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.

5 Reasons Why Purchasing Standards Will Change Your Life

Did you know you’re urgent day-to-day routine effects your purchases? Your urgency helps tasks but leaves you rushing and lowering your purchasing criteria. Often price is your main objective. As long as you have the cheapest price you’re happy. Right?

Being “cheap” cost you more than you think. Rushing your buying process and only shopping for the best price you’re missing out on quality and value. Rushing when purchasing makes you an emotional buyer and that can cost you tons of money in this game.

Create yourself purchasing standards.

Here are 5 reasons why purchasing standards will change your life.

Keeps You on Target

When you purchase on emotion, you purchase with what you “think” is the best decision. Hormones play with your mind.

Emotions will overrule your best long-term decision.

Creating a purchasing standard, you’ll commit yourself to overall excellence. You’ll avoid making fast, emotional decisions that lead you to heartache and pain.

Helps Avoid Scammers

I’ve said it before and I’ll say it again, aircraft component scammers are active and ready to take your time and money. It’s a fact of life.

One of the best ways to avoid scammers is with a purchasing standard. When you set standards you create a blueprint for excellence. You create an ideal world. A preferred supplier persona.

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More Focused on Total Cost of Ownership

Direct cost and lead time is how you make your decisions. Both of these are incredibly important but so is the total cost of ownership. Once you set your purchasing standards, you’ll have a guide that helps you make the best overall decision. Direct costs are often used as a vanity metric. Total cost of ownership is your primary metric for purchasing excellence.

Reduce Processing Costs

Processing costs are a part of the total cost of ownership but they play a critical role here.

Orders being processed are often followed by a huge productivity slump. After an RFQ (request for quote) is created, competing quotes are received, the order is placed and issues resolved. Productive time is literally flushed down the toilet.

Once you have your purchasing standards created, you’ll reduce time and money processing orders. You’ll have a fluid process to go to every time.

Better Decisions

As orders are being placed, you’ll make better decisions on what components to purchase. You’ll be faster at solving problems as they pop up.

You live in aviation. Issues happen but solving them fast and with least financial impact is critical. Your purchasing standards will help guide you through this process. It’ll tell you how to handle such problems.

I find that most problems are unique as a standalone issue, but they all follow the same decisions making process.

Creating purchasing standards for your aircraft components will help save you time and money over the life of your purchases. It’s their guide to you, to be your point of reference in times of difficulty.

First start by working with a partner who embodies everything you would want in an ideal vendor. They reply to you fast, they have what you want, when you want it. They accept problems and solve them not leaving you to figure it out all alone. That’s an ideal vendor. A true partner.

Once you have that, start by creating your purchasing standards on the ideals they represent. Simple!

10 Ways to Avoid Aircraft Component Scammers

We’ve all been there. You purchase an aircraft component and never receive it. You've been scammed. Or you receive something that’s vastly different than what you ordered.

In either case you've been duped, tricked, and fooled into paying for something that was a lie.

Money is thrown in the garbage and you’re left having to fix it.

You think you’re alone when this happens. Sadly, you're not alone.

A few years ago we bought an INU for $15,000. The "company" was based out Atlanta. GA.

Before paying we revised the airworthiness certa. Everything checked out. The vendor sent us an AWB.

The next day, nothing showed up and nothing tracked. We called the local FedEx branch and they said they have a guy on video coming back to pick up the part.

We were officially scammed.

Thankfully for me I have a cousin in the FBI and a few friends gave these scammers a nice phone call. Over the next couple weeks we had our check back.

We can't all be so lucky every time.

We’ve also encountered a $30,000 fraudulent wheel assembly purchase out of Turkey. We avoided it using the tips below.

Smell the scammer

[Tweet "If it looks like a scammer and it smells like a scammer then it is a scammer. #avgeek"]

During your first communications you’ll have clear signs of what type of person you’re dealing with. He probably even smells funny through the phone. If you smell a stench, hit the trench.

Reliable partners are completely transparent. You can find them online, they’ll video chat with you and they’ll reply to you during all hours of the day.

Scammers want to keep a low profile and they ALWAYS use aliases. It’s your responsibility to connect the dots. If the dots are easier to connect, you have a legit company.

Disclaimer: just because they’re legit doesn’t make them good. Legit companies can still be horrible to work with.

Ways to avoid being tricked

We’ve been tricked into buying fraudulent aircraft parts numerous times. It's tough to spot especially if you're in a rush.

We’ve also received parts that weren’t what we ordered and getting it resolved was a pain.

Here is a list to help you avoid be scammed. If you’re dealing with someone that resembles these be cautious.

1. They don’t have a professional website.
2. They have a standard email address like @gmail or @hotmail.
3. They don’t give you their phone number, better yet they hide their mobile #.
4. They write emails unprofessionally.
5. You request documents and it takes then a couple days to get them to you.
6. You request a picture of the unit but all you get is one picture fuzzy looking thing.
7. You request a picture of the id plate and the S/N doesn’t match their paperwork.
8. You ask if they take credit card and all they take is wire transfer.
9. You ask them to fill out your QA audit form and they don’t have an internal QA policy and they can’t send you a copy of their QA manual.
10. You can’t find the person you’re purchasing from on the internet.

These are the best ways to spot a scammer. Professional aircraft component scammers have to keep running. They lurk in the shadows.

When talking with them something will always be suspicious. Keep ears and eyes open.

Better yet, if they resemble some of these points above, run away.

Calculate Aircraft Rotable Lifecycle Costs in 7 Easy Steps

Every time you buy an aircraft rotable, how much does it cost your operation? I’ll spare you the pain of having to answer that. It’s not the initial cost you acquired it for. Everything you buy, every part you touch has reoccurring cost, buying an asset for $10,000 doesn’t mean it’ll only cost you $10,000.

The direct cost (the purchase price) is the most common cost most purchasing and logistics departments focus on. I’m sure you’re the same way.

When you buy an aircraft rotable, knowing its total lifecycle cost is a good strategy. It gives you a clear insight on where you’re bleeding money.

Here are 7 easy steps to nail down your aircraft rotable lifecycle costs:

Know your direct cost

Direct cost is your best friend. It’s who you spend the most time with. You go on long friendly dates and prefer they pick up the bill. You focus on lowering your cost every chance you get.

Your goal is to get the best possible upfront cost, right? Not quite but it’s a good start.

Let’s make two comparisons. A supplier sells you a “cheap” part and is unreliable or can’t create a total value solution for you. Your other supplier is slightly higher priced but always delivers and does what he says he’s going to do. He also gives you many opportunities for comprehensive support solutions, creating tons of value.

Based on these two examples, you want to go with the value creator despite the initial higher direct cost. This is the way you want to begin thinking.

Either way, knowing your direct cost is the starting point not the finish line.

Know your processing costs

This is one you don’t think about often.

How much does it cost you to cut orders and ensure delivery? In order to determine this expense look at your labor costs directly associated with ordering. Spending less time babysitting orders and focusing labor hours on critical projects is important.

Chasing suppliers is a huge productivity waste and a costly burden.

Know your freight costs

In the last week I witnessed an airline spending $12,000 on a carry on AOG freight solution for a couple expendables. Yikes!

With every purchase it’s imperative to know your freight costs.

Just freely shipping everything priority freight is a costly mistake, especially for routine orders. Every decisions you make must have a cost associated to it. A cost of money or a cost of value crated.

Know your holding costs

Stocking aircraft parts makes you feel comfortable. It’s your safety net. Nowadays you have plenty of outsourcing options so don’t get caught up in this myth of overstocking. Being married to your parts is a thing of the past.

You’ll spend 20% of the direct costs on every asset you own every year in holding costs.You spend $10,000 to stock a component for 2 years and you now just accumulated $4,000 in holding costs. Not to mention the capital you just tied up on the shelves.

Know your repair costs

You buy a component, great! How much is this going to cost you when it’s removed for routine, or non-routine repair?

Knowing the cost to upkeep your assets is good business. Outsourcing this is even better business.

Know your change or environmental costs

What if upper level management decides to upgrade or change your fleet?

Having a surplus of “just in case” inventory sucks capital and creates a liquidity problem. The more you have the more inflexible you become. If something in your operations strategy changes you’ll be required to liquidate your excess inventory. Know this risk and plan for it.

Know the true value your aircraft rotables create

Keeping your fleet in the air is priority number 2, first is filling your seats with passenger or your belly with cargo. Every strategy you undertake, your component support strategy must play a deciding factor. Simply buying components as needed on an AOG basis or overstocking spares is not good strategies to adopt.

Where can the most value be created for you?

All of these steps are important, but nothing is as important as a reliable supply chain. Whether you decide to outsource 95% of your aircraft maintenance activities or relay on an AOG partner, you must think long and hard about the total value they create for you. Simply bringing on more suppliers and throwing out RFQs to the world is a chaotic solution. Streamlining your focus and being diligent on the people you work with will help you resolve all of your cost problems.

Think about it. It’s difficult to envision but I assure you it makes a world of a difference.

Do you have cost problems? Is reliability an issue? We can help. Fill out the form below and let’s chat about how you can overcome your current problems.

Why Total Cost of Ownership is Your Secret Sauce to Aircraft Component Purchases

You’re always stuck on the purchase price. It’s the first and last thing you think about. It slaps you across the hand and says, look at me, I’m important. Sadly, you’re wrong. Money and time is lost by this way of thinking.

Total cost of ownership is a different story. It’s when buyers go beyond the initial price and develop a more holistic view of how much a certain asset will cost over time.

We can take this vary concept into our daily lives. Don’t be fooled when you bring a dog into your family. Whether you adopt ($0) or buy one for $2,500 you’ll spend way more over the course of it’s beautiful life. Or don't be fooled if you buy a car for $30,000 and think it’ll only cost you $30,000 over it’s useful life.

Aircraft component purchases must be treated the same way. Don’t be fooled spending $30,000 on an INU and think it’ll only cost you $30,000. What about freight costs, processing, holding costs and I’ll continue the list if you want me to. In fact, if they direct cost is fair market value (+/- 5-10%), then it’s the later you deserves more of your attention

The Total cost of ownership methodology will save you heartache and pain (yes, I just quoted this song). Acquisitions must be viewed in this way…always.

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Determine the overall lifecycle cost of your aircraft components and save money

Looking at the direct cost alone is fool heartedly. You’re procurement activities are global and there’s a myriad of costs that you must consider.

For an airline or MRO logistics and procurement activities are direct costs, freight, processing, labor, installation, holding costs, comm unication, problem resolution, warranty, training and productivity losses.

By looking at direct costs, indirect costs, transaction costs, and disposal costs, you as a purchasing professional get a more co mplete picture about a specific financial investment. I don’t care if it’s 1 part or 100. Looking beyond the initial cost will shock you into what you’re actually spending.

Here are some real world examples we’ve encountered:

• An airline needs 10 components (a mix of rotables and expendables) and focuses solely on direct costs. They decide to purchase all 10 components from 7 different suppliers. Some suppliers are reliable while others have failed them in the past. The airline will incur 7 different processing and freight costs. They’ll be forced to resolve any issues that arise and be hit with productivity losses. They overlook the cost advantages of streamlining.
• A large MRO buys expendables from all over the world and becomes AOG for such small items on a frequent basis. They overlook the importance of TCO and the cost reductions an on demand or JIT strategy will create.
• An airline buys millions of dollars in inventory. They overlook the long term expenses associated with holding inventory. It eats away at their cash flow and ties up millions of dollars of capital on the shelves.

You now understand why I said “fool heartedly.”

Buying based solely on direct cost is disastrous to your bottom line. Get a more holistic view of what you’re buying and save big.

Do you focus all your attention of direct costs? Are you losing money by the day? We can help as we help hundreds of airlines, MROs, lessors, and military’s every week.Fill out the contact form below and we’ll be in touch in no time.

Happy National Aviation Day 2015

What are you waiting for? Get up and celebrate...it's National Aviation Day.

Our friends over at Wikipedia explain the meaning of  National Aviation Day:

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"The National Aviation Day (August 19) is a United States national observation that celebrates the development of aviation.

The holiday was established in 1939 by Franklin Delano Roosevelt, who issued a presidential proclamation which designated the anniversary of Orville Wright's birthday to be National Aviation Day (Mr. Wright, born in 1871, was still alive when the proclamation was first issued, and would live another nine years). The proclamation was codified (USC 36:I:A:1:118), and it allows the sitting US President to proclaim August 19 as National Aviation Day each year, if desired. Their proclamation may direct all federal buildings and installations to fly the US flag on that day, and may encourage citizens to observe the day with activities that promote interest in aviation."

You're Crazy Focusing All Your Attention On Repair TAT

You put a ton of effort in shortening your repair turn around times. You, just like me, are crazy.

Everything you do pushes the MRO for an early completion. You yell, scream, beg and maybe even threaten.

When you have this approach is your effort in the right place? Is your time and money being allocated to the right cause?

Yes and no, but before you start throwing CMM books at my head trust me, I get it. Repair TAT is important.

It's crucial yet I urge you to not focus all your attention here.

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A wasting your time story

We recently received thrust reversers. We began inspecting them and soon realized that these beauties had more modifications done to them than a Los Angeles actor.

They were fitted onto a modified aircraft. They're literally the only thrust reverse's of their kind on the planet.

When we were preparing for this project, they took 12 days to get to us off of an aircraft undergoing a routine c-check. We scheduled our truck to pick the units up but we got a call that the thrust reversers we’re improperly crated and they had to bump the pick-up. It took 2 additional days to get them into transit.

Once they got to our facility they were inspected and the nozzle was beyond physical repair. We could save these units but the price of repair would become double the standard repair rate. Remember, these are the only two of their kind.

A lot of work will have to be done to bring these two units back to airworthy condition. After the initial quote it took 14 days for approval…and yes while the c-check was still in progress. No loaners, no exchanges, no replacements, we had to repair these units.

We still had 21-30 days after approval to get these units done and when they were approved, it was advised that we get these done fast. Yet, it took 28 days to get the thrust reversers to approve the quote.

And that leads me to my next observations…

Focus your efforts on internal processes along with reducing aircraft component repair TAT

From this story you can see where some of the problem occurs. Now, the fault isn't pointed at anybody. Some decisions are hard to make and yes, sometimes it takes multiple approvals to get things done. I get that.

In this situation there's nothing the MRO could do to rush as a large chunk of time was spent in processing and outbound logistics activities.

By focusing some of your time and effort on internal processes you can cut your aircraft component repair time dramatically. In the story I shared, half the time could have been saved.

Start to focus more attention on areas that create the longest drag, meaning where does the component do most of it’s sitting and waiting.

Here are some areas to start on:

• Component removal
• Transport to stores
• Quality control
• Outbound processing
• Logistics
• Inbound processing
• Installation

There's plenty of areas to focus on but start with one. It'll be less stressful and less bureaucratic to make small changes over time.

Reducing your internal process will help reduce your component TAT and you’ll see a dramatic improvement in your overall rotable cycle times.

Are you experiencing long repair TATs? Fill out the form below as we're very confident we can help.

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Aircraft 'bomb bag' limits on board explosion impact

A new system to resist terrorist bombs smuggled onto aircraft has been tested in dramatic experiments. A device called FlyBag is designed to absorb the shockwaves and shrapnel caused by explosions. Read more here.

Article By: David Shukman Science editor

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United Airlines Pays Man A Million Miles For Reporting Bug

TWO MONTHS AFTER United Airlines launched a bug-bounty program to reward researchers who report flaws in the company’s web site and apps, a researcher has received 1 million air miles in the first reward given. Check out story here.

Article By: Kim Zetter

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.

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Boeing aware of metal 'fragility' issues before aircraft part plunged into Shanghai factory

Aerospace giant Boeing has ordered airlines around the world to address a "fragility" problem after a section of landing gear from one of its 777 passenger jets broke off shortly after take-off from Shanghai last week and plummeted 3,700 metres into a city suburb. Check out story here.

Article by: Danny Lee

Inspection Failings Could Cost SkyWest $1.2m

The FAA has proposed a total of $1.2m in civil penalties against SkyWest Airlines for failing to correctly inspect aircraft. The US regulator has proposed a penalty of $911, 000 alleging that Utab-based Skywest. More details here.

Article by: MRO Network