Pros & Cons: Time and Material Aircraft Part Repairs

You have a pile of repair orders on your desk. They sit, waiting for you to take action. Do you approve or deny them? It’s a constant price and lead time battle.

With your aged fleet, time and material aircraft part repairs is the best strategy for you. It gives you more flexibility. It’s the shirt that fits nice. It’s not too tight where it's choking you or too loose making you look sloppy.

When you adopt a time and material repair strategy, here’s some of the pros and cons to look out for.

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Let’ start with the cons…

Cons for an aircraft part time and material repair strategy

As with any decision, you must always consider your downside, or simply put, the cons.

Here’s some of the cons:

• Unpredictable repair prices. MROs will give you an average but the price swings can be great.

• Unpredictable lead times. Nothing is a guarantee.

• Varied customer experience.

• Varied piece part quality.

• Varied piece part pricing. Some MROs inflate piece parts or charge your NE pricing for NS or serviceable.

• You’ll spend more time managing your repair orders.

Pros for an aircraft part time and material repair strategy

Just because there’s a few cons doesn’t mean you should avoid them entirely. Time and material repairs can have a great upside, depending on your product or ATA chapter.

Let’s run down a few of the pros:

• You can control the cost by supplying your own piece parts.

• You have more control over your repair orders.

• You can fire your MRO for being too slow or having poor quality.

• The labor rates are either fixed or variable based on hours worked.

• You can avoid MRO bottlenecks by using different tiers of preferred MROs.

Whatever you choose, whether it be fixed rate or time and material, there’s pros and cons of each.

When deciding your repair strategy, sit down and write down your goals. What’s the end result you want to achieve?

If you want more freedom, outsource. If you want more cost predictability, fixed rate. If you want more control, time and material.

What's the difference between AR, SV, RP and OH aircraft part conditions?

This is series 2 of our aircraft part conditions defined. In our last post we talked about FN, NE, and NS. From the feedback we got, this cleared up much confusion.

aircraft-parts

Now, were talking about unserviceable and airworthy conditions.

These conditions are looked at vastly different in various parts of the world.

Some people will never use a "SV" component while others prefer it. On both ends of the spectrum you have AR which is removed from the aircraft and deemed unserviceable and OH which is the closest thing you get to NE. We'll explain this a little more as we get into each condition.

When you think of these conditions you first must determine your primary objective, is it price or quality? Answering this will help guide you to the right condition for your maintenance goals.

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As Removed (AR)

Skylink: As Removed Aircraft Part

This is a component that was pulled off an aircraft. Spoiler alert, that's where "as removed" comes from.

Sometimes she'll come with a reason for removal but often times in the part out world she'll come with nothing, just a removal tag and trace. It could be repairable or beyond economical repair (BER) for all you know.

These items must go to a certified MRO for functional test or repair.

Serviceable (SV)

Skylink: Serviceable Aircraft Part

This condition is intertwined with the repaired condition but there's minor differences depending on who you're talking to.

For a SV unit you'll know that the unit has been functional tested in accordance with OEM specifications and that it'll come with an airworthiness certification depending on what region you're in. Here as you know it's the FAA 8130.

Typically these units will not come with a teardown but only an airworthiness certification stating it passed functional test and it's able to be installed. This varies depending on MRO.

Repaired (RP)

Skylink: Repaired Aircraft Part

The repaired condition is a serviceable unit that requires a little more work.

With repaired units minor piece parts are used to bring the unit into serviceable condition to meet the functional test requirements. Gaskets, bolts, and small expendables are the normal piece parts used in repairs.

This condition will come with an airworthiness certification and teardown detailing what was done and what piece parts were used in the repair.

Skylink: overhauled aircraft part

Overhaul (OH)

This is the most work an aircraft rotable can go through.

Skylink: overhauled aircraft part

This is the "best" of all conditions and requires the most work. With an OH unit you'll be sure that your units will receive the 100% OH kit according to the CMM and any other components to bring it to such a condition. Overhauled units can also be painted and cosmetically pleasing so you know you're not getting a hunk of metal.

Warning: In some situations, MROs will tag certain components as OH despite the CMM not having proper OH specification and they should be deemed RP. It's primarily used for marketing to sell a higher priced unit based on it's classification. We use to see this a lot with pitot tubes and other accessories.

That's it. Those are your 4 rotable condition classifications.

Depending on your operation, make the choices that best fits your needs.

Are you in constant need for aircraft rotables? Fill out the form below and we'll be more than happy to help you out.

3 Incredibly Important Reliability Areas You Need To Know And Improve On

What is reliability? Since 1988 we’ve been playing the reliability game. The gamble of who to trust and what actions to take.

Today, much has changed. Everyone says and does the same boring thing, over promising and under delivering.

It’s common to run into reliability problems. It even gets to the point that some days you just want to run away.

Just ask our supply chain team.

Some days I have to peal them off the ceiling as they explode with frustration. I even have to peal myself off the ceiling some days.

Whether it’s logistics or even aircraft components, reliability is a game of chess. One wrong move and you lose time and money. With the right move you’re efficient. Time and money become your ally.

Many people talk about reliability, but unless you want to pay millions of dollars in consultancy fees, very little guides you in the right direction.

For now, let’s cover the basics…

Aircraft component reliability

The primary goal is to keep your components on wing for as long as possible. We’ll call this the dumbed down version of a much more complex issue.

At this point you’ll want to collect data and information about your aircraft components statistical analysis. This will give you valuable feedback on the data if irregularities developed in operation.

If you’re the type to geek out on this stuff, read this.

The key is to build a foundation for a component reliability program. Which ATA chapters do you have the most trouble with? Can you outsource solutions?

In order for you to answer these questions, having a firm understanding of your fleet and activity of components’ removals is very important.

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Supplier reliability

It’s amazing how many people overlook supplier reliability.

I understand price is important, but it’s not the first or last decision. Your primary objective should be to work with people who can deliver and create the most value to you. 

When you look into your supplier reliability program answer these questions to help build your foundation:

• Who answers you back the quickest?
• Which company has an account manager that responds to you any day of the week, at any time?
• Who helps you resolve issues?
• Who provides solutions in addition to just selling you something?
• Where is the greatest value for every dollar you spend?
• Who solves problems without creating more problems?
• Who do you trust?
• How do their parts look when they’re delivered? Are they in good condition and packaged properly?

Answering these simple questions will guide you to building your supplier reliability program. You’ll avoid the people that over promise and under deliver.

Logistics reliability

If turn-around-times (TAT) keep you up at night then logistics is its angry step brother.

We live in a small world where we can get anything, anywhere in a short period of time and yet complications are still extremely common.

You may have experience with high import taxes, customs delays, airlines losing your packages, shipments being bumped and re-scheduled to a later date, damage parts, and the list goes on and on.

I have found the best logistics reliability program works with someone who is easy to talk to and helps you resolve problems. It’s really that simple.

I have worked with so many freight forwarders and 95% of them give me a massive headache. I feel one coming on now. We found 3 solid partners, one for routine freight, one for small parcel and one for AOG shipments and they are the only people we’ll use.

Build your logistics reliability program around your specific needs and the ease of communication should be very important to you.

Building a reliability program around aircraft maintenance and components, suppliers and logistics will help make your hectic aviation life easier.

Start slow and start now.

Do you have reliability issues? We would love to help you. Fill out the form below and we’ll tackle this together.

Super Easy Way to Reduce Aircraft Component AOGs With Insurance

Aircraft spare parts is a big deal. The aviation industry spends $5 billion, yes with a B, annually on replenish stock.

Stock is the insurance policy against unplanned removals and it's costly. No wonder so many people are stressed.

According to Oliver Wyman, this has a collective airline sheet balance of $19 billion. And yes, again with a big giant B.

Having the right aircraft components, at the right time, and in the right place is critical. Notice how I left out price?

Overstocking aircraft components isn't the solution

Many airlines have issues with over-insuring less critical and poorly positioned components and under-insuring highly critical components. Olivery Wyman estimates $175 million in similar inefficiencies for one major airline.

A lot of provisioning is organized from the recommended spare parts list (RSPL) from the manufacture. This is not a very bright idea. These lists often overlook the insurance nature of spare assets. It's a good starting point but not a gold standard.

They're typically conservative at best and over inflated at worst.

One solution for a good insurance policy is outsourcing

Airlines have begun relying on third parties to provision their spare parts needs. This improves access to aircraft components while reducing the significant amounts of capital tied up in inventory.

Aerotime explains it perfectly:

"Although maintaining a spare parts stock has long been a routine part of any airline’s life, it seems the situation has been gradually changing for a while now. Under competitive pressure more and more airlines have actually been abandoning the strategy of holding huge and expensive parts stock to support their operations.

In fact, according to the industry experts, the airlines have been reducing their stocks for about 10 years now, if not more. If such a pace remains, it is said that by 2020, the operators will abandon inventory stocking at all, thus switching solely to the offerings from third-party providers. Nevertheless, if this scenario in fact proves to be true, the industry has still a lot to do in order to improve the efficiency, transparency and reliability of such services."

Relying just on a third party isn't a good insurance policy

Outsourcing is a great way to reduce capital tied up on the shelves, but for an effective aircraft component insurance policy, it's not just up to them.

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Oliver Wyman states that for most airlines each day they reduce their cycle time amounts it can translate to $1 million in inventory shed from the balance sheet. Amazing!

In order for you to reduce your capital and AOG pressure, incorporate a better aircraft component insurance strategy into your operations.

Do you need better insurance to cover your AOG needs? Are you in need of spare parts provisioning? Fill out the form below and we'd love to help.

The Cost Myth Debunked: Cheap Aircraft Parts Vs. Total Value Creation

Have you ever bought a cheap aircraft part and regretted it? Of course you have. Cheap prices are attractive. They look good, smell like savings and sound like a “deal."

The lower you drive individual costs the better off you’ll be, right?

Not quite...

Cheap Aircraft Parts vs. Total Value Creation

Our supply chain team felt the pain of this just recently. They were huddling to bring in a new component to replenish a specific pooling product line. We’ve had trouble in the past with this supplier but since they met our QA standards we figured we would give them another try.

We sent the $3,000 PO to the supplier. They replied and said the unit is SV not OH, despite the email string saying otherwise. We told him that’s not we agreed upon and he replied:

“I’ll have to pass on this one…” Wait, what! He’ll have to pass?

We replied and demanded him to honor his quote and he stated “This is aviation bro, it happens.”

Yes, the term “bro” was used. I can’t make this stuff up. Can you believe it, this is aviation? Not Skylink’s type of aviation (Never Forget Your Wings).

This was our fault. We decided to procure based on price instead of total value. We’re still searching for this item and will have to absorb a NE unit at 4x the cost. We would have made other decisions from the beginning if we didn’t rely on this “cheap” price. Our mistake and we now pay.

Driving down cost is a smart decision but anything less than fair market value get’s you into sticky situations.

What you can expect from “cheap” aircraft parts

The definition of cheap is "costing very little; relatively low in price; inexpensive; low-cost in comparison to market."

Now, I’m sure you knew this but with low and cheap pricing you bargain with opportunity costs. You’re giving up something else in return for cheap pricing.

From experience, these are common things you gamble with:

• Reliability

• Quality

• Service

If cheap pricing is the way you want to go then you may see a higher occurrence of vendor problems. This means more cancellations, delays and poor customer service.

Sometimes it’s worth the gamble, but most often it’s not.

What total value is and isn't

The definition of value is "relative worth, merit, or importance."

Total value isn’t you spending 2x the market price on a particular aircraft part or using a specific supply chain partner. Total value is the return you get in addition to the price you pay for a specific product.  This is calculated in many different ways but a great example is when your aircraft is undergoing a maintenance check.

When your aircraft is undergoing a maintenance check, you need to get parts to the MRO at a designated time otherwise you’ll be penalized, or worse, the aircraft will be delayed. Let’s say with every delay you’re charged $500. You could buy a cheap component for $2,500 or a fair market component for $3,500.

You risk cancellation and delays with the cheap component.

You’ll then have to resolve the problem and expedite shipping, spending more of your precious time. When it’s all over with the “cheap” aircraft parts cost will add up well over $3,500 when you consider your time and expedited shipping and even late delivery penalization costs.

Most of the time, it’s not worth the headache alone. When you go with total value upfront, you save yourself the headache after.

Remember, this doesn’t mean I recommend you buy expensive inflated components. What this means is look at everything, not just the “cheap” cost itself.

Look at reliability and service as the core benchmark to determine appropriate actions.

Have you been caught in a “cheap” price predicament? Are you looking for total value with fair pricing? Fill out the form below and let us prove to you that were not “cheap” we’re valuable.