Optimization is not the only algorithmic tool that supply chain companies need to solve their planning and decision-making problems.More May 2, 2019
Reducing turnaround times: The most critical and challenging KPI for aircraft engine MRO companies
Author: Kerem Seçilmiş
For aircraft engine maintenance, repair, and overhaul (MRO) companies, everything revolves around reducing turnaround time (TAT) – which is their most critical and most challenging KPI.
Indeed, cutting turnaround times for aircraft engine MRO services (while simultaneously maintaining quality and safety standards and decreasing costs) is the chief concern for these companies as it enables:
-their key stakeholders – including planners as well as managers on the shop floor and in back office – to increase service excellence,
-their customers (the airlines themselves) to maximize the utilization of their assets and minimize their stock of spare engines,
-and their shareholders to boost bottom-line performance and market share.
Given the importance of this TAT metric, one would expect that there is an industry standard, and that most major players in this highly competitive space typically hover around or even exceed this standard – but, when it comes to engine MRO turnaround times, this is not the case.
Indeed, turnaround times for aircraft engine MRO services vary widely – with some companies averaging around 100 days while others are able to get the job done in less than 50 days.
And this begs the question: Why is there such a huge disparity between the TAT performance of certain aircraft engine MRO companies and others?
To answer this, we need to look at what is causing some aircraft engine MRO companies’ turnaround times to spike so significantly.
The causes of substandard TAT performance
There are many different drivers of poor TAT performance in the aircraft engine MRO space – some are company-specific, while others apply broadly across the industry.
Generally speaking, substandard aircraft engine MRO TAT performance is caused by:
1) Inefficient capacity utilization: In most cases, the primary cause of protracted turnaround times and lackluster service levels is poor utilization of resources. Despite the astronomical costs of the workers, equipment, and spare parts required to perform aircraft engine MRO services, companies often fail to effectively schedule and efficiently utilize these resources.
In fact, many aircraft engine MRO facilities are not capable of operating anywhere near their peak capacity. One company I have spoken with, for example, said that although their facility’s annual capacity is nearly 250 engines, they are only able to conduct maintenance on around 150 engines per year – that’s a gigantic gap between capacity and reality!
2) Complexity and unpredictability of demand: For aircraft engine MRO companies, demand is hard to predict (as, when it comes to unscheduled maintenance, you never know precisely when an airplane engine will have a breakdown or exactly what the job will entail – until you open up the engine and assess its condition) and complicated to satisfy (as each job requires a unique set of resources).
The complex and unpredictable nature of the aircraft engine MRO business environment creates immense planning and operational challenges, and companies often find themselves scrambling to coordinate the right people, equipment, and spare parts in the right facilities at the right times to satisfy specific job requirements and slash TATs.
3) Lack of data integration and cross-functional collaboration: Another root cause of poor TAT performance for aircraft engine MRO providers is lack of integration of their data, systems, people, and processes. Often, there is a disconnect between planners in the back office and managers on the shop floor and key stakeholders in various departments.
Using manual planning techniques and tools like Excel to compile data, MRO planners and managers are unable to gain visibility and control over what is happening in their facilities in real time and collaborate effectively to make the best plans and decisions on how to utilize their resources.
To achieve this, they need an automated, unified platform (with a powerful advanced analytics engine) that can serve as a real-time control tower: instantly collecting and processing data from various sources – including IoT and mobile devices, back-office systems, and strategically placed kiosks on the shop floor – and using that data to fuel integrated, optimized plans and decisions.
4) Unavailability of spare parts: Another major cause of longer turnaround times is the lack of availability of the critical and costly spare parts and materials necessary to conduct the maintenance, repair, and overhaul of airplane engines.
Many aircraft engine MRO providers waste precious time and resource capacity as they wait for manufacturers to deliver the spare parts required to complete particular jobs.
Consequently, these companies face a difficult dilemma: order the spare parts only when they are needed for a specific job (and run the risk that suppliers won’t have them available) or hold excess inventory of the spare parts (which represents a huge cost). Neither alternative is ideal.
Aircraft engine MRO companies must be able to accurately assess and forecast their long-term spare parts requirements and maintain just the right amount of safety stock of spare parts (in the right locations at the right times) to minimize TAT and costs. To do this, they need an automated, algorithmic planning and decision making optimization solution.
Making turnaround times shrink, profits soar
So, to go back to our initial question: why do some major aircraft engine MRO companies have turnaround times nearly twice as long as their competitors?
The answer is that they are not able to address and tackle the root causes of longer turnaround times: lack of data integration, inefficient capacity utilization, the complexity and unpredictability of demand, and cross-functional collaboration, and the unavailability of spare parts.
Overcoming these issues using manual planning tools and techniques is practically impossible – to do this, an intelligent, integrated planning and decision making optimization solution is essential.
With a cutting-edge planning and decision making optimization software solution (like ICRON), aircraft engine MRO providers can realize faster turnaround times and higher profit margins – without compromising the safety and quality of their services.
We have worked with numerous aircraft engine MRO companies around the world to help them improve their TAT performance – and one of our customers has actually achieved best-in-class engine turnaround times.
With algorithmic planning and decision making optimization, aircraft engine MRO companies can rise above the challenges and complexity of the industry, and simultaneously reduce turnaround times and costs.