Nowadays it is often taken very much for granted that we will be able to go to the airport, then sit on a plane to arrive safely and on time at our destination. However, behind the scenes there are so many factors that ensure this not only happens safely for the client, but also profitably for the companies involved. In this episode of LokadTV, we discuss the aerospace sector and the key features of this market that make it so unique from other businesses.
Nowadays, aircraft are made of up to 300,000 pieces and airlines need to have them fly as much as possible to be profitable. As a matter of fact, it costs up to $200,000 per day to ground a plane for maintenance. This makes on-time aircraft movement a critical success factor that drives both costs and revenue. We understand how airlines manage their stock and even collaborate with each other to ensure that losses due to aircraft on ground (AOG) are kept to a minimum.
In addition, we explore how airline maintenance works and the budget constraints that affect even the largest aerospace companies, who can own over a billion dollars of inventory each. We also discover how airlines manage to work together, even in a highly competitive world, in order to keep aircraft flying.
Finally we wrap things up by explaining why classical supply chain models can’t be applied to aerospace supply chains and why a probabilistic approach that completely embraces the fact that your supply chain is built on loops and not on a direct flow from producer to consumer, is actually what works best. We also go further into seeing what a supply chain solution for aerospace should try to achieve in terms of KPIs.