Bridging the Inventory Planning Gap
In the previous piece, we identified the gap that exists in inventory planning for airlines and MRO. We outlined the essential differences between MRO inventory planning and more traditional inventory planning, and saw how ERP systems adapted to the latter situation fall short when met with the complexities of inventory planning for airlines and MROs. After we identify this gap, the question becomes, what can we do to address it?
Typically, in MRO and airline inventory planning, the response to this gap is to develop manual workarounds, which usually give less than optimal results. People work outside the ERP using spreadsheets, tribal and tacit knowledge, and their best subjective judgement, unsupported by any analytical system. In a highly uncertain, complex and dynamic business, it is impossible for this method to achieve optimal results, or even to keep up with demand. We find ourselves in a position where we are forced to react to events rather than proactively plan for them. Often, Initial Provisioning with spreadsheets, AOG support and projects to address surpluses and shortages is considered to be sufficient planning. We are reacting to AOGs and major events but not addressing operational changes, or even more subtle changes, such as unserviceable removal of a surplus part, or a scrap in repair, or depletion of serviceable units in a particular location, or a demand spike resulting in many parts unserviceable in repair.
In this situation, the inventory planning process is not considered and analysed as whole. Inventory planning is broken into a fragmentary series of unconnected events, which are tackled individually rather than viewed as an ongoing process which must be dealt with continuously and holistically. The emphasis is placed on ability to respond quickly to unexpected demand, rather than planning in advance to avoid, insofar as is possible, the unexpected. There is a tendency to depend on individuals to come to the rescue and then view these individuals as indispensable. What emerges from this ‘hero’ culture is a disorganized, reactive approach to inventory planning. What it leads to is reduced availability, operational disruption, poor controls, low accountability and increased costs.
What is really needed is a series of continuous sustained processes, integrated into the operation and supported by a fit for purpose system with the analytical capability to address the challenge to define the inventory policy for the operation and drive the operation every day to proactively maximize availability in a cost-efficient manner. We need the right systems and processes to plan for the operating model with its intrinsic uncertainty, complexity and scale. The ERP system requires a decision support layer, specifically tailored to MRO and airline inventory planning, which allows us to ensure that proactive actions are taken to deliver the best business outcomes in terms of availability and cost. Proactive planning recommendations will be executed using standard materials management transactions, but the systems and algorithm will be unique to aircraft materials planning, as will the supporting processes. This will give a much-needed holistic perspective, and enable us to take an end-to-end view, planning for the short medium and long-term rather than solely the need of the moment. The decision support layer would work with the current ERP system to allow us to define optimal stock levels throughout the organisation, guide the operation to execute in a prioritised way, to take input and feedback to the organisation, and maximise availability at the lowest total cost.
We can clearly see that current, makeshift methods of addressing the gap in aviation inventory planning have glaring drawbacks. Rather than continuing to “get by,” and suffer these drawbacks, we should aim for optimal results. A better, more analytical solution is needed, one which will allow us to leverage our data and our operational knowledge to optimize our decision making to maximize service levels and aircraft dispatch reliability while reducing our inventory costs.
Read our previous post on ‘The Inventory Planning Gap‘.
