In the aviation industry, timely availability of parts is vitally important to keeping planes in the air. Part values are significantly higher than in other industries and the untimely availability of parts can cost aerospace customers millions of dollars in lost revenue and cause irreparable damage to their service reputation. Every minute on the ground can translate into missed customer commitments. Aerospace Products International (API) was founded as an aircraft parts distribution business to serve airlines’ needs for regular and time-critical parts. It started in 1988 with one central facility in Memphis, Tennessee, a major U.S. hub for shipping and air cargo.
API earned its solid reputation in the industry by being open 24/7 to offer one-stop access to nearly 200,000 factory-new parts manufactured by over 150 OEMs. Customers include aircraft operators, manufacturers, and maintenance and repair operator (MRO) providers.
Business lift off requires better business processes
In addition to its parts and components supply business, API is now a leading provider of supply chain management and customized third party logistics services and technology solutions, including inventory management services. API also offers overhaul and repair services for brakes, starters/generators, and other aircraft systems, and also builds custom hydraulic hose assemblies.
With growth came a set of new business management challenges. As Dave Currence, API’s Vice President and CIO, says, “To continue to grow the business, and to become more profitable as we grow, we needed a more comprehensive, sophisticated platform to help us operate more effectively and efficiently.”
API management was clear that they needed a comprehensive business solution that would provide
- An immediate and complete view of business operations and customer activities
- Industry-specific business functionality to support diverse lines of business
- Seamless compliance to regulatory requirements.
API realized that there was significant risk in staying with their proprietary legacy system. It would require a major investment in time and talent to build it out to meet expanding needs. And in the end API would still have a largely proprietary system that would need continual best practices adjustments. Experience and good judgment prompted API management to consider a completely new solution.
Never trade luck for skill
It’s an old aviation motto that works perfectly for API. API wasn’t going to leave anything to chance. Because the team was clear about what they wanted, API didn’t go through a typical nine month selection process. Rather, they got right to the point, bringing in three vendors and inviting them to set up a conference room pilot situation. Currence notes, “The team from itelligence, with its mySAP it.wholesale solution, had a head start because they were working from the product’s classic distribution template that already had 80 percent of the functionality we needed. They asked us to select specific functionality and then they showed our core team what was essentially a turnkey distribution solution.”
API’s decision in early 2005 to go with the SAP solution took two months from the first phone call to selection. Recalling the decision process, Currence observes, “The solution fit us the best, with mature processes built into the template. SAP is global and itelligence is global. Together they can support our global expansion. Also, deploying an SAP solution aligns us well with the aerospace and defense companies we deal with. Most all operate on SAP platforms.”
Piper line flies first
Leveraging the solution template to satisfy the majority of core business needs, API went to work on challenging industry requirements that would give them competitive advantage. Specifically, the support for API’s specialized rotables and core piece process, which is unique in the distribution environment. API has regulatory compliance considerations, such as the FAA (Federal Aviation Administration) requirement to track and trace every airplane part, maintaining a complete history of each.
In describing the implementation plan, Currence says, “We cut over the Piper line of business first in October. It covers all of our functions, including financials, materials management, sales and distribution, warehouse management, production planning, and customer service, so it gave us the opportunity to exercise the full, horizontal range of functionality and train everyone on the entire product all at once.”
Managers of the Piper business especially appreciated immediate benefits such as acceleration of sales order throughput and real-time visibility of pricing and stock levels across all locations. The new solution also automates the handling of special pricing considerations.
Currence adds, “This was more than an IT project. It was also a big culture shift. So we took our best and most experienced employees and put them in charge of the implementation process. After all, technology is a means not an end in itself. The engagement of solution champions to create positive change helped condition the organization and helped us keep our eyes on the value delivered.”
Today API has rolled the solution out to its other lines of business worldwide, adapting as appropriate.
“Now we can govern from a centralized location, with ‘one truth.’ At the same time, our infrastructure accommodates future growth including the company’s continuing international expansion,” says Currence.
Already API is reaping operational benefits. On the cost side, the company has increased productivity in the pick/pack/ship process. And Currence notes that mySAP it.wholesale’s real-time visibility and information infrastructure gives API the precise inventory control that is necessary to reduce expensive “just in case” inventory while also increasing aircraft availability and customer satisfaction. He anticipates a marked improvement in inventory turns.
In addition, Currence observes, “It’s turning out to be a quality initiative as well. For instance, we’re seeing that implementing best practices has improved our order entry process. Capturing and validating more information at the source of the business event leads to cleaner, higher quality orders that streamline the process.”
Because API sees supply chain solutions as a significant growth segment, Currence describes another benefit of implementing mySAP it.wholesale. He says, “Having SAP in place as our solid back end solution enables us to put our energy into ESP, our customer-facing Electronic Supply Program, which enables our customers to increase service levels while reducing overall costs.”
“There are intangible factors in this equation, too,” Currence acknowledges. “When talking with prospects, the Department of Defense, or existing customers, SAP gives us credibility. It opens doors for us. It’s hard to quantify that, but we know the value is there. The mySAP it.wholesale solution is supporting our ability to grow the business and to achieve industry-leading levels of product availability and customer service,” Currence concludes.