The Frustrations of Not Having Accurate Inventory Counts
When it comes to repairing aircrafts, mechanics are like a team of frontline doctors running triage. The health and safety of the plane (and all its passengers) are in their hands. And, much like doctors, mechanics are only as good as the tools and parts available to them. This is true for both airlines and MROs, across the civilian and military sectors.
Aircraft tools and parts can be really expensive, hard to come by, and in high demand—assuming they’re adequately accounted for. Unfortunately, aircraft tool and part inventories are also subject to issues with availability, logistics, and human error.
Consider a common scenario: an A380, fully loaded with passengers, is in line on the tarmac when there’s a malfunction. Well, 853 passengers, who have collectively spent over a million dollars, need their flight to be airborne right now.
So the mechanics arrive—ready to perform last-minute emergency maintenance. But while the plane is parked and everyone is waiting, these hardworking mechanics run into problems sourcing the necessary parts and tools for the job. This happens way more often than most airlines would like to admit.
The bottom line is that inventory accuracy is crucial. Not having dependable, accurate inventory counts can be devastating for any airline, as the following case study will show.
Case study: missing injectors
A plane on the runway had an urgent issue that required critical mechanical support. As the plane parked, mechanics hurried to the storeroom, assuring the pilot they’d be up in the air shortly…only to discover a serious problem.
Getting the plane airborne would require 16 new injectors. Their inventory reported they had 116 injectors, so they thought everything would be fine.
But, in reality, there were only 12 injectors in the storeroom. In other words, not only did they not have the necessary 16 injectors, but they were also missing 104 injectors.
The result? The plane couldn’t take off, passengers were angry, and the airline hemorrhaged money. Everyone lost thanks to inaccurate inventory counts.
But it gets worse.
The injectors cost $4,000 each. With 104 missing injectors, the airline not only suffered the loss of revenue from the plane that failed to take off, but they also discovered they were out $400,000 in missing inventory.
This is by no means a rogue case. Inventory inaccuracies create massive problems for airlines. Reporting errors are often caused by manual sign-out processes and outdated tracking metrics. Unfortunately, excessive overspending is often the only “real-time” solution to offset inaccurate inventory counts.
The problem: cycle counting
The reality is cycle counting, in some shape or form, has existed for thousands of years. And while cycle counting was the best solution for a very long time, it’s in desperate need of a more automated and less manual update.
Traditional cycle counting demands significant time and resources, which is why most airlines can count on one hand how many times a year they do it.
Consider what’s at stake: you’re dealing with millions of dollars worth of inventory—specialized parts that are essential for complex aerodynamic processes—yet some airlines only have time to check on them once a year.
This leads to two major internal and external issues.
Going back to our case study, the discovery of the missing injectors had a snowball effect. The loss of product not only impacted the airline’s overall inventory, it created costly breakdowns in process efficiency.
As soon as the airline realized the injectors were missing, Procurement rushed to buy more injectors from their suppliers. Finance had to approve these urgent requests, further eating into budgets and distracting teams.
There’s also the glaring issue of last-minute orders. An emergency batch of injectors shipped overnight from the distributor will cost significantly more than a standard order.
Throughout 2022, airlines have struggled to get the parts they need when they need them, largely due to ongoing supply chain issues. In the worst-case scenarios, planes can be permanently grounded until airlines locate and overnight missing parts, which they’ll probably pay a steep premium for.
Now, you’re dealing with multiple departments scrambling, wasting time, and spending more money than they should have because of a single inaccuracy in your inventory. The snowball effect is very real and very expensive.
The loss of revenue from the grounded flight only scratches the surface of the external repercussions. In 2020, airlines spent $12.8 billion on cash refunds (a 72% increase from 2019) in the U.S. alone.
But the losses don’t stop there. Airlines anticipate specific numbers of cancellations annually, which affects how they budget for their customer service teams, the number of additional flights, the amount they pay for overbooked flights…the list goes on. These costs are positively correlated to the number of canceled flights.
Let’s not forget customer experience, either. With increasing economic pressures and an evolving remote/hybrid workplace, retention is top of mind for so many airlines. One airline, for instance, just invested $2 billion in customer experience to stand out from the competition. It goes without saying that flight cancellations don’t do much for customer retention.
The main problem is that traditional, manual cycle counting can’t be executed with any regularity because it requires a significant investment of time and resources. For many airlines, cycle counting can tie up internal resources for a week or more. It’s not sustainable, but neither are infrequent inventory checks.
Simply put, the old way of doing cycle counting is time-consuming and tedious work, with a high likelihood of human error.
The best solution is automation.
The solution: automating inventory checks
Accurately managing thousands of moving items in your aviation hangar or industrial storeroom is now possible thanks to intelligent and improved inventory dispensing solutions.
Modern, automated solutions track, update, alert, and learn from your airline’s unique habits and behaviors. These solutions can prevent the improper handling of equipment by allowing only permissioned employees to access specific resources. They can also identify the scarcity (or abundance) of certain supplies.
Armed with accurate, real-time information, airlines can radically transform how they do inventory checks. Cycle counts are no longer annual—they can be automated daily. Not only does this vastly improve inventory counts and accuracy, but it can also result in new process efficiencies and insights while decreasing stress and humanizing work across the organization.
Stockroom and workforce morale inherently improves when your team doesn’t have to deal with endless, repetitive drudgery that could still lead to inventory nightmares. Ultimately, an automated solution can reduce turnover and lower headcounts, too.
Getting a complete, fully transparent view into your inventory helps you to be proactive, rather than reactive, with all your decisions. When you know your usage patterns ahead of time, you can also make smarter buying decisions (e.g., subscriptions, buying in bulk, etc.). Overnight shipping at the eleventh hour for missing items will be a thing of the past.
Upgrade your inventory management with Tier1 MRO
Tier1 MRO engineers custom-design solutions for airlines to help with inventory management. Every airline has unique inventory challenges and goals—so it’s important to make sure your inventory is optimized the way you need.
Our products have helped airlines and other support organizations lower MRO costs by over 20 percent by streamlining inventory and tool management, eliminating human error, creating efficiencies and offering data-backed insights into your inventories.
If you want to learn more, feel free to reach out today.