We've all been there when the dreaded phone begins to ring. You anxiously wait as you look at the caller id.
A brief thought comes to mind, should I pick it up? Or should I let it go to voice-mail?
You ponder the thought of ignoring it.
Instead, you cautiously pick up the phone.
It’s your boss, the VP of Maintenance and Engineering, and he’s unhappy about the current spending.
He’s beginning to feel the pressure from your CFO.
Repair costs have doubled and they're now taking more time to process, meaning more people must get involved.
From the increases in aircraft maintenance costs, the loss of productivity, and the stress, it’s beginning to drive you nuts as well.
It’s not uncommon and you’re not alone.
65% of all major airlines outsource, and for very good reasons.
This is why you should evaluate your aircraft maintenance repair strategy for the following 3 reasons.
Overspending on outright units
Whether you have a closet full of shirts or not, if you go to the mall it’s likely you'll buy another shirt.
Or if your my wife, another pair of shoes (please don’t tell her I said that).
But you're not mall shopping.
You have assets sitting on your warehouse floor (or even better on your aircraft not removed yet) that can be repaired.
If you buy an actuator for $10,000 outright you can expect to pay between $5,000 and $9,000 to overhaul the same unit.
No matter how you think about it, even if you're hanging upside down, your savings are roughly 10%-50%.
Going crazy having to babysit multiple vendors
Just think back.
When your child was born you had to tend to her every need.
If she cried, you would have to feed her, change her diaper, burp her, and hold her tight to comfort her.
Having to deal with multiple vendors is very similar. It becomes a babysitting job.
You have to process the repair order, make sure the components were received, evaluate the work orders, figure out why the repair quote was high, approve the repair quote, follow-up with the quote, call and ask why it hasn't shipped…
Okay okay, you get my point.
Now that’s just for one vendor. Imagine if you have 10, 20, 30.
It’s borderline chaotic.
Losing your mind on exorbitant shipping costs
Now comes the tough part.
Or easy part depending on how you think of it.
If you ship your repairs to 10, 20, 30 MROs, you’ll have multiple legs of freight costs.
Let’s say you have 20 MROs and 20 parts. That’s 20 parts you must ship. If each shipment cost you $350 then you would spend $7,000 it total shipping costs.
Now, this is an estimate for the visualization I’m trying to paint but you get my point.
If you decided to consolidate your shipment into one pallet, you would save at least 60% in total freight savings.
That’s $4,200 in savings just for a more efficient, streamlined logistical strategy.
As you can see, there’s an easier method to your madness.
If you find yourself coming across one of these, a serious re-evaluation of your repair strategy is in need.
Outsourcing isn't a bad thing.
You will save money on freight, repair costs, and best of all, you’ll be re-using the assets you already own.
No airline has time to deal with so many vendors.
It’s unproductive, and you’ll work against your core activities.
This is why it’s a good idea to outsource your repairs.
Simple as that.