It is now obvious that the chaotic, manually performed spare parts procurement process involving multi-million dollar deals and requiring enormous human resources is unproductive, costly and time consuming. The aviation industry is becoming increasingly globalized therefore optimizing daily operations and related costs are among the top priorities for all market players. This cannot be achieved without shortening the entire spare parts procurement process and the Locatory.com newly introduced Supplier Management Tool (SMT) might be just the right answer to modern aviation supply chain issues. With the help of the SMT procurement executives may save up to 35 working days and cut on average 15% of the inventory price.
The Supplier Management Tool (SMT) is specifically designed to meet the needs of airlines and MROs based in the rapidly emerging markets. When developing and perfecting the new tool, Locatory.com experts focused on facilitating the daily tasks of purchase and supply managers as well as saving their time by optimizing operations and raising effectiveness. And we all know that in the aviation industry saving time and money means making money.
‘After carefully analyzing the activities and business operations of our clients in the emerging markets we have observed that only 5-10% of all RFQs are dealt with by using parts locators. Most of the RFQs (90%) are still being distributed by sending queries directly to the preferred vendors. On average 7% of the entire RFQ distribution is administered in the open market (i.e. parts locators) and 3% of the RFQs are distributed by other means.’ explained the CEO of Locatory.com Zilvinas Sadauskas.
Table 1. Usual RFQ Distribution
The traditional spare parts procurement process fails to withstand the new aviation industry challenges arising every day. Heretofore this process required to perform up to 9 steps: send a large number of electronic messages to multiple regular suppliers; manually consolidate and analyze the received information. If the obtained result is unsatisfactory the process needs to be repeated by sending out the RFQ to an open market via the spare parts locators. Then the information needs to be manually consolidated again and so on.
In the meantime, by using the Supplier Management Tool and working 40 hour per week, a single aircraft spare parts purchase manager can save up to 5 hours per week, which sums up to 35 working days per year. The tool enables to skip many stages that cannot be avoided by using the traditional method. All that the procurement specialist has to do is to enter the required part number in the system. Locatory.com SMT then automatically distributes RFQs to the preferred vendors and an open market, then gathers responses and consolidates all the information in one simple table. This saves a lot of time that is usually consumed by manually consolidating the data and also gives the procurement executive a chance to compare the prices offered by the preferred vendors against the ones in the open market.
Table 2. Usual aicraft part procurement process vs. Procurement process with SMT
Table 3. Example of required report: All quotes are consolodated in a single table.
‘Comparing market prices during the spare parts procurement process allows companies to save up to 15%. The system does not require sending out numerous identical e-mails to countless different addressees, processing the obtained information manually or using additional spare parts locators. All this can be done automatically. In addition to that, SMT users are enabled to upload their surplus stock for sale and generate more income. Moreover, it allows its users to compare different market prices and find new vendors offering the best deals. Implementing the new system does not require additional technical equipment or any structural changes – it can be easily accessed via the Internet,’ says Z.Sadauskas.
According to Z.Sadauskas, companies all over the world spend many hours and valuable resources on maintaining relationships with clients on a daily basis. The constantly increasing competition, complexity of services, geographical extent and highly sophisticated computer technologies facilitate the rapidly developing spare parts supply chain ‘computerization’ the role of which is becoming more and more important in modern aviation industry.