The Definition Of Your Demise, Stress

This article was first seen on NateAnglin.com. To see original article, click here.

Stress is like a nagging sister. Disclaimer: not saying I have one of these or anything.

She pulls our hair, pokes us when we’re concentrating, and to reflect a bit, embarrassed us when we brought a new “date” home in high school.

The effects stress has on you both mentally and physically is killing you. 

A day in the not so distant past, I was a part of the re-stocking initiative (sound fancy?) to replace the wheels and brakes for an A320. This project was a little shy of $100,000 and had several risky obstacles to stay on budget.

One of these obstacles was dealing with a new third party to handle repairs. If you know me, any “new” third party makes me sweat. With no history, we had no true knowledge of how they did things. It was a gamble.

2 weeks pass with several updates along the way. On the 14th day of the second week we called to check up on things, you know, the nosy in your face check up. They claimed that our account manager was fired and they never received our purchase order.

I about blew a gasket.

They went on to tell our Director of Operations to just cancel the order.

Now 2 weeks in with a 2 week deadline, we were in trouble.

I began to feel nauseous, slept poor and was craving some crazy foods. I think I may have even put on 5 pounds. Or maybe it was just the mirror. Let’s go with that.

Stress has a crazy effect on our body but most of us can’t even define it. We can quickly claim we're stressed in a broad term but so what.

You need to know what it is.

So, what is stress?

I define stress as demands put onto the body but then again, that’s vague and I’m not a doctor.

A respected psychologist, Richard Lazarus defines stress as “...any event in which environmental demands, internal demands, or both tax the adaptive resources of an individual...”

Stress affects your body's ability to control its inner environment. It’s a disturbance of homeostasis. If you've seen the movie Biodome you’ll know exactly what a homeostasis disturbance is.

Your adrenals are two glands that sit on top of your kidneys. Picture a walnut if you need a visual.

They’re the pilots of your hormones. They secrete cortisol, epinephrine, and norepinephrine that regulate stress response. For this reason, the adrenals are what determine our tolerance to stress. They’re the system of our bodies most affected by stress.

Picture a pilot out partying the night before with a 12 hour transcontinental flight the next morning. Your adrenals are the pilot when burdened with stress. Out of whack.

Different types of stress

There are 3 kinds of stress worth explaining as we often times define stress in a general term.

Acute stress

Acute stress is the most common form of stress. In small doses, acute stress can be thrilling but over time it can be exhausting. A challenging workout in the morning can be beneficial and invigorating.

But if you did the same workout three times a day you might find yourself less energized. You’ll feel tired and groggy. Performing activities beyond your limits can lead to injuries.

The good news is acute stress symptoms are recognized by most people. It can be a deadline you’re looking to meet, the car door being slammed into the wall, or the loss of a large contract.

Because acute stress happens in the short term it’s less likely to manifest into extensive damage that occurs during long-term stress.

Episodic acute stress

Episodic acute stress are for those who encounter acute stress on a regular basis. They live their lives in chaos. They’re the ones who rush out the door, stub their toe, drop their coffee and are always late. They're in a rush to be late.

They can’t seem to organize their life and everything is out of order. Sound like you?

Individuals who are overwhelmed with episodic acute stress can be over aroused, short-tempered, irritable, anxious and tense. They describe themselves as constantly having nervous energy. The “Type A” personality often times falls into this stress category.

Another form of episodic acute stress is in the form of ceaseless worry, or better known as worry warts. Everything's an issue and disaster is lurking around every corner.

Chronic stress

Chronic stress is the killer. While acute stress can be thrilling, chronic stress is far from. This is the type of stress that beats on you day after day, year after year. It destroys your mind, body and soul. According to American Psychological Association:

It's the stress of poverty, of dysfunctional families, of being trapped in an unhappy marriage or in a despised job or career. It's the stress that the never-ending "troubles.”

Chronic stress comes when a person never sees a way out of a miserable situation. It's the stress of unrelenting demands and pressures for seemingly interminable periods of time. With no hope, the individual gives up searching for solutions.

The worst part about chronic stress is most people just get use to it. They live with it and forget about its presence. “People are immediately aware of acute stress because it is new; they ignore chronic stress because it is old, familiar, and sometimes, almost comfortable.”

Natural occurrence of stress

Unbelievably, stress can be well intended.

You're probably familiar the term “fight or flight.” It’s your body’s natural response to stress.

When presented with a stressful situation, we either get aggressive, or run away as fast as we can in the opposite direction. 

Just picture a grizzly bear with cubs and without cubs. With cubs, she’ll tear into anything presenting danger to her children. Without cubs a loud noise could make her run in the other direction. Or for you aviation folks, a Cessna may try to fight with a Cessna, but when challenged by a B747, she's off in the other direction.

Your natural “fight or flight” response is incredibly efficient at energy preservation. It’s what helps you survive. You begin to sweat, your muscles tense, and your hearing sharpens. You are now incredibly alert. Concentration and awareness on anything else is avoided. The nervous system gets a flood of adrenaline (epinephrine). Your adrenal cortex pumps out 30 different types hormones to help compensate for the stressful situation. Your immune system temporarily shuts down so your body can efficiently use its resources to combat the potential threat.

Our body is a magnificent feat of science. When used properly we can turn a stressful situation into a way for us to hear better, jump higher and run faster. We will either outrun or out live a potential threat. Or that's the main objective at least.

Sadly, we now do most of this from an office chair.

Modern day captivity

Today our bodies are subjected to lifestyles that create an enormous amount of sedentary stress. We didn't evolve to deal with a daily barrage of stressful situations.

Persistent low-level stress turns into chronic stress over time. Maybe you sit in your office getting yelled at by the engineering department for 8 hours a day or you get stuck in traffic... every day. These are persistent low-level stressors.

Your body interprets this as a “natural” threat and your adrenals pump accordingly. Cortisol releases glycogen stores for immediate energy. The problem is with persistent cortisol release, it requires other important mechanisms to shut down. Some of these mechanisms are immunity, digestion, endocrine function, and the list goes on. This is why the link between elevated cortisol levels and weight gain have been established.

In the natural world stress is your super human ally, while in the office world it is your greatest nemesis. It’s your killer, your achilles tendon, your greatest foe.

To understand stress is to effectively define it. In the next blog post we’ll discuss how to identify it and symptoms you should be aware of.

What does your normal day look like? From this definition, what category of stress are you in? Comment below.

5 Benefits Of Humor In Customer Service

Do you think you’re funny? Do you have a good sense of humor? An appropriate one?

With all these questions now racing through your mind, who cares.

You are not the one being dissected here. Customer service is becoming a robotic dance between buyer and seller. No emotion, not friendly interaction...nothing.

We recently talked with a company who, on occasion, we call for quotes.

We called and they said, “You haven’t ordered from us lately, so this is a no quote.”

Not once has this company tried engaging with our purchasers, not once has this company engaged in a friendly and memorable dialogue, not once has this company called to ask us how they can best serve us. And lets be honest, they're not funny or entertaining so calling them is rather pointless to begin with. They're not memorable.

What happened to the days when you picked up the phone, laughed, joked and built a relationship. Humor is more than making jokes, it’s having fun and loving what you do.

Today, this “vendor” was tossed in the trash and we’ll make sure to call someone more humorous next time.

5 Benefits Of Humor In Customer Service

Humor is a dying breed in customer service. With greater technology comes distanced human interaction. Humor is necessary, just like smiling. Why do you think Southwest has maintained such a competitive advantage using humor in there customer service practices?

Laughter relaxes the whole body. When you laugh it relieves physical tension and stress. It’s reported to leave your muscles relaxed for up to 45 minutes after. When your customer service agent uses humor it relaxes you and allows you to make the best decision.

Laughter boosts immune system function. When you laugh it decreases stress hormones and increases immune cell function. It also increases infection-fighting antibodies, improving your resistance to disease. So, if your customer service agent makes you laugh and smile, thank them for saving your life.

Laughter triggers a release of endorphins. Endorphins are the body’s natural feel-good chemical. They promote an overall sense of well-being and can even temporarily relieve pain.

Laughter protects the heart. Laughter improves the function of blood vessels and increases blood flow. Now, thats a heart healthy alternative to drugs. This can help protect you against a heart attack and other cardiovascular problems. Did they just save your life again?

Laughter boosts social skills. Many scientist believe laughter allows humans to connect, bond and communicate with one another. Laughter is a universal means of communication. It’s a great way to connect with many cultures and is the reason “...when you laugh, the world laughs with you, but when you weep, you weep all by yourself.”

Humor and laughing is a natural part of being.

So why are so many companies avoiding this connection between their company and their customers?

I challenge you to focus on people who can make you smile and laugh. It will not only help you during procurement but it just may save your life.

How does laughing and humor make you feel? Have you had an experience where it changed the outcome of a situation you were in? Comment below.

10 Ways To Spot A Customer Service Robot

When you pick up the phone do you hope to talk to a human?

In the not so distant past I was calling an OEM for status on a repair we had gone through.

I picked up the phone, palms slightly sweaty as I was already anticipating what I was about to encounter.

After dialing the number the phone began to ring...

My ears aware of what was coming next I hear “You have reached ___ please listen carefully as our menu has changed”

Oh no!

After 8 options I chose 4 for repairs.

“You have reached the repairs dept. please press 1 for…” and they go on to list customer support, shipping, QC, among 5 other options.

I chose the option that I thought was best, customer support.

They then go on to list 5 people whom I can press an extension for and talk to. Frustrated being on the phone for 5 minutes at this point I press 3.

I call the extension and it goes to voice-mail. I was nearly a few seconds away from throwing my phone across the room but I decided to leave a voice-mail. I received a return call 2 days later.

To me, this is horrible customer service and is no way how to interact with paying clients.

Would this even be considered customer service?

This is why I give you 10 ways to spot a robot and avoid situations like this.

10 Ways to Spot a Customer Service Robot

1) Pressing multiple numbers to reach one person Just as you saw in my beginning story, pressing all sorts of crazy numbers adds stress, anxiety and annoyance in a world where you already get plenty of that. Hang-up the phone, throw it across the room, or avoid any companies who want you to go through 15 robots automated answering machines to get to a human. Clearly they're too busy or cheap for you.

2) Overpromise and underdeliver Have you ever talked to a person who overpromises on everything but never pulls through? “Oh you need it there by Thursday, I’ll get it to you by Wednesday.” Come Friday you still don't have your order. Or they quote you an average repair price and they either find out they no longer have capabilities after you send them the unit or their average is double just from labor.

3) No personality If you call a company and the other person doesn't sound alive, like they want to talk to you, or are miserable...RUN. You’ll be on a fast track of a whole mess of “I Don't Care About You” if you continue any further.

4) Significantly delayed responses People are busy and delayed responses are normal. But and I mean a big “but” is when you see a company that says if you do not hear from us in 48 hours consider it a no quote. This statement shows this company has their priorities straight (incredible amount of sarcasm in that sentence).

5) “Sorry for the inconvenience” We've talked about this before and I hear this often. You order something and they can’t locate the part or whatever excuse it may be. They then send you an email saying “sorry for the inconvenience.” Inconvenience? You deserve more than than an inconvenience statement. An inconvenience is when you run out of salt for your dinner, the dry cleaners are closed on Saturday, but this order, your time is much more than an inconvenience. It’s a distribution nightmare that you now have to fix.

6) Poor problem solving skills The people who write “sorry for the inconvenience” are always people with poor problem solving skills. If a problem occurs you deserve solutions to be presented to you. Or better yet they just figure out a solution and go on as normal and don’t stress you out.

7) Unreachable on weekends Now, you may debate with me on this one but if you are close with your supplier they should be accessible to you on weekends. Aviation is an industry that never sleeps and for you, neither should they.

8) Avoids emailing after closing Companies close and that’s fine. Your account manager or whomever you talk to should still be able to respond via email after closing. Granted, they can’t make magic happen but they can still address you if its pertinent. This small step shows they care and that they’re not a robot.

9) Constant push lists and sales tactics This drives me crazy. I get a push list from a particular company every single day.  I've actually tried to buy off this company. I submitted the PO, I never got a confirmation and my phone calls would go straight to voice mail. Surprisingly, I still received push lists despite them ignoring my attempt to buy. Crazy I know.

10) Reading from a script This is the worst case of I’m a robot. Just recently we contacted a company and a young lady answered. Sounding rather timid we advised her the reason of our call. I kid you not, she replied after a brief pause “So it looks like I’m supposed to ask you how the weather is". Wait, what? After a brief laugh we parted ways.

There are plenty of articles on customer service and how it should be done but there’s no magic formula.

Just deal with a human that cares about you and you’ll be all set.

Avoid robots, talk to humans and live stress free.

Have you experienced dealing with a robot? Comment below.

5 Ways To Have A Productive AOG

It’s 5am and you're on your way to work. You feel good. Your outfit is sharp, coffee in hand and you're ready to take on the day. With every breath of fresh air you’re excited and invigorated until…

Your Head of Engineering has a busted starter solenoid which has rendered your bird, Aircraft on Ground.

The initial feeling you get in your stomach is that of stress and anxiousness. Your feel good, great morning has now been crushed.

On standard days you would process an Aircraft on Ground requirement with a frantic hurry. Mass emails, hurried phone calls and rushed order procurement.

Hurrying in an unplanned, unorganized way will only create a flurry of issues.

A productive Aircraft on Ground

Nobody likes the deep feeling of stress in their stomach. And it’s not good for you.

To effectively tackle an AOG you must be methodical, organized and rely on quality partners.

Here are 5 ways that can help any AOG situation turn positive.

1) Organization: People have claimed that they work best with “organized chaos.” Papers are all over their desk, icons fill their desktop and they don’t know their left hand from their right. Nobody works at 100% efficiency disorganized, period. To get the most out of your AOG make sure to have all your information clear and concise. A few questions you should answer are:

• What do you need to procure and what are all the specific requirements (i.e. OEM certs, condition, FAA 8130 no less than 12 months old, etc.). This will help you communicate exactly what you need with your suppliers and reduce unnecessary back and forth communication.
• What’s the latest day I can have this at our facility? The answer to this question gives you a realistic picture if you need to overspend on shipping or if you can wait a day or two. It also helps your supplier plan.
• By what means is it going to get here? By answering this you can relay all the pertinent shipping information to your supplier so they don't have to waste time asking you. Do you need to ship this AOG air, freight, express? Is it DHL, FedEx or possibly another integrator? Does your supplier use their account or yours? You get the point.

2) Streamline your supplier list: If you normally send to 100,000 people in your email list, narrow it down to your best 2 suppliers. This will help you avoid data overflow and avoid market being stirred. Whether you want to believe it or not, when you send to a long list of people a handful are calling around to get market price which in turn artificially inflates demand and increases the current supply price.

3) Forget about price: I know, easy for me to say but hear me out. When you streamline your supplier list you avoid artificial increases in demand and support the current market price. If you use your 2 best suppliers you know for this instance they shouldn't be overpriced. This avoids precious time being wasted  going back and forth trying to negotiate price with multiple vendors. Remember being streamlined is crucial during an Aircraft on Ground situation. Haggling back and forth over market price only wastes time and time is money.

4) Evaluate a contingency plan: Lets say you buy a part from ABC company and they tell you at 4pm that they “can’t” locate their part in inventory. Do you have a contingency plan to fall back on? By having a contingency plan you have a backup for when something unexpected arises, which as you know happens often. And, on a side note your supplier should have their own contingency plan.

5) Communicate, communicate, communicate: There's nothing harder on a supplier than when an AOG situation arises and information is withheld. Your supplier then has to contact you for more information and considering the international marketplace, you may be sleeping. Share as much information as you can upfront and constantly communicate with your supplier. Effective communication will avoid misunderstandings entirely.

AOGs are bad but through effective planning you can block any obstacles thrown at you during the process.

Give an example of a recent AOG situation you were in below. I’ll analyze it and give you my opinion.

Retirement Plan For End Of Life Aircraft

There comes a day when aircraft get old and it’s time for them to retire. Their joints begin to ache, their bolts begin to fall out and their oil dries up.

If you have or know of such an aircraft that’s hurting and barely getting through its last days, we want her.

We’re looking for various teardown candidates who have reached the end of their life.

The current aircraft we want to put in on our retirement plan so they can feel happy and useful once again are:

Boeing 737-300/400/500

We've worked with Boeing aircraft for over a decade. The B737-300/400/500 aircraft is dear to our heart and we want to make sure that she gets the most out of her life. She is our short to medium-range twin jet narrow-body work horse.

Boeing 767

With an increasing number of clients utilizing this aircraft we want to make sure they're covered. This mid to large size, long-range, wide-body twin-engine jet has become a  popular choice and we would like to add more to our retirement plan.

Airbus A320

Another popular short to medium range, narrow-body aircraft that comprises a large amount of our maintenance traffic. Since she is popular by our clients, we would like to continue to add more of these aging aircraft to our retirement program.

ATR42 and ATR72

With the first ATR produced in 1984, these regional, twin-turboprops have been a major product line at Skylink. They are a unique blend of elegance and efficiency and as they age we want to make sure they go out peacefully.

Lockheed C-130 Hercules

A major player in the military transport field, this four-engine turboprop is a major transporter for the international Air Forces we work for. She is strong, yet aging. To continually support newer fleets cost effectively, we must be able to use pieces of aging fleets. We will evaluate any model available for tear down.

As you can see, we have a few aircraft that we want to continually add to our retirement program. These aging fleets deserve final days on green pastures and we want to grant them that wish.

If you have or know of one of these aircraft reaching its retirement point: CLICK HERE

Surplus Robbery And Why To Avoid Excess

Young-man-surprised

Have you ever walked down a busy urban street to eventually find out you’ve been robbed?

Or, maybe you're like me, a type that goes grocery shopping while hungry.

I’ll go down each aisle, stomach growling and toss junk in my shopping cart.

A week later I’ll reach into the refrigerator and find out that my vegetables are rotting, the meat is smelly and my fruit is beginning to attract several flying creatures.

These two scenarios have one thing in common, lost money. When you're robbed you lose money immediately but when you overbuy money is lost over time.

Now, the problem with these 2 scenarios is your surplus inventory is similar to both.

I know, hold the screaming and crying.

Aircraft surplus robs you blind

I challenge you. Go through your inventory and calculate the amount of money that's been tied up on your shelves for more than 12 months.

Is it 50%? 75% Maybe even 90%?

Now, think of that money sitting in a large pile in the middle of your warehouse. Do you have the image?

Now light it on fire!

Inventory that’s been on your shelf for greater than 12 months is a poor inventory turnover strategy with negative effects on cash flow.

Just picture how this money could have been allocated. I’m sure you have more important projects than just sitting money on the shelf watching it get dusty. This is why we created our aircraft asset management program.

Our goal is to minimize your inventory's shelf life, reduce holding cost and capitalize on generating revenue from your aging material. Aging assets is a poor way to manage your money.

With so much focus on hedging fuel, creating ancillary revenue, you should also focus on minimizing idle, wasted inventory.

Don’t sit and wait.

Look at your inventory, scream out loud and take action. Liquidating this excess is a bright future for your cash flow.

And just possibly an aircraft asset management program may be a good solution for your operation.

If it is, contact us today by CLICKING HERE and saying "Help me eliminate our surplus nightmare."

High Turnover and the Inventory Dream

You sit in your office, wondering, waiting.

The mess on your shelves is a never ending doom of dust and debris.

You fight with yourself trying to figure out when it will sell or when it should be scrapped.

Aircraft component surplus is a common problem. A costly problem.

It’s a marriage problem.

Often times people feel married, dedicated to the parts.

A few years ago, more like 7, we decided to move to another location.

We had old Rolls-Royce engine nacelles lining the wall, several hundred feet of wings and struts hanging and consuming the outside perimeter of the warehouse.

Prior to the move I walked into the warehouse, with a deep sigh, and thought, what a bunch of junk.

The material had sat in the warehouse for over a decade and was deemed useless and costly to continue to sit. So we decided to scrap it.

Now, as an airline you have the option to consign the material to someone like Skylink but for us, at this time, scrapping was in our best interest.

For you, creating a strategy where you have high inventory turnover may seem impractical, but it may not be a so far from being just a dream.

Inventory turnover

Inventory turnover is defined as how many times a company’s inventory is sold and replaced over a period. This is a valid definition for someone like Skylink.

For you, inventory turnover is defined as the liquidation of unnecessary components to reduce cost and fund profit generating activities.

High inventory levels are unhealthy because they represent an investment with a rate of return of zero. It also opens you up to trouble should prices begin to fall. Another very big issue we see.

Often times airline surplus is still expected to get the same return from pricing 10 years old. Unrealistic and hard to achieve.

The best option to avoid this is to consign your assets to a trusted partner who specializes in the resale of aircraft spares. And it’s for this reason we have our Asset Management program.

By utilizing a skilled partner who does this day in and day you will ensure a higher inventory turnover than you experience now, it will cost you less to staff and facilitate sales, and reduce your overhead expenditure.

An asset management program is an excellent tool if you see your inventory levels rising and dust beginning to collect.

If you're interested in such an asset management program, Click here

Problem Resolution: A True Testament To Vendor Relationships

We've all been there. In the office, palms sweating, heart racing on the verge of an emotional breakdown.

Last week we had an international air force AOG for a scarce, nonexistent yoke. No, not the egg kind.

Now envision a drill sergeant yelling at you if you screw anything up.

The order was planned, distribution was set. A week later the OEM advised us they had changed their “policies.” Meaning our order isn’t a priority and there’s now an additional lead time.

Thank you corporate structure governed by an aggressive union.

No calls to advise us on status, 10 emails left ignored and a careless attitude because of internal politics and simply not giving a ****.

Companies are horrible at communicating and resolving problems.

This is true for 95% of the industry, big OEM or small, 2 person distributor.

Identify the problem & fix it

Identifying problems and issues is a three step process.

Most people over-complicate the first step and then kick and scream eventually giving up and leaving the customer high and dry.

First step: Identify

This is where you dig down and find the real issue. Most of the time the problem is rarely the real issue. Dig deep to find the cause.

For us we recently had a fire-bottle that needed to go to Uganda on an AOG basis. Every day the freight kept getting bumped and we narrowed it down to the 1.4S HAZMAT classification.

With the real issue identified we could begin discussing resolutions.

Second step: Discuss

In an open and honest environment everyone must share their thoughts, ideas, concerns and possible solutions regarding the issue. After discussing and debating with the greater good in mind, the solution is always simple, though not always easy and sometimes very hard.

For the fire bottle our client and VP discussed and debated collaboratively. No rock was left unturned, no email went unanswered. We were on a mission to get it resolved.  A few carriers were crossed out, a bonded warehouse was found and the end destination was possibly going to be changed.

Step 3: Solve

Once a solution has been stated and agreed upon it’s time to take immediate action. Put it on the person who owned it’s to-do list and confirm completion.

We eventually decided that the fire bottle was best to be transported to S. Africa to a bonded warehouse in Johannesburg. Then our clients could take receipt of the goods and install it. A decision was made to redirect the material and that's exactly what happened.

An effective problem resolution strategy is best in conjunction with effective communication.

Once people begin only thinking about themselves and not in a collaborative, team environment, more unnecessary problems will surface.

Do you have issues resolving problems? Or do you deal with vendors who do? Comment below.

5 Ways To Be Cheap And Profit

Let’s face it you want to be cheap.

This isn’t always true through procurement since quality comes at a higher price. Getting a WalMart “Everyday Low Price” is a scary thought for a $50,000 avionic.

But operationally you want to be cheap without sacrificing efficiency. This is why we are a huge proponent of Lean Six Sigma.

I had the opportunity to discuss this very topic with an airline executive.

We entered the coffee shop and a fresh aromatic smell entered our noses. You know the smell I’m talking about.

We ordered our coffee and discussed the war stories we each had encountered in the aviation industry. Both witnessing tragic endeavors for nearly 2 decades in different parts of the aviation industry, we had a lot to talk about.

Finally our names were yelled as though we were at a fair. Our coffee was ready and with scorching hot cups we proceeded to sit.

I bluntly asked the gentlemen, how he precluded to ensure operational efficiency.

His answer was, do everything ourselves.

I about fainted and blurted out WRONG.

Operational Efficiency

Operational efficiency is defined as the “...ratio between the input to run a business operation and the output gained from the business. When improving operational efficiency, the output to input ratio improves. Inputs would typically be money (cost), people (headcount) or time/effort. Outputs would typically be money (revenue, margin, cash), new customers, customer loyalty, market differentiation, headcount productivity, innovation, quality, speed & agility, complexity or opportunities.”

I will cut to the point to avoid any sudden onslaught of boredom.

For any airline operational efficiency is when you operate to maximize your revenue generating activities and minimize your expenses. Easy I know. I’m no Albert Einstein when I define this.

The problem with my airline friend's response in the beginning story is that he relies too much on internal pressures where certain activities could be outsourced.

Managing inventory, aircraft asset remarketing, and surplus inventory and sales is not his strong suit. He’s adding additional expense and taking away from their core focus, keeping the fleet in the air and reducing cost.

How to be cheap and profit

We all want to reduce cost, it’s the best way to expand the bottom line. As long as you aren't cutting back where operational efficiency will suffer.

I have 5 ways you can save, generate more money and become more profitable by utilizing an aircraft asset management partner.

Reduce cost of money: Nobody likes holding cost. Lets say you have $5M worth of inventory in which you're more than likely sitting on a credit line. What if you could reduce that inventory to $4M? I’m sure you could use the additional $1M in increased cash flow rather quickly, for better uses. This cost is typically seen at 15% of your average inventory.

Cost on $5M of inventory = $750,000

Reduce storage cost: No matter if you own or lease you’re paying for warehouse space. The more inventory you have, the more warehouse you need. From computers, to racks, mezzanines to boxes the list can go on. What could you do with a smaller space? Storage cost adds 4% to your carrying cost.

Cost on $5M of inventory = $200,000

Reduce Taxes: Ronald Reagan once said, “Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.” Your inventory is always moving so whether you like it or not the government will more than likely tax it depending on where you're located. From an accounting standpoint, an increase in inventory is shown as a profit and will be taxed as such. Taxes will typically add 2.5% to your annual carrying cost.

Cost on $5M of inventory = $125,000

Reduce waste: Let’s face no matter how much you plan waste will always follow inventory. You cannot plan the market 100% of the time. From overbought gaskets whose shelf life has been reached, an outdated TCAS system, or excess expendables waste is on your shelf. It can be safe to say that most of these won't be going anywhere any time soon. Waste can usually add 1% to your annual carrying cost.

Cost on $5M of inventory = $50,000

Reduce shrinkage and spoilage: Dan Kiefer explains this best when he says “...This category should not be confused with obsolescence.  This category includes inventory that came into the warehouse and should have been sold but can’t and won’t be.  Where as obsolescence and spoilage have to do with purchasing and the market demand, pilferage and damage can often be attributed to human behavior in your warehouse.  Although this  cost can vary greatly from one warehouse to the next, and can often be controlled and reduced, it can never really be eliminated.  Whether a forklift hits a pallet, a jar gets dropped during handling, or someone gets overzealous with a box cutter, damaged products in a warehouse are a fact of life and must  be accounted for.   The longer something sits in your warehouse, the greater the risk of it being damaged or disappearing.”  The typical cost associated with shrinkage and damage is 1%.

Cost on $5M of inventory = $50,000

Reduce insurance: Your insurance company is charging you based on the average amount of inventory you have on your shelf. If not, please refer me to your insurance company as I’ll change policies immediately. The cost is not huge but it’s still an unnecessary cost for unwanted, unused material. Insurance costs are typically .5%.

Cost on $5M of inventory = $25,000

For a $5M inventory your annual carrying costs are $1,200,000. WOW!

You can solve this by taking advantage of an asset management program.

Whether it’s an aircraft ending its life or surplus inventory sitting on the shelf the right partner can market your assets at an attractive price to liquidate and generate revenue.

You will immediately reduce carrying costs and operate within operational efficiency.

We have just the program for you. Click here to show your interest.

Why Your Material Assets Eat Away At Your Bottom Line

Not long ago having a lot of inventory common. It was "smart", right and the industry norm. You had something when you needed it...if you ever needed it.

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I used to think this way as well.

I'd wake up every morning, sip on my coffee, and wonder how I was going to keep plenty of stock. Always. But then one morning I woke up and the coffee smacked me clear across the face.

We opened up various airline and MRO client financials and calculated furiously, Albert Einstein style. I tend to think him and I as one of the same, but anyway...

The financials argued against everything that was industry norm. Insurance premiums continued to soar, warehousing and distribution costs were at an all-time high, and overhead was out of control.

Carrying costs were clearly not in the best interest of our airline and MRO clients. 

Are you losing your ass-ets?

Inventory is necessary but excess is a sin.

Excess is overspent, unwanted surplus that you have no control over. It’s a blood sucking insect that is more of a pain than it is a benefit.

According to "Production Spare Parts: Optimizing the MRO Inventory Asset" they state some sobering facts:

• In a typical production plant, about 30 percent of the spare parts sitting on shelves are unnecessary.
• More than 60 percent of all stocked spare parts have not been used in three years.
• About 35 percent of all spare parts are critical to operations and not easily attainable with short lead time.
• Between 10 and 20 percent of the parts account for 80 percent of the total inventory value.
• Annual carrying costs associated with spare parts is between 20 and 25 percent, meaning the cost to a company of every spare part stocked doubles in four to five years.

Manage your assets the right way

Finding ways to avoid carrying costs is easy, but implementing them is a chore. 

It takes a planned strategy and proper support.

Here are a few ways we recommend for you to manage your aircraft assets and bottom line:

1) Streamlined Distribution: Procurement for aircraft checks will encounter bottlenecks. Talk with your trusted material advisers during this process and organize maintenance check material distribution strategy.

2) Vendor Managed Inventory: The JIT strategy benefits are low inventory, low wastage, high-quality production, and increased up-time. It reduces carrying costs and the effort into having to repurchase common material.

3) Repair management: Recycling your inventory through MROs is mandatory but dealing with the mess having to manage MROs is another story. A repair management program will do all the work for you. It'll save you a lot of money on freight and processing costs. 

4) Asset management: Whether you have surplus or you're slowly building the unwanted dust an asset management program will help you liquidate your surplus material. You'll recapture the lost capital tied up into your inventory. Or if you have an end of life aircraft consign it to a reliable party so they can tear it down and sell the assets. You'll have thousands of profitable spare parts generating revenue for you while keeping a depreciable asset.

Focus on stocking enough for minimum requirements and adopting new strategies for streamlined distribution. You owe it to your  bottom line. And stop losing your ass-ets. 

Need to sell your surplus?