Solutions for material forecasting & monitoring Forecasting the consumption of

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1 55 I MAINTENANCE & ENGINEERING The requirement for materials originates from consumables for airframe checks and component repairs, and maintaining the correct inventory of rotable components. IT solutions to predict and plan an airline s consumable and rotable component requirements are examined. Solutions for material forecasting & monitoring Forecasting the consumption of materials, parts, consumables and rotable components for an airline is a complex process. Materials and parts are used on a routine and nonroutine basis for a large number of different airframe checks and component repairs, often for several different aircraft types and variants within a single fleet. Material consumption Materials include parts, consumables, repairables, and rotable components and line replaceable units (LRUs). Their consumption can be sub-divided into those that are used in airframe checks and on-going component repairs, and those that are used in the inventory of rotable components. The classification of rotable components and LRUs is further complicated because some of them are repaired in-house. These repairs consume parts, so their consumption has to be planned for. In addition, although some maintenance events or tasks are routine, and so have a predictable material consumption, others are non-routine, which makes their consumption less easy to forecast. Routine and non-routine maintenance events are performed in a variety of locations. Distributing parts and materials to the correct locations in time for each maintenance event adds a further layer of complexity to planning. Consumables, rather than repairable and rotable items, account for the consumption of the most material types for airframe checks. However, some rotable items are used in airframe checks, in the routine replacement of parts, so they are predictable events. Examples are the replacement of life limited parts (LLPs), in particular safety-related components. Non-routine consumption of rotables will include the failure of system components during tests that are performed during airframe checks. A large number of airlines now subcontract the repair of rotable components to specialists. Although airlines no longer have to take into consideration the materials for these repairs, the quantity of each rotable part number held in stock by an airline is a major management issue. This is because of the high capital cost of individual parts, and the impact their failure and the lack of a replacement has on the ability to operate at an acceptable level of reliability. Airframe maintenance The majority of materials used in airframe maintenance are consumables. Most airframe maintenance is performed through a series of routine checks. Their content and frequency is defined by the maintenance planning document. A maintenance and engineering (M&E) IT system will therefore include the maintenance planning document (MPD), approved maintenance programme (AMP) and all associated task cards for each aircraft type. Airline maintenance planning engineers constantly feed utilisation data for each flight and operation for each aircraft type into the M&E system. Taking these utilisation data and calendar time, M&E systems generate a timeline of airframe checks and maintenance events coming due for each aircraft. The MPD data and information on the routine task cards for each of these maintenance events therefore forms the first stages of predicting the airline s material requirements. Scheduled airframe checks clearly comprise a group of routine task cards, which may or may not have a material requirement, says Chris Reed, managing director at Trax. Those cards that do have a routine material requirement are the predictable elements of airframe maintenance. Once the routine content of each forthcoming maintenance event is known, these parts can be reserved relatively easily. It is the non-routine requirement for parts that is variable, and so harder to predict. This means that routine task cards inevitably lead to some sort of non-routine defect and rectification, which will generate a need for materials. The requirement for routine or fixed consumable materials and parts can be kept as a template for material forecasting by planning engineers. Our DigiMAINT system has an automatic requisition function for each task card, so that all the routine parts required for the task cards in a workpackage are automatically requisitioned, says Barend van de Vrande, director of aviation solutions and project implementation at AeroSoft. DigiMAINT groups all the tasks of a maintenance event, and produces a summary of all the tasks and associated materials. The system also provides the locations of all the parts, the number required, the number on hand, and the number on order. It can also list the part numbers of alternative parts if the ones required are not available. The planner also notifies the system where the check will take place, so a picking ticket will be sent to the appropriate warehouse to requisition all the required parts. This can be viewed, together with the parts availability. The collective requirement for all maintenance events coming due over a short-term period of, for example, six months therefore defines a portion of the airline s material requirements. M&E systems will generally have a database of consumables held in stock. The forthcoming requirement for routine maintenance and the stock already held will be compared by the M&E system, to simply define what needs to be ordered. OASES has a traffic light system to indicate the availability or otherwise of ISSUE NO. 81 APRIL/MAY 2012 AIRCRAFT COMMERCE

2 56 I MAINTENANCE & ENGINEERING each consumable part, says David Pusey, director at Commsoft. A green light indicates that sufficient stock is available, while a red light indicates a shortage. A yellow light indicates that an order has been placed for a part, while an orange light indicates that the predicted delivery date of the part will be too late, and that some action needs to be taken. Trax has a similar summary page functionality, to list all the parts required for the routine task cards. The planning engineer will examine a summary of the consumable parts required for the forthcoming maintenance events, says Reed. The number held in stock, number required, and the shortfall or availability thereof is indicated. Once parts have been ordered or are known to be in stock, they are allocated to a specific maintenance visit so that they are not taken for other checks, and then found to be missing just at the time when they are needed, adds Reed. Further detailed parameters are often required. Ramco, for instance, allows the user to input alternative part numbers and suppliers. Suppliers can be airlines that provide swapped or borrowed parts, and an airline s own alternative locations. Ramco also allows the user to define how the system searches for alternative parts and locations. This takes into consideration ordering lead times. The system follows this process before it declares a part unavailable and alerts the user accordingly. Unavailable parts are automatically ordered by M&E systems, which will raise a requisition. The schedule of planned maintenance events for a period of six months or even a year can therefore be used as a basis for predicting the airline s routine consumable material requirements. This plan should be compared periodically to the detailed forecast that is made on a more frequent basis for maintenance events that are coming due in the short term, says Reed. Ideally there should never be a shortage of consumable parts for the routine portion of airframe checks, and in-house rotable component repairs, if the forecasting is accurate. Commonly-used consumables typically have a fixed inventory level, and new parts are ordered whenever the actual level of stock held drops below this fixed level. When forecasting the need for consumable materials, planning engineers aim to determine the fixed inventory level correctly, says Reed. Over a long-term period of use by an airline, the system builds up a database that records the consumption of each part number. This is particularly useful for materials used for defects and nonroutine events arising from routine inspections. Variable demand The more challenging aspect of material forecasting for airframe maintenance relates to the defects that arise out of routine task cards. These defects will generate a requirement for additional labour inputs and materials. The exact part numbers required and the quantity of material is harder to predict than routine consumables. The only way to have reasonable accuracy in predicting the consumables and other materials used for non-routine work cards is to use historical data in future forecasts, says Reed. This is made difficult when parts are ordered on the basis of predicted non-routine requirements, and only some are used. In some cases it is actually too expensive to return the part and record the fact that is has been returned. It is therefore important to acquire good quality statistics on the parts used for non-routine defects on each task card, continues Reed, so that they can be used in maintenance planning. Continuous feedback on what parts are required for non-routine work on each

3 58 I MAINTENANCE & ENGINEERING task card will allow more accurate forecasting of what is actually required. Airlines must take into account the fact that the non-routine requirement for consumable parts steadily increases as the aircraft ages. Acquiring good data starts with the creation of the non-routine task card. Once the originating routine task card number is produced, information for the non-routine work is written in, including a description, and the predicted manhours (MH) and skill type required, explains Pusey. A non-routine reference number is created, as well as a barcode so that the correct labour and materials can be requisitioned. This links the material cost to the defect, the routine task card and its associated work package. In parallel, OASES will look at the historical rates of consumption, minimum vendor lead times, the criticality of the part, and the amount of safety stock, continues Pusey. These parameters allow the system to determine the re-order levels for each part number for consumable parts and materials. These re-order levels will trigger a purchase order each time the monitored stock level of the part number falls below the reorder level. The historical consumption of each part requires a large database of parts used for all maintenance events, both routine and non-routine. OASES will use the database to calculate the average daily consumption of each part number over a long-term period, continues Pusey. Consumption can be at an even level over the long-term for most consumables, given that most part numbers are used at all types of airframe check level. Once this long-term consumption level is known, the consumption data can be used as a parameter for calculating re-order levels. Rotable inventory The second main element of material forecasting is predicting the quantity of rotable components held in stock. The objective is to balance the investment in rotable components with an adequate supply of parts to support an operation with a satisfactory level of reliability. The number of parts required to maintain a specific standard of reliability can be expressed as a service level ; which is usually at 95% or more for most airlines. The service level indicates the number of times a part is available when required. Not all parts need to have a 100% service level, since only some are classified as no-go parts in the aircraft s minimum equipment list (MEL). Parts that are not no-go do not have to be held in stock and be available at all times, since their replacement after a failure can be deferred, usually until the aircraft is at its homebase. This helps to reduce the total inventory held. Some airlines are also prepared to accept lower service levels of some part numbers, even if they are no-go items, because they have a high capital cost. One thing that moderates the inventory of rotables needed is the economies of scale achieved through larger fleet sizes, says Reed. Another factor influencing the amount of inventory required is the route network on which the aircraft type is operated. Total inventory held, or at least the amount of inventory the airline needs to have available to maintain a satisfactory level of operational reliability, will generally increase with the number of routes and destinations served. The amount of inventory an airline needs to hold can be reduced by its ability to swap or borrow parts from other airlines and service providers for a specified period under various schemes. This means that not all no-go items are required at every outstation the airline flies to. Inventory levels tend to be higher at outstations that are served by higher service frequencies, or where the airline has a limited ability to borrow or swap parts with other operators or service providers at short notice. Determining the amount of inventory

4 60 I MAINTENANCE & ENGINEERING required is a complex process, and has to take into account all the factors described, and more. M&E IT systems have inventory modules configured to analyse the factors determining the amount of inventory required, as well as track all rotable components and identify surplus items. The first parameters to be taken into consideration are the number of each part and dash number installed on each aircraft in the fleet, says Reed. This comes from the configuration of each aircraft held in the M&E system. Parts are constantly removed from, and installed on, aircraft, and pass through various stages of the repair and logistics cycle. This is why Trax is able to track every individual component. Not only does tracking parts allow the configuration of the aircraft, the inventory held in stock and the location of all parts to be constantly followed and monitored, it also provides each part s main reliability parameters, continues Reed. These include the mean time between failure (MTBF), which is a confirmed failure; and the mean time between unscheduled removals (MTBUR), which includes confirmed and unconfirmed failures classified as no fault found (NFF). MTBUR is a shorter interval than MTBF; and MTBUR is important since it indicates the average removal interval for each part number. The MTBUR, specified in aircraft flight hours (FH), the repair time, and the rate of aircraft utilisation in FH are three major factors that determine the quantity of inventory that has to be held. Another complication is that although a fleet type can use the same part number for a particular component, there can be two or more dash numbers associated with the same part number. One dash number may only be compatible with some aircraft in the fleet, while another is only compatible with the rest. This therefore creates two sub-fleets, and effectively generates a need for two sets of inventories to be held. Aircraft can be modified or upgraded so that all in the fleet use the same, later dash number. Components can also be upgraded to a later dash number. Modifications and upgrades to components can, however, be costly. The issue of different dash numbers for particular part numbers highlights another advantage of the tracking functionality of M&E systems. Earlier dash numbers may gradually become obsolete as the fleet is modified. These earlier dash numbers will start to be utilised at lower rates and gradually become surplus material. Surplus material can be identified relatively easily, and so sold on the used market. Stock levels There are several ways of calculating the amount of stock required. At a simple level, the same algorithms used to determine re-order levels for consumable parts can be used for rotable components. The re-order level for consumables is equivalent to the level at which repairs vendors need to be chased for returning repaired and serviceable parts, says Pusey. This means that once the parameters relating to historical consumption rates, minimum vendor lead times, the criticality of the part and the quantity of safety stock are known, reorder levels can be set for each part number. The re-order level for a rotable component is the minimum stock level required for a unit always to be available. These minimum stock levels can be modified with an essentiality code for each part number to indicate whether the part is a no-go item. Ramco has a stock analysis module. Once the system has enough transaction data it will suggest stock levels and reorder levels, says John Stone. This involves classifying parts to define how critical they are, in terms of four different

5 62 I MAINTENANCE & ENGINEERING parameters: high-value/fast-moving; highvalue/slow-moving; low-value/fastmoving; and low-value/slow-moving. The parameters required for each part number in order to optimise the inventory are: the annual consumption of each part; the pre-order and carrying costs; the level of safety stock required; the re-order level; and the demand during the lead time, adds John Stone, chief executive officer at Ramco. Once these parameters are defined, the system constantly updates the recommended parts level. Optimising inventory levels starts with the minimum and maximum inventory levels for each part, using algorithms to determine the total stock level for each part number, and then optimise the stock levels. The system then constantly feeds data back to the algorithms to modify stock levels. Optimised stock While many M&E systems have some capability to determine stock required, there are specialist solutions available to perform this particular function. The problem is that the need for rotables is highly variable. M&E systems generally focus on what part numbers to buy, and how many, and when orders should be placed, says Michael Armstrong, chief executive officer at Armac Systems. Our specialised software helps an airline determine how to optimise the amount of inventory held, and how to distribute it over its route network. An example is an airline over whose entire operation there are seven or eight demands during the year. There is an average 30-day lead time to repair the part, and an additional seven days for transport prior and post repair, equivalent to a total transit time of about 45 days, continues Armstrong. Our system may calculate that two or three spare units are required to support the fleet. The random nature of failures means that two of these could be required at the same time, leaving just one spare. The airline will decide what service level it wants for each part number, continues Armstrong. There are spikes in demand for individual part numbers, which can usually be dealt with by part exchanges and borrowing. The software will determine the number of parts that must be held to satisfy a service level. Optimising the inventory has to be done by part number, storage location and service level, continues Armstrong. Inventory is optimised by taking transactional data from the airline s M&E system, including removal dates, causes and intervals, and aircraft utilisation levels. It also requires user knowledge, such as a higher requirement for specific part numbers at certain outstations and route destinations. All the data are then merged and the optimisation process begins, continues Armstrong. Service levels are set for each part number over the whole operation, and the inventory required is calculated, using linear optimisation algorithms, a queuing theory and various statistical models. We are able to feed in removal rates for each part number by aircraft type and the user s route network to determine the likely demand at each outstation. We can also add in inventory available from other suppliers, such as other airlines and the international airline technical pool (IATP). Ultimately, the system calculates where to hold the parts in inventory stores in order to minimise transport and delay times in the event of aircraft on the ground (AOG) situations. In addition, the system works dynamically to determine the optimal location to which a part should be sent after repair. This can change daily. Optimisation also takes into consideration the purchase price of each unit, to strike a balance between service level and investment, adds Armstrong. Two parts can have the same criticality and demand levels, but one may have a

6 64 I MAINTENANCE & ENGINEERING purchase price 10 times the other s. Five of each may be required to maintain a particular service level. The investment can be reduced, and almost the same service level maintained, if seven of the lower cost units and four of the higher cost units are held. If this is repeated over the whole inventory then investment can be reduced while maintaining the service level. In fact, it is ultimately possible to get a higher service level and a lower investment when this optimisation is processed for the entire inventory of several thousand rotable parts. An alternative to ARMAC s software is Servigistics three levels of software that optimise and regularly re-optimise the rotable inventory required. The first module is the Advanced Inventory Optimisation (AIO) software. AIO has all the relevant fleet and operational data fed into it to create an airline operation activity matrix, says Ed Wodarski, vice president of solutions for aerospace and defence at Servigistics. The problem we have found with most airlines is that they base their rotable inventory requirements on past activity, rather than their planned operations in the future. The information clearly needed for this are the routes, aircraft types and operating schedules. Aircraft configuration and part interchangeability data are also required. Ultimately the airline wants to know the number of parts required, and where to locate them. AIO runs an optimisation algorithm which has to be run on a monthly basis, because of fleet re-deployments and changes to planned operating schedules and other parameters, continues Wodarski. A re-run of the optimisation algorithm means that parts are moved to hubs and stations where they are more likely to be required. We then use our second module, called Advanced Planning & Scheduling (APS). This aims to achieve the inventory targets in actual operation that are calculated in AIO, continues Wodarski. APS tries to get parts in the right quantities at the right locations and at the lowest possible cost. APS looks in detail at the daily activity, and therefore monitors: the number of parts at each location; the part removals and installations; and the parts consumed, inspected and repaired. Up to 100 parameters in total are followed, and thousands of parts have to be managed. APS basically analyses activity down to the individual part level, and as a result the user gets a list of part numbers that need to be addressed in terms of redeployment between locations, adds Wodarski. The recommendations can either be accepted or rejected by the inventory planner using the software. The benefits of this software that Wodarski highlights are the increased productivity of inventory analysts. This is because they no longer spend time looking for problems, and so the response time for dealing with issues is significantly reduced, claims Wodarski. APS provides an advanced warning of specific inventory running low, and so avoids AOG situations. The objective is to avoid inventory imbalances. The software is designed to holistically consider the airline s inventory. Once the system has exhausted all possibilities of re-balancing the locations of parts, then the next stage it takes is to look at the parts in repair, says Wodarski. After this it looks at preferred vendors, and can create purchase orders. Servigistics has also developed specialist software to analyse whether or not removed parts should automatically be sent for repair. Removed components are often automatically sent for repair on the basis that they will be needed again in a serviceable state as soon as possible. It is not always necessary to send them for repair immediately, and the software looks at the anticipated demand for the part number going forward, as well as the other serial numbers in repair and in stock, and decides when to send it for repair. This can improve cashflow, since repairs can often be delayed, says Wodarski. The system is also useful where there are lots of line stations close to each other, and parts can be loaned or swapped in a short time, which saves repairing or purchasing them. Servigistics also has an insight module. This provides a reporting mechanism to aggregate data relating to rotable inventory, and its consumption, says Wodarski. The planning data must be compared with the actual operational data. The user needs to know the number OASES

7 65 I MAINTENANCE & ENGINEERING of flight delays, cancellations and AOG situations. These can quickly reach an unacceptable level because the lack of a small number of high-cost parts can affect an aircraft s operation. The user can drill down into the data to find the cause of a large number of cancellations, for example, and can find the specific line stations, aircraft types and part numbers causing problems. An abnormally high number of failure rates or bad allocation of parts can be isolated this way, and this provides feedback that can then be used in the planning engine. Inventory location The correct location of individual items is essential to maintain the required service level. Trax has a base distribution module. This has data like the different destinations the user serves, the number of times a day it flies to the destination and with which aircraft, and the turn time between successive flights; since this influences the quantity of inventory required, explains Reed. Other factors are alternative sources, like the IATP, and the lead time for delivery of a replacement part. Trax has an algorithm to calculate the number that has to be held at each destination. Other systems have similar functionalities to aid users with the optimal location of parts. DigiMAINT has a parts locator module. This lists all the rotable parts by Air Transport Association (ATA) Chapter and by part number, says van de Vrande. It will provide a list of where all the parts are located, and the number available in stock. DigiMAINT has icons to show if parts are in stock, if they are on order, and which aircraft they are fitted on or removed from. It provides information quickly, and with clicks on icons provides a complete overview up to the level that it provides a complete list of all the individual serial numbers installed on the aircraft. Other details include items such as who owns the part, and the maintenance status of each serial number. OASES has a network status report. The system scans for AOG-critical parts for their availability across the user s route network, and examines which stations or destinations have a shortage of no-go parts, says Pusey. The results are summarised in a grid (see picture, this page), showing each operating station and destination along the top of the grid with their three-letter airport code, and the part numbers listed vertically down the left side of the grid. There is therefore a cell for each part number and location, and three digits in the cell. Each cell is highlighted with a specific colour to indicate availability. The first digit is the quantity of that part number at that station, continues Pusey. If the digit is zero then that part is not required at that station. The second digit indicates the quantity on pick, which means the number of parts requisitioned for a particular aircraft or maintenance event. These parts are still in the warehouse. The third digit is the minimum number needed to maintain the operation. When the quantity available, which is the first digit, is more than the minimum level, the third digit, the cell is highlighted green, adds Pusey. When the quantity plus the number on pick is higher than the minimum level then the cell is highlighted blue, to indicate that there will be an imminent shortage. When the stock is zero and lower than the minimum level, the cell is highlighted red, to show an actual shortage, and the risk of an AOG situation. When the stock is less than the minimum level, but not zero, the cell will be highlighted orange, to indicate the risk of an AOG situation is lower. Airlines will have to operate with some cells highlighted red, since the cost of holding some stock for each part number at all stations is prohibitive. An airline can take this risk, however, if a part can be acquired from another operator or station in a relatively short time. This page can be used by the operator s maintenance control centre (MCC), engineering team, line maintenance department, and operations department and displayed on a large screen as a management tool. To download 100s of articles like this, visit: ISSUE NO. 81 APRIL/MAY 2012 AIRCRAFT COMMERCE

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