The world has been looking toward promises now for two years. The promise of vaccines. The promise of seeing loved ones in person. The promise of borders re-opening. And yes, the promise of taking a flight to see family, visit friends, work with colleagues or just to fly. Throughout this “new normal” we sought a return to the normalcy of the recent past. Yet as the uncertain ebb and flow of new variants combine with geopolitics, commercial aviation is reshaping itself with a wary eye to whether the recovery will ever return to the relative certainty of the aviation business circa 2019. As MROs focus their businesses, their success depends on looking beyond the value propositions of 2019 to what will win now and going forward.
Pundits across industries have declared that the pandemic simply accelerated physical and digital trends that were already underway. The commercial aftermarket is no different. Does the pivot to narrowbodies and thinner routes represent the future of flying? Is the agility and resiliency needed to respond to changing fleet utilization and supply chain performance a temporary requirement or a core capability? To navigate these questions and emerge on top, aftermarket providers will need to get closer to their customers, provide dependable, quality service, and cash in the currency of speed.
The notion of getting to “truly know” one’s customer is trite. Yet the continued variability in aircraft utilization, segments and other factors that aftermarket providers have relied upon for planning has greatly increased the importance of better understanding changing customer needs to increasing aftermarket business predictability.
In our most recent research, airline executives told us they wanted their aftermarket providers to focus on aircraft availability, vendor contract management and supply chain performance. Some are starting to do just that. For example, Leonardo recently deployed an integrated customer management and online commerce capability to consolidate customer experience for purchasing parts, getting customer support and procuring other aftermarket services. This kind of digital integration of customer insights with aftermarket execution is at the forefront of the types of services that aftermarket providers need to compete and win now.
Airlines care about supply chain. So should aftermarket providers. The rise of new digital service-based revenue models aside, planes need parts. Reliably getting them is another matter. Only 45% of aerospace and defense executives polled in Accenture’s latest Commercial Aerospace Insights Report expected that their suppliers will deliver on time with quality in the coming six months. Aftermarket providers that can dependably deliver on schedule amidst global supply chain constraints will quickly separate from the pack as utilization and subsequent part demand increases. That will require a renewed focus on planning demand and supply, securing alternative sources of new and used material, and improving warranty and service contract profitability, particularly for availability and utilization-based contracts.
That brings us to speed. Aftermarket providers have always sought to get parts to aircraft on ground and MRO networks quickly. Today’s aftermarket ecosystem is moving beyond the speed of overnight shipping to increase speed of operation. Moving an assembly through a repair center faster opens capacity with the same physical capital. Accelerating the location and fulfillment of a part reduces inventory holding costs. Cutting the time to collect lease return paperwork, conduct required maintenance, and change layouts and liveries “creates” weeks, even months, of additional revenue for an aircraft’s next lessee.
Becoming an aftermarket speed merchant, however, is much more than marketing, digitizing paper or automating processes. It entails new priorities that align compensation to service outcomes, not just part sales. It demands new ways of working and new skills that accelerate decisions and actions around tradeoffs across cost, schedule and committed outcomes. Looking forward, it suggests business models that continue to push beyond billing for hours and even power by hour to structures that further reduce operators’ asset and operating costs.
Work is returning across the aftermarket. While daily shipping, workscoping, repairing and quality checks are familiar, the business, workforce and customer climate is not. As the industry pivots to recovery, operator aftermarket expectations will also pivot from cost control to value creation. For many customers, that value is fast, predictable aftermarket services. To become reliable speed merchants, aftermarket providers must reshape how they work to align with operator priorities, retool their supply chains to increase MRO utilization, and invest in not just building new workforce skills, but also amplifying existing workforce knowledge. Welcome to the era of speed.
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