The Uptime Blog
Companies that manufacture complex equipment are starting to invest in e-business solutions to help sell aftermarket parts. These are products like Oracle E-Business Suite, SAP mySAP Business Suite and IBM WebSphere Commerce. When linked to ERP, CRM and other supply chain systems, e-commerce products can significantly improve order management and order processing. They can check a customer’s credit, verify product availability, apply customer discounts, track order status and payment, and so on—all of which are important elements of the customer’s experience.
Yet while these e-commerce products decrease order processing costs, our experience indicates that they don’t really increase revenues. Why not?
One reason may be that, when it comes to selling parts online, ordering a part is not the same as selecting a part. Order management systems are not designed to help customers figure out what to order, so in reality they only solve half the problem. If a parts manager, field technician or end-customer doesn’t have parts and service information handy, he/she is likely to 1) spend too much time looking for the right part number, or 2) order multiple parts in the hope that one of them will work.
For a service technician to find a part, he may need to start with assembly diagrams, or troubleshooting instructions, and “drill down” to pinpoint the right item(s). By linking the parts catalog to the relevant service documentation, with interactive assembly drawings and integrated service bulletins and maintenance notes, it becomes much easier to find the proper parts quickly. If it is too difficult and time-consuming to find the right part, assembly or kit, the customer or parts manager is likely to look elsewhere to buy their parts.
OEMs can increase aftermarket profits by making it simple to find and buy parts and service information. For distributors, this means they can quickly serve their customers while also reducing mean-time-to-repair (MTTR), increasing first-time-fix-rate (FTFR) and decreasing the number of mis-ordered parts.
To maximize ROI, a parts catalog must be designed to support equipment with complex maintenance requirements and multiple configurations/dependencies. It must integrate seamlessly with an OEM’s e-commerce and back-office investments and extend certain aspects of these enterprise applications to distributors and customers. Enigma InService EPC is such a product, and is proven to minimize the cost of ownership and add value to key IT investments.
For OEMs trying to figure out how to get more from an e-business strategy, an electronic parts catalog should be a key component.
As I mentioned in my previous post, I recently attended the MRO Middle East conference. I particularly like aviation conferences because, unlike in some other industries, the common aim of safety leads companies that would otherwise be mortal enemies to freely exchange ideas and enter into lively debate.
At this conference I particularly enjoyed the sessions on Lean and Six Sigma. There was some good debate on Lean (as a stand-alone initiative) and Lean plus Six Sigma. Some panel members suggested that Lean will reduce waste (in this context, waste = time) but the result will simply be that more maintenance problems are discovered in less time. On the other hand, these panel members argued that the combination of Lean and Six Sigma will not only reduce waste but also improve performance (meaning consistent service and reliability). The panel agreed to disagree and I personally think there are merits in both approaches but I believe it’s a blend of Lean and Six Sigma that will best support the aviation industry going forward.
Another subject, PMA parts, seems to be on the agenda at every MRO conference these days. If I understand correctly, there are over 100,000 PMA parts in use so it’s no wonder there’s a great deal of interest. There seemed to be some skepticism regarding the ability of PMA parts to deliver savings to an airline. A voice from the audience said they did not think the savings were as great as the presenters believed. And the biggest concern expressed by one of the airlines was whether or not an aircraft would be accepted at fair value when it came off lease. The worry that lease companies will not accept PMA parts seems to be valid. I conclude that although there is an increase in PMA part usage, the industry has yet to really make up its mind about the wide and complete acceptance of PMA parts. Certainly the OEMs seem to be stoking the fires against PMA parts and so the debate continues.
A couple of weeks ago I made the trip to Dubai to attend the MRO Middle East conference. I went there to understand more about a region that still has GDP growth and, more importantly, is not cancelling/ deferring orders for aircraft.
Considering that this was the first MRO Middle East conference sponsored by Aviation Week, it was well attended. The show seemed to be about the same size as MRO Asia, with the usual companies exhibiting: Boeing, Airbus, SRT, MTU, ADAT, and Iberia (easily 100+ exhibitors). The conference sessions held about 150 to 200 people, however, the exhibition area seemed to have a lot of people milling around who were not attending the conference sessions. I guess there may have been 200 more people just looking around the exhibition area on the first day. There appeared to be a good spread of people from Middle East, India and Africa.
It’s not surprising this conference had a healthy turnout, because
1) This was the first-ever MRO Aviation Week conference in the Middle East, with MRO Europe, Asia and North America well established.
2) MRO (and aviation overall) is “hot” in this corner of the globe.
If you want some stats to support the assertion that the MRO industry is booming in the Middle East, here’s a snippet from the Aviation Industry Group:
“The Middle East MRO industry will see steady growth of 4.4 per cent and reach $3.4bn by 2018 as compared to $2.8bn in 2008, according to industry experts. This year, the global MRO will be down between four per cent and eight per cent from 2008 as airlines have generally reduced capacity worldwide, particularly in North America and West Europe, said Chris Doan, president and CEO of Team SAI.”
The conference sessions had some really interesting topics. Most opened with market data, first for the region and then a global picture. I was surprised by the number of aircraft flowing into the region over the next few years, Emirates are still taking delivery of 2 new aircraft a month, and Qatar, Etihad and flyDubai have huge expansion plans. It is expected that the combined fleet size will grow from 700 today to 1100 within the next 10 years, with a large percentage of that growth in the wide-body types.
Now for the real interesting question; who’s going to do all the heavy maintenance? Even with the reduced maintenance requirements of new aircraft there is still a significant growth demand. Some good things appear to be happening around the ADAT & RR joint venture, the relationship with SR Technic and companies like JorAMco – all are looking to expand their 3rd party business. However, demand still exceeds capacity and true engine shops are in short supply. It sounds like the biggest hurdle is going to be finding the staff and then retaining them. Interesting times!
I’ll have more on this conference for next week’s blog…
My team and I just got back a few days ago from Interlog Winter 2009, a conference that’s focused on the aftermarket parts and logistics business for automotive, industrial and aerospace manufacturers. I was pleased to discover that attendees wanted to do more than soak up the sun on Marco Island, Florida (the Sunshine State) and casually browse the booths; most were on a mission to find better ways to improve their corporate bottom line.
The agenda was full of great presentations on a wide range of topics related to customer service, inventory, logistics, outsourcing, procurement and electronic parts catalogs. Of all the messages delivered during the conference, I noticed two major themes:
- Increased parts sales depend on improving customer satisfaction and dealer relationships
- There are innovative ways to get more with less in today’s challenging economy
I believe Enigma’s InService EPC (electronic parts catalog) application assists customers in both areas.
First, we’re seeing that companies are renewing their focus on aftermarket parts and service as a way to improve customer/dealer relations. Simplifying business transactions is an easy way for OEMs to gain a competitive advantage for aftermarket parts sales. InService EPC strengthens the OEM-customer/dealer relationship by providing the most recent and relevant parts information at the point of need, and by streamlining part selection and order processes. OEMs that invest in aftermarket technologies (like Enigma) show that they care about the success of their customers/dealers and are positioning themselves to reap the rewards of a long-term relationship.
Second, InService EPC not only improves business transactions but also streamlines and automates internal processes such as catalog creation, update and distribution. So while InService EPC helps increase part sales, it also reduces the cost of catalog production.
Despite—or perhaps because of—the down economy, companies are willing to invest in technology as long as it improves revenue and/or reduces costs (preferably both). I guess that’s why we had so much traffic at our demo booth! If you missed Interlog Winter, I recommend you put it on your calendar for next year.