Aircraft Maintenance
Management Module
Inventory Costs Optimisation
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1.The Materials Inventory costs
Optimization
 The airline Inventory aspect revolves around availability of
spares to support the maintenance requirement depending on
the essentiality targets preset by both the OEMs and the
airline itself. In addition to the essentiality comes the desired
service level targets set by the airline as well.
 Theoretically it is possible to achieve high availability by
including more spares. However more spares mean additional
resources such as cost, space, etc. Thus spares required for
any system should be carefully determined and if possible
optimized.
 As the major portion of airline maintenance costs are costs
linked to materials. We always need to find proper means of
optimisation such costs.
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1.1 Costs of Inventory (i.e. Holding,
provisioning planning & stores)
 The investment of the airline in the inventory domain is
quite significant, EK for example holds an inventory of
US$707868 (year 2010) Million excluding spare Engines
in order to support its operational requirements and meet
service level target set at 98%.
 In addition to the inventory spares investment capital,
comes in the administration of this inventory.
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1.1.1
Holding Costs
 These costs include but not limited to following elements:
- Warehouse storage of all spares parts including Engines
and other bulky items.
- Insurance costs for loss or damage to warehouses
- Overhead costs for administration staff salaries
- Stock depreciation and Obsolescence costs
- Outstation stock rentals
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1.1.2
costs
Provisioning and planning
 These costs include mainly the staff admin cost spent on:
- Identification of required quantities, item descriptions,
suppliers, distributers, etc.
- Planning costs for the maintenance checks requirement to
meet on dock dates.
- Purchasing and
accounts payables invoicing activities
logistics.
- Administration costs associated with purchase orders
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1.1.3 Stores and Logistics
support costs
- Costs linked with shipping local and international freight
costs. These costs can be quite significant for bulky items
such as Engines where it could reach $100,000 per Engine
single one way shipment.
- Forwarding and handling costs.
- Receiving, inspection and binning costs of the items.
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1.2 Inventory Parts classification
& Operational categorisation
 As a continuation to the familiarisation per the
aforementioned section on the inventory, it is
important to equally understand within this
industry, classification and categorisation of all
aircraft parts.
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Classification of spares
 Spares & Tools within Emirates Engineering have been
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classified into four sub groups as follows. Major
classification is Rotables and non-Rotables.
Rotables ClassT
Repairable Class R
Expandable Class E
Consumable ClassC
T class spares are defined as Rotables and rest all as nonRotables.
These classes are in line with industry norms. A brief
explanation of different classes is as under.
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Parts classification cont’d
1.2.1 Rotables parts: These are defined as the items which are
on condition and normally do not require repairs until they fail.
These have no life limit and can well serve through the life cycle of
aircraft. They are referred to in some occasions as the Assets where
the airline could sell to other or return to OEMs for a good value.
These are generally, higher assemblies having break-down parts
and replaceable units. Components, having CMM and strip
down/re-assembly procedure. These units are repairable.
Repair/Overhaul brings them at par with new unit, technically.
Have infinite life in terms of hours & cycles (hard time). Have an
individual serial no control. Are fairly expensive.Stock control of
Rotables is by way of float. Example Engines& Pumps, control
units & APUs.
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1.2.2 Repairable Parts: Those parts would normally have a
life span and can be repaired few times before they are
eventually scrapped. These items are those, which are
conditionally repairable i.e. an authorized procedure exists for
repair, but an assessment is done to ascertain whether repair is
economical. If the condition is B.E.R (Beyond Economical
Repair), they are scrapped. These are generally structural
items like fittings, frames, panels. These are moderately
expensive items. Stock control of Repairable is by
replenishment against scrap, review of usage, repair and scrap
analysis. As example, these include valves, switches and
some structural parts.
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Parts classification cont’d
1.2.3 Expendables parts: Those parts are scrapped more
often, though these are replaced and no repairs are performed,
still if the value of the part is high a repair procedure can be
drafted by the OEMs, in most occasions the repair price tag
would be BER. Example of these parts includes fittings,
ducts, tubes, hoses and brackets.
1.2.4 Consumable parts: These parts have no repairs at all
and only be used one time such as oil, dye, grease, filters,
screens, etc.
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Expendables ( E class)
Consumables ( C class)
 Expendables, This particular group of spares generally
contains hardware items. There is no authorized procedure
for repair, however they have a salvage value, by way of
 cleaning, NDT and re-use. Stock control of Expendables is
by way of ROL (Re-order levels).
 Consumables, This group represents dope and paints, gas,
sealants, Grease, Oil and other similar items. Once issued
these are charged to consumption and should not be reused. These have shelf life control.
 Stock control of consumables is by way of ROL (Re-orderlevels) and replenishment against scrap.
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Parts classification cont’d
 The operational categorisation of these parts varies
according to the Airline policy due to the essentiality
established codes of the airline. The parts categories were
drawn along the industry standards with a little
differentiation in the application.
 Using the industry common rule of thumb that the
materials costs in most of defects rectification form
approximately 70% of total DMC cost, we can easily
derive that a strict control and attention must be given to
Inventory costs.
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 As we have seen through out this whole chapter, the airline
has many tools within its capability to contain such costs
and optimise the inventory by mainly administering the
Product support remedial actions through the full term.
Therefore, Proper processes should be deployed within the
relevant engineering Departments to religiously
implement the Warranty and Reliability programs for
Aircraft rotables as committed by the OEM as this
contributes dearly to inventory cost optimisation.
Additionally, the airline inventory holding value is
normally huge,
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Holding Cost reduction steps
hence any small percentage in costs reduction will be large in
terms of financial savings across the whole inventory stock as
follows:
1. Work out a plan with OEMs to envisage many available
plans to reduce inventory holding such as advance exchange
schemes or local distribution centers
2. Implement effective warranty and reliability processes to
ensure that all contractual remedies are recovered including
availability of the required spares. This will prevent high
expenditure of purchasing units to increase the float to cater
for operational requirement when such units can be availed
from OEMs through warranty and reliability claims.
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3. Airlines must work hard on their materials provisioning
math models and where practicable reduce the safety level
from 98% to 96% per the industry Norms in order to
optimize the materials stock and keep at bare sufficient
minimum provided a due diligence is given to the No Go
items to avoid operational issues.
4. Compare PMA to “OEM policy” in terms of Purchase
and/or Repairs. With the current development in the
manufacturing and maintenance organizations, Airline is
required to evaluate PMA parts and MRO repairs services
due to significant savings in those fields.
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5. Review Supply Chain Management (SCM) to introduce a
SCM strategy and approach as well as SCM performance
measurement framework that aims at optimizing the
supply chain performance and inventory.
6. Automation and deployment of sophisticated systems
such as inventory optimization tool should be evaluated
by Airlines as it can bring about the following potential
benefits:
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6.1 Highlight the slow or non-moving parts whether
rotables or expendables in order to either return back to
OEMs or sell in the surplus market. Normally and within the
OEM Product Support Agreements, there are many terms
related to buy-backs of unused parts against the full value
within a period of Five years post Aircraft Entry into service.
6.2
Provide a list of parts to the respective Depts of the
fast moving parts in order to take necessary steps to avoid
any operational disruptions due to material requirement.
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6.3
Generate a frequent report of Nil or approaching zero
stock items due high number of removals in order for
respective Depts pursue further in case of reliability
performance issue to acquire from OEMs all contractual
remedial actions.
6.4
Induce effective process to discover overprovision or
under provision parts to mitigate the situation and optimize
the spares holdings.
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Material Planning & Inventory
Control Support Services
INITIAL PROVISIONING
 Manufacturers are obligated to provide product support,
including the Initial Provisioning Data, IAW appropriate
ATA specifications. These must be fully exploited and
agreed upon in the contract, so as to ensure the airline
maximizes all necessary support from the Manufacturer.
Examples of these are listed as follows :
 a) Data for material planning and initial provisioning;
 b) Data for a sound technical basis to establish usage;
 c) Performance measurement e.g. reliability, usage rates,
redundancy, costs and Supply information.
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 Maintenance of stocks of certain range of items at the
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customer’s Base;
Availability of parts for lease, hire, loan and subsequent
purchase;
Provision for supply of spares on an emergency/AOG.
Extent to which the Manufacturer does the provision of
“standard parts”;
Provision for withdrawal / “buy back” of non/moving/
obsolete parts;
Supply of catalogues, manuals, guides, models related to
inventory management.
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Initial provisioning process steps
 IP parameters to manufacturers
 4.1. Engineering. Material Planning Section is responsible
for collecting and compiling the IP parameters from
various sections of Engineering and provide it the
Manufacturers to enable them to calculate and recommend
the RSPL and to prepare and provide various Data Files
required for Operation. This will enable us to determine
the range quantities of spares and materials to be procured
as Initial Provisioning.
 Normally OEMs of aircraft, engines and components
would send a Spares Planning Data Questionnaire & the
details required there-in include fleet size, investment
levels, annual utilization,
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(RTAT) and “spares protection/ service level”.
Attend IP Conference
 Initial Provisioning Conference called by the
Manufacturers is attended by the persons responsible for
the Materials Services to Engineering. This provides an
opportunity to discuss the options and facilities offered by
OEMs, and a forum for negotiation on company's behalf.
 Examples of options and facilities: Manufacturer’s AOG
services, OEMs supported pool, OEMs/ Vendors keeping
the stock on behalf of customer, Manufacturers
establishing spares support at regional centres, Vendors’
supply lead time, and other airlines’ data if available, etc.
 After this process, and if need be, modify the Spares Data
questionnaire filled/ sent earlier for the Manufacturer to
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provide the simplifiedAircraft
provisioning
IP Process steps cont’d
 Request Manufacturers to provide RSPL listing with
various options and parameters. This may be either a single
list showing the quantities required for varying Service
Level percentages and RTAT ranges, or as many lists with
a combination of parameters.
 The latter options could be six different RSPLs for the
following parameters, or such other appropriate parameters
and/or combinations:
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IP Process steps cont’d
 This is to enable Material Planning to differentially select
the right range and quantities of the spares under different
categories, viz. (a) Components of Essentiality Code (EC)
1, 2 and 3; (b) Components which are repaired in-house;
(c) Components which are repaired outside and having
different RTATs; and (d) Spares and components which
are required to be positioned at Line Stations.
 Request for and ascertain the time of availability of the
Electronic Data Files (S, T, and other files) for aircraft,
engines, equipment and tools. EM&S to request the
Manufacturers to identify the PNs which may be common
with the existing fleet/equipment.
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Manufacturer establishes customized
data files
 On the basis of the spares planning data provided by
Emirates and as agreed at the IP Conference, the
Manufacturer establishes a customized spare parts
recommendations for all kinds of spares.
 As soon as possible after receipt of the data submitted by
Emirates , the Manufacturers will prepare “provisioning
lists (RSPL)” for different options requested such as
different Service Levels and RTATs. [ see 5-4 above].
Normally the RSPL data is sent in electronic form(PC
Diskettes), but some vendors may send hard copies only.
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 Manufacturer lays down the IP data provided by the
customer and other history data available with them in the
various Provisioning Data Files (S, T and other files)
according to the specifications. Processing of these
electronic data files, and their dispatch to customer, is
considerably later than the simplified RSPL listings.
 The Manufacturer’s data files, including the simplified
RSPL, will indicate the recommended quantities of parts
and their budgetary cost in US dollars.
 The recommended quantities are usually determined by a
Poisson probability model reflecting a constant average
failure rate and the replacement of a failed part in the
system during the repair
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factors.
 The purpose of processing an RSPL is for a quick
calculation of the range and quantities of the Initial
Provisioning spares and components, well in advance of
the receipt of Electronic Data Files, to enable meet the
budgetary and the cash flow.
 Provision. When considering a significant investment a
more dynamic approach, than a mere Poisson model, or a
generalized ground rules and approach, must be in place.
To arrive at the recommended quantity it is necessary to
consider individual component’s characteristics and the
airline peculiarities with reference to that component. The
following are the steps of Initial Provisioning exercise,
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 Convert the RSPL diskettes with several options and
combinations, received from the Manufacturers, into an inhouse database PC format (such as Excel) to enable sorting
and selection from within such groupings any subset to
form the Initial Provisioning recommendation.
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Establish initial provisioning with s
and t files
 Based on the parameters provided by the airline,
Manufacturer establish various provisioning Data Files.
These are customized and are processed in electronic
forms. (These files are dispatched to customer six to eight
months later than the simplified RSPL listings) These are :
 S file : Includes all items contained in IPC (of aircraft and
engine manufacturers)
 T file : Includes all items contained in IPL (of aircraft,
engines and components manufacturers)
 V file : Combination of S and T files, under Spec 2000 (all
line maint spares, overhaul and repair spare parts)
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Establish initial provisioning with s
and t files cont’d
 Others: Other data files are : U, W, Z, X Y and G
 IPC : Illustrated Parts Catalogue - detailed parts list for
aircraft and engine, with illustration IPL : Illustrated Parts
List - includes End-Item Detail parts list of the CMM, with
illustration
 The S, T and other Data Files and their subsequent
revisions are more accurate as they have been established
with greater details and more current component
information. This procedure involves Data Control staff in
Material Planning and IT (M&E) first processing the Data
Files, and the Materials Planner reviewing and
recommending the range and quantities of spares and
materials for Initial Provisioning.
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Establish initial provisioning with s
and t files cont’d
 Material Planning receives S and T spares provisioning
data files from Manufacturers. (While S File is an
electronic file, T Files in respect of some of the
Component Manufacturers may be in hard copy form)
 Forward S and T files to IT for processing, i.e. uploading
in mainframe.
 IT uploads S and T file into EMPACS to compare with
existing parts basic data base in the system.
 Conduct a run to check on S file to establish Vendor
information existence in the part basic database in
mainframe, and/ or its accuracy (conformity to the records
existing in the system)
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Line stations provisioning
 Airlines holding their own stock, or having access to Pool
stores, is an insurance against flight delays as a result of
materials shortages. Emirates Line Stations requirement of
spares and materials are met by one of the following options :
(a) Self stocking, (b) IATP Pooling , (c) Bilateral arrangement
with an airline at the station, or by (d) carrying such essential
items on board as a Fly Away Kit/
 The process starts with first establishing the total requirement to
support the airline’s flight handling and maintenance at the
outstations, and then identifying the components and spares that
are to be provided by Emirates (station stock or by FAK), IATP
Pooling and Bilateral arrangement with local airlines. If the
stock is to be provided by Emirates, then such requirement
would also be included in
the Initial Provisioning.
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Pooling Arrangement
 Pooling Decision : Go through pool documents for
availability of the parts in Pool, Pool provider airline,
number of Pool partners, and if the local airline has, etc. to
decide EK's options.
 Decide the final quantity requirement for EK to stock (Pool
is an "insurance" and does not replace IP for the station),
particularly minimizing quantity if Pool option is
 not available.
 Compile a proposed list of Station Imprest draft, indicating
part, part number, quantity required, proposed provision by
: stock by EK, stock location, Pool, on request from OAL,
Pool provider, etc.
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 Send messages to Pool provider / local airline (and/or
"handling" airline) querying about "availability" of the part,
alternate parts, etc.
 Receive confirmation on availability and/or alternate
availability; update the Station Imprest list
 Attend twice-yearly IATP-Pool meeting to ratify Pool
Agreements (including last minute dynamic changes on basis of
the number of operators sharing the costs and the probability of
service on demand) and to establish co-ordial relations with
other airlines/operators and aircraft handling agencies. The
updated Station Imprest is distributed to all concerned.
Particular Station's
 Imprest is sent either to the Station Engineer or to the Technical
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Handling Agency.
Parts re-provisioning
 Electronic Inventory Reports (EIR): Generally for the
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purpose of re-provisioning and other pre defined alerts,
system generates Inventory report electronically.
Function: This report gives comprehensive information on
a part no. required for re-provisioning planning and
answering other general queries.
EIR Handling – Objectives
a) Meet operational requirements
b) Optimize investment in inventory
c) Follow quality & safety policy.
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Periodic review of component float
 The post-IP review relates to all future changes
adjustments made to the range and float quantities of items
in the Initial Provisioning list. The changes are two types :
 (a) increase in float quantity, and (b) decrease in float
quantity. The review to increase the float quantity is an IR
triggered reactive action (Shortage/ Nil-stock, NSU,.). At
that time the component’s removal rate, actual repair TAT,
and other factors affecting the float level are reviewed, and
then the float quantity may be revised upwards and
necessary purchase made.
 On the other hand the review to decrease the float quantity
has to be a proactive approach.
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 This calls for the availability of data to Material Planning
about the component removal rate, actual repair TAT and
other parameters determining the float level. The proactive
review is to be carried out every six months, after the first
aircraft has completed its first 'C' check.
 The float quantity may be reduced if the components’
actual MTBUR (reliability) has improved from the
manufacturer’s MTBUR, and also if the actual repair TAT
(repair cycle days) reduced from that used in the original
calculation of Initial Provisioning.
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 The Materials Planner should be in the full knowledge of
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all those provisions relating to and effecting the float
levels. Float level reduction should result in any of the
following actions:
a) Invoke Reliability Guarantee provisions in the contract
to claim reliefs, such as “Buy Back” or FOC Loans.
b) Invoke Repair Guarantee regarding free of cost repair
and/or replacement of the item/FOC Loans.
c) Buy additional quantities as/if necessary.
d) Declare the items as surplus to our requirement , and
move into surplus stock; and Initiate disposal action.
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