ORLANDO, Florida—As suppliers prepare for a presumed rebound in demand for parts and services to support global airline fleet activity, mitigating risk of inevitable future disruptions is top of mind.
Flight control and actuation systems specials Liebherr-Aerospace had risk-assessment plans before the COVID-19 pandemic. But the company is revamping them based on some fresh lessons learned, chief services officer Alex Vlielander said. Among the more prominent risks that the pandemic has highlighted—logistical challenges due to a cargo-capacity crunch and smaller suppliers closing up because of a lack of orders.
The cargo issue is simple supply and demand. As airlines parked their passenger aircraft, belly capacity dropped, putting a premium on remaining capacity, including all-cargo operations.
“We’ve gone from an average of about a week to get product shipped from our factories in Europe to two to three weeks at a 30% increase in cost,” Vlielander told attendees at Aviation Week’s MRO Americas. “It’s not just, ‘Do we have the parts? Do we have the raw materials?’”
More concerning is the loss of smaller suppliers that the company relied on to meet its customers’ demand.
“What we’ve actually seen is that some of our sub-suppliers [have] folded,” highlighting smaller, “family-owned” businesses as being particularly vulnerable to a prolonged drought in new orders, Vlielander said. “What that meant is we had to bring work back in house.”
Liebherr outsources about 40% of its manufacturing work, including some finishing services that it found could be done more efficiently by a vendor. Among the adjustments the company is making to help minimize the ramifications of future disruptions is ensuring it has second and in some cases third sources for the work.
“We are a customer ourselves, so we have to make sure that our supply chain is robust,” Vlielander said. “We have to find new suppliers. In those cases where we can’t find them, we bring in those services in house.”
Vlielander believes other manufacturers are facing similar challenges, which could lead to more in-sourcing—at least short term.
“I think OEMs will by necessity have to bring more of the actual manufacturing in house until they feel comfortable that their supply chains are resilient enough,” Vlielander said. “We’re going to have to rethink how we go about our business.”
Among the changes is ensuring suppliers are getting orders, even if it translates into excess inventory. That means modeling a 100% recovery in activity sooner than perhaps it will come.
“There’s no other way for us to do it,” Vlielander said. “It’s easier for us to say that than for the supply chain to jump up. We may have to actually over-order to get what we really want.”
Such an approach runs counter to most pre-pandemic thinking. Top-tier customers—including major manufacturers—were focused on minimal inventory and just-in-time supply chains. Now, they are buying into a more conservative approach.
“There was a trend with suppliers and the airlines alike—we’re all taught to become extremely lean,” said Drew Skaff, VP-supply chain for Republic Airways. “It was this just-in-time sequencing of getting the right material at the right place at the right time. There was no buffer management. I think there’s going to be a step back while we all partner and recover.”
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