Are you purchasing aircraft material daily?
Like most airlines and MROs, it is important to complete projects, keep aircraft in the air and make money.
But what if, everything you thought about purchasing was costing you more money? The money you didn’t know was seeping through the cracks as hidden operational expenses. Money not on the POs you send, but hidden in everything that surrounds the PO.
This might not be your concern (it should be!). But it’s certain your CFO sits at the depths of their deep analytical office and sweats when they see your operating expenditure. They eventually push this stress down to the various departments that have a role in these expenses.
Yup! Purchasing, maintenance, and stores are at the brunt of this tirade.
What if you could present, propose or even change how you purchased so that it would dramatically put money back into your operation? Does it sound too good to be true?
It's not. Let me show you how.
The Hidden Costs Of Purchasing Aircraft Material
Just the other day we had a meeting with a multi-billion dollar distributor. Their cost to process a PO is $85 per PO.
Think about that. Per PO!
And they're incredibly efficient. More efficient than you would have expected any airline or MRO to be, given the totally different business demands.
This is a calculation we use ruthlessly here at Skylink too. We’ve done deep analysis on this topic for the past 2 years and we’ve seen that on average airlines and MROs spend between $100 and $200 for every PO they process. If you’re processing 100 POs per month, do the math. Cha-Ching.
And this doesn’t account for shipping cost, AOG risk, cash-flow financing fees, and non-direct labor costs. You can expect with these numbers, you’re spending upwards of $200 for every PO you process.
If you currently process 100 POs a month and you can cut that in half, while still getting the material you need, you’ve just saved $100,000 in cost per year.
3 Huge Ways To Cut This Cost From Your Operating Expenses
There are many ways to reduce this cost but the fact is, you still need the aircraft material when and where you need it.
Here are 3 huge strategies to start using as soon as you stop reading this…
1) Utilize a vendor managed or consigned inventory
In a vendor managed inventory your trusted material advisor will send you a shipment of material as you hit a minimum stock level.
This happens automatically and you’ll never have to process a PO. Imagine all the expendables and consumables you can put into a vendor managed inventory and how much processing time and cost that would save you.
It adds up.
2) Consolidate your material
Don’t buy 5 different bolts, on 5 different POs to 5 different vendors. Consolidate. You’ll make up for the per unit price difference in your processing and shipping costs.
We call this $ave by Consolidating.
3) Work with a material partner who can handle high volume RFQs and POs.
The goal is to limit the time and cost you spend sourcing and processing your material needs. Work with a partner who can accept the demands of multi-line RFQs and POs and still give you the 24/7 support you need.
Most of our long-list RFQs come in the form of maintenance checks, stock replenishment, or long-term planning.
Reduce the amount of sourcing and processing you do and save yourself well over $100,000. You can take me to dinner another time. ;-)