The changes going on within the commercial aviation industry are disrupting the traditional supply chain model to a significant degree. OEM’s are being forced to find alternate sources of revenue as they face numerous factors that impact their long established business models. As a result, they are being forced to reevaluate how they view the aftermarket that has been traditionally viewed as an “afterthought”.
Well, not anymore, not in today’s world!
The challenge is very simply – to create a predictable revenue stream that will sustain a product from the assembly line to its end-of-life. This can be done in large part by capturing a greater share of the aftermarket economics that exists for the products they manufacture.
From data analytics, technical support, asset management, engineering, logistics, training, repair and maintenance, companies can create additional value by adapting their business models accordingly. This would help create a steady revenue stream and predictive margins over the entire life cycle of its products.
This is significant, as often times these aircraft last 20+ years or more for commercial aircraft and even longer still for military aircraft.
As a global aftermarket distributor and part supplier to the commercial and military aircraft industry, Mitchell Aircraft is in a uniquely position to play an important role in this sustainment initiative. After all, parts distributors are the foundation of the supply chain that demands strategic inventory planning across multi-tiered distribution networks in support of the OEM’s global customer base.
Our focus on after-sale services (i.e. USM, pooling, repair administration, distribution, materials and asset management, etc.) position us to be an idyllic partner for OEM’s looking to optimize the supply chain. The trick is to find the balance between customer demands, global market conditions and other challenges while in constant pursuit of sustainable revenue. These initiatives must weigh the risks and opportunities associated with each integrated product and service that creates lasting value (revenue) for the customer.
It’s not a one size fits all partnership.
In the end, the OEM is in a better position to protect its intellectual property, improve product integrity and enhance its brand by optimizing the supply chain in support of its products. Yielding higher margins and reliability, reduced transaction costs, streamline logistics and improved cash flow over the entire product life cycle.
This predictability enhances the bottom line with inherently higher margins as additional segments of the supply chain are exploited and maintained. Yet obtaining these results remains more of an art than a science.
It seems that the aftermarket is no longer the “afterthought” it once was and Mitchell Aircraft is well positioned to exploit these opportunities going forward.