TATs is probably the most common challenge, as the longer it takes to repair unserviceable material, the more inventory is required to support the in-service fleet.” 
 

Next, Dundas asks how bottlenecks are affecting the price of used serviceable material (USM).  

Symington replies that the bottleneck situation at the repair shops is a key factor in the imbalance in the supply and demand equation and since USM prices are primarily pinned to the OEM CLP (catalogue list price), which are increasing 7-12% p.a., they are following the market and going up.  

It is going to be some time before we see an alleviation in this situation.” he warns. 

So, what should airlines and MRO providers do to prevent production disruptions and AOGs?  

Predict, prepare, and plan!” says Symington. “For an MRO and supply chain solution provider such as AJW Group, it is a matter of having a solid yet agile inventory management strategy to meet customers’ needs.

By ensuring we have the right stock at the right place at the right time – we provide the highest levels of customer service to prevent AOG situations where possible
.”   

Overcoming Supply Chain Challenges - AviTrader MRO

How can part ordering and managing inventory levels combat supply chain shortages? 

Symington talks about adopting a proactive stance to the situation. “AJW's strategy of investing in substantial inventory well in advance exemplifies a proactive stance that can provide a competitive advantage in navigating supply issues.” 

“By holding a robust inventory of 450,000 line items valued at over US$500 million, the company has established a resilient buffer against supply chain disruptions, ensuring a steady supply of critical parts to meet customer demands.”   

Placing orders for parts well in advance aligns with AJW's proactive approach to inventory management. For newer platforms such as the Neo and Max, there is no teardown material available, so the only solution is to place longer term forward orders with the OEMs. We are also investing in packages of spares on new platforms wherever possible and are now the first independent supply chain solution provider with a significant inventory in the A350 space.”   

When asked how PMA parts can help in alleviating supply chain shortages, Symington responds that PMA parts can offer a strategic solution for overcoming supply chain shortages by providing alternative sources for critical components from approved alternative suppliers.  

There is no doubt that in certain critical cases, PMAs offers the only viable alternative, and if you want to fly then airlines are taking a less conservative approach. 

Finally, Dundas asks whether MRO providers perceive any signs of improvement in the situation, is there a light at the end of the tunnel?  

Symington’s reply concludes on a positive note:  

The aviation industry is a dynamic yet resilient one. More than anything, the events of recent years have highlighted the agility of industry stakeholders who have driven change and process improvement to survive and navigate the ongoing challenges.”   

Whether we’re facing these challenges or others related to the sector, disruptions are inevitable, whatever their nature, but a resilient supply chain built on enduring relationships, as AJW has forged over the past nine decades, reinforced by our commitment to efficiency, is what makes us an industry leader.” 

Despite current challenges AJW’s MRO operations are thriving due to high demand, meticulous inventory strategy, and efficient operations. There is always a light at the end of the tunnel, we have learnt to navigate the dark times and seek out the light, which is why we’ve been in operation for 92 years. 
 

 

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