Unrest in Libya and nearby countries has been at the top of the news lately; and news analysts are commenting on the effect of that political volatility on oil prices. According to CNN.com, early last week the price of a barrel of oil went over 100USD for the first time since 2008, before retreating to 97USD toward the end of the week. The rising price of oil impacts many aspects of the economy, but its impact is dramatic in the aviation sector. (Bear in mind, the price per barrel for jet fuel is even higher than crude oil, with prices between 115-120USD per barrel.)

One source, FlightGlobal.com, sounds the financial concern: “IATA is forecasting 2011 will see industry profits slump 40% to $9.1 billion, assuming Brent [Brent Crude is the European classification of crude oil] at $84 per barrel. However, director general Giovanni Bisignani warns: "For every dollar increase in the average price of a barrel of oil over the year, airlines face the difficult task of recovering an additional $1.6 billion in costs."

The same article quotes British Airways chief executive Willie Walsh as saying "There's only so much airlines can do to offset the increased cost. It will drive airlines that are unprofitable out of the industry ­because they just won't be able to survive but, ultimately, it's going to lead to higher prices."

On February 22 an AviationWeek.com MRO blog commented, “It may be obvious that rising oil prices are bad news for airlines, but it is also a major concern for MRO providers -- and not just because financially struggling airlines make lousy MRO customers.”

AviationWeek.com also touched on this subject in an article on its recent MRO Middle East conference, “Inventory destocking, outsourcing and cutting costs (including labor) take priority, even as airlines order new aircraft to stay fresh and competitive in their markets. For maintenance and engineering departments and MRO providers, this means supporting more component work, facing increased competition for contracts and developing new ways to package services. A surge in fuel costs gives these issues new urgency.”

As airlines and MRO shops consider various steps to cope with increased fuel costs, they should also look to IT solutions for ways to reduce costs and improve efficiencies. We’ve written on this topic before, but it is a message that bears repeating: automating and integrating maintenance content saves time and money.

A case in point is Air France Industries KLM Engineering and Maintenance (AFI KLM E&M), which documented a 10% reduction in aircraft maintenance IT costs with its initial implementation of Enigma 3C.  With an upcoming rollout of Enigma InService MRO and Revision Manager, the company expects to gain additional savings (see press release here).  “By significantly accelerating the implementation of tens of thousands of maintenance updates and revisions, Enigma’s InService MRO will provide another competitive advantage for our aircraft, components and engine services operations,” said Peter de Swert, Executive Vice President, AFI KLM E&M.

Other M&E organizations still rely on manual processes to 1) incorporate OEM revisions into current maintenance practices and 2) extract maintenance parts and procedures to update ERP, MRO, PLM and SCM systems. Automating those manual processes saves significant time; for example, by using InService Revision Manager, airlines can reconcile OEM revisions about 80% faster (days rather than months). Integrating the maintenance documentation into enterprise systems ensures that the latest technical information is available across the maintenance environment. This means maintenance engineers, planners and technicians work more quickly, improving aircraft uptime, and helping airlines remain compliant.

With the rise in oil prices, airlines and MRO shops need every competitive advantage they can get. IT solutions for maintenance documentation and execution should be a key element of their cost-saving strategy.

A few days ago we had the pleasure of co-sponsoring a webinar with SAP and Air Transport World, with featured guest speakers Alun Pryer, the Design Authority Head of Engineering at British Airways, and Phil Te Hau, SAP’s Director of Solution Management for Airlines. Together, we discussed “The Challenges of Aircraft Provisioning, Configuration and Maintenance Execution,” a topic that has been of great interest lately to airlines and MRO shops.

Pryer described how British Airways is working to increase efficiency within maintenance and engineering. One challenge, according to Pryer, is that traditional IT systems require too much manual intervention for processing technical documentation and revisions. While BA’s current approach provides acceptable quality, it is very labor intensive with aspects of the process being monitored and managed using spreadsheets. There are no automated checks and balances to validate and approve data changes, which creates delays and increases costs. As Pryer stated during the webinar, “The system works well, and we produce quality, so the case for [process] change is not around quality. Rather, it’s driven by new documentation formats, and the need to modernize, reduce costs, increase efficiency and conserve resources.”

Technical documentation goes through frequent, sometimes complex revisions. Yet it’s critical to keep that content updated and synchronized with other IT systems, because technical documentation is the key to communicating important changes throughout an MRO ecosystem, and is the foundation for compliance. Outdated tech pubs information creates a ripple effect that impacts inventory, maintenance and compliance decisions. For airlines and MROs looking to make meaningful business improvements it’s essential to automate tech pubs processes. (Enigma offers solutions such as Enigma InService MRO, InService Revision Manager and InService Job Card Generator.)

But automating tech pubs is only one part of the solution. Integrating tech pubs with the master parts list (MPL), inventory and “as-maintained” configuration for each aircraft is the other key to improve efficiencies throughout the MRO environment. That’s why Te Hau from SAP stressed the importance of integration and configuration control to “increase efficiencies in the supply chain, improve compliance and reporting, and to manage down maintenance costs and inventory to best match fleet requirements.” To minimize delays and costs, it’s important to keep inventory synchronized with the airline’s fleet (provisioning). This requires configuration management to know the parts that are already on an aircraft and the parts that are allowed, which in turn affects maintenance planning, execution and compliance.

The problem for many MRO organizations today is that traditional configuration management and inventory systems don’t integrate technical documentation, and so it is difficult to compare the as-allowed part numbers (from the IPC), the as-planned parts (from the MPD/MPL), and the as-maintained structure of the aircraft (from the MRO/ERP). An integrated MRO IT system brings together technical documentation, the MPL, the maintenance planning documents (MPD) and the as-maintained structure, to provide one consistent view of configuration control, inventory and maintenance requirements.

“We want everything centered around a single, central content repository, with automated revisions, reduced paper format, and a standardized, streamlined approach,” said Pryer. “That is our vision. We are aiming to achieve an integrated workflow, automated tracking and revisions, and application directly to the source documentation.” Pryer also noted that British Airways needs a scalable solution to accommodate their growing third party MRO business, and the need to be “ready for future technologies, especially mobile.”

To view the entire webinar presentation, we encourage you to playback the recording.

An analyst at Carlisle and Company recently noted that the North American parts industry seems to be in recovery because consumers, after delaying service during leaner times, are finally bringing their cars in for maintenance and repair (See a December 2010 Carlisle and Company blog post.) Unfortunately, that recovery may be partially offset by the recent spike in gasoline prices.

How does the price of gas affect the automotive aftermarket?  Two recent (January 2011) articles point to possible effects. According to Aftermarket News, “Higher pump prices would have a huge negative effect on driving miles, vehicle service and tire sales, not to mention serving as another deterrent to much needed job growth.”

A Frost and Sullivan report, titled “Fuel-Efficient Driving Behavior Will Affect Aftermarket Demand,” states that due to high energy prices (which are predicted to continue to rise), “a large percentage of vehicle owners are likely to modify driving and maintenance behavior to save fuel.” The Frost and Sullivan report also notes that drivers are “driving fewer miles annually.” It’s interesting that the report does not address the theory that a decrease in miles driven leads to less wear and tear on a car, and therefore less need for maintenance. Instead, the majority of the report discusses how North Americans are not only changing how much they drive, some of them are changing the way they drive in an effort to conserve fuel.

The report describes how some of these driving behaviors can either create or reduce wear and tear, depending on the behavior. For example, the author cites potential increased wear and tear on starters, alternators and batteries as a result of shutting off and restarting the engine to reduce idle time. Despite the mechanical analysis, the report does not issue any firm conclusions about how this will affect vehicle repair needs; it merely says, “The impact of these practices on the aftermarket has yet to be quantified, though any such changes in consumer driving behavior are extremely important for aftermarket participants to make note of.”

What are the possible ramifications for automotive OEMs? They can’t afford to ignore the impact of these trends on their aftermarket business, because they reap a significant portion of their profits via aftermarket parts sales. (For many OEMs, spare parts generate less than 10% of total revenue, but more than 25% of total profits.)

Their primary channel for selling aftermarket parts is their dealership network, so if fewer miles driven = less need for maintenance = fewer visits to dealership service bays, it stands to reason that OEMs will sell fewer parts. To help their dealers offset these potential losses, they have to stay competitive against the independent repair facilities (IRFs). And one way OEMs can help their dealers do that is to make it easier for them to access an up-to-date electronic parts catalog, so they can quickly find the relevant service information, order the right part, and perform the service.

OEMs can’t control gas prices or consumer driving trends, but they can improve their dealer satisfaction, and the accuracy of service and parts orders.  With the right parts and service information technology, such as Enigma InService EPC, OEMs can decrease the cost of aftermarket operations and increase their market share for parts and accessories at the same time. To learn more, click on Enigma’s automotive customer case studies.

Airlines and MRO shops are increasing investments in IT solutions that integrate and improve three critical aspects of MRO operations: inventory planning, maintenance scheduling and maintenance execution. This blog post looks at the opportunity for leveraging technical content to optimize inventory and the challenge of integration. 

Inventory is a major priority for airlines and MROs because the carrying costs are so high. It’s a no-brainer that carrying the right inventory, and having the right amount of inventory in the right places, can cut costs and improve aircraft availability.

To properly plan maintenance and inventory, airlines and MROs rely on the ERP system, expecting it to be up-to-date and accurate. The information in the ERP system comes from maintenance manuals and parts catalogs. With each revision of the technical documentation, someone needs to evaluate and approve any changes before adding them to the ERP. This is a time-consuming process that typically involves 1) side-by-side comparisons to understand what changed and 2) manual data entry into the ERP. The result of this process is that the ERP system is frequently out-of-date with regard to latest parts and service recommendations. At the 2010 Air Transport Association eBusiness Forum, GE admitted that it’s not uncommon for airlines to be two or three revision cycles behind the OEM updates. Why? The conventional process of reconciling and implementing OEM changes takes too long.

How does this affect inventory?  Each updated illustrated parts catalog (IPC) can contain over 5,000 modified parts lists. That’s over 40% of a typical IPC!  While some changes may be specific to certain operating conditions, like ETOPS, airlines must evaluate every change to understand the impact; and any approved changes must be updated in the ERP. Since the IPC defines the valid parts for each aircraft, if revisions are not processed quickly then the ERP documents that drive inventory decisions will not be accurate—Minimum Equipment List (MEL), Master Parts List (MPL) and Maintenance Planning Documents (MPD). In fact, if an airline gets two or three revisions behind on maintenance manuals and parts catalogs the inventory and ERP system will no longer reflect actual fleet requirements, and inventory will become bloated with “dead” parts. 

The solution to this problem is Enigma InService Revision Manager, which simplifies the process of reviewing and integrating OEM updates. It turns a labor-intensive task measured in weeks or months into an automated procedure often completed in hours or days. Revision Manager compares new maintenance revisions to existing information—previous OEM data as well as the airline’s own best practices—and uses customizable logic to accelerate the reconciliation process.

After the content is reconciled, the next important step is to make sure changes flow seamlessly into the ERP system. Airlines and MRO shops have seen the need for ERP integration for years but until recently, the technical hurdles were too high. Now the technology exists to automate this process.

Accurate technical documentation is needed throughout the MRO lifecycle, and across maintenance planning, engineering, technical publications, and line and base maintenance departments. In particular, maintenance technicians and parts managers need relevant, updated IPC content to guide procurement decisions; without it, they risk using the wrong parts and carrying excess or obsolete inventory.

Stay tuned for more posts related to this topic; we’ll discuss how to synchronize various maintenance documents, including the IPC, the MPD and the aircraft maintenance manual (AMM), to drive productivity and lower costs. We’ll also explain how effectivity filtering helps to manage logistics by helping identify which parts go with each specific aircraft and fleet.