How Parts Suppliers Can Win POs & Support Airlines & MROs with Automated Buying
A lot has been covered and discussed (ourselves included) about how technology, data and algorithms are driving the aviation industry supply chain forward by reducing costs and driving efficiency for buyers. However, that’s just one side of the ecosystem. These same tools can also benefit suppliers, while supporting airlines and MROs, creating a true win-win scenario. Here’s how suppliers can also benefit from automated buying.
Getting More Demand
Traditionally a lot of legwork goes into winning a purchase order. Sales teams need to be constructed and deployed, relationships have to be built and a lot of labor-intensive work needs to happen with each part requirement being processed sequentially. And this is only if suppliers have enough market insight.
Often suppliers are dependent on “tribal knowledge,” meaning that if it’s this part that the buyer is purchasing then this and that supplier is invited to the RFQ, if it’s another part, then a different supplier is invited, etc. With automated buying suppliers can be configured to receive all relevant demand.
This is especially useful for suppliers coming out with a new product line or carrying different products. Instead of relying on a buyer remembering or learning to invite a supplier to an RFQ, suppliers simply have to activate a new set of part numbers to receive new demand and not miss out on any opportunities.
Airlines encode their logic into algorithms to process thousands of part requirements simultaneously, which also means a greater amount of selling opportunities for suppliers at a much higher velocity. Machines can run purchasing at a rate 10-100x faster than traditional manual processes.
Suppliers can get a lot more results with less effort by leveraging these automated demand channels. Best of all, given the volume of POs, a compound effect can quickly be realized.
Selling Parts Packages
There’s another huge opportunity for stock-carrying suppliers. Not only will these suppliers be quoted more often by the algorithms because they offer more readily available parts, but these suppliers can sell more parts packages.
This is because airlines look to reduce logistics complexities and lessen their environmental impact by packaging as many parts as possible in a single order. Therefore, airlines are likely to purchase from suppliers with the most readily available parts, even if it might happen to be more expensive than purchasing each of the parts individually.
This also builds a relationship with and positions these suppliers well for future purchases from these airlines since they know they can be relied on to fulfill packaged orders and reduce their amount of transactions.
Not only can automated buying increase revenue for suppliers, it can also save them an incredible amount of time, increasing overall efficiency and freeing up time to focus on the most important opportunities.
This is especially useful for low-value, high-volume C&E parts, which can be tedious and very time consuming to process. These low-cost transactions which need little to no human intervention should be carried out automatically.
The other benefit of automating the quoting process is that suppliers are afforded dynamic pricing opportunities. This allows suppliers to create buyer-specific pricing based on the customer (on criteria such as price, lead time, location, past transactions, etc.). This creates a win-win scenario as it provides buyers with relevant quotes.
Improving Stock Turnaround Time
Speaking of improving the entire supply chain, one of the aspirations of the aviation industry is to move towards Just-in-Time Inventory/Purchasing. The only way for this to occur is by leveraging new technologies such as automated buying.
We’ve already started to see the industry shift out of necessity. Because of COVID, airlines have been trying to reduce as many costs as possible, which includes buying and stocking as few parts as possible.
Because of this, their safety stock levels are low. This creates an opportunity for suppliers who can support airlines with shorter lead times.
Stock carrying suppliers can accelerate the industry’s move towards Just-in-Time Inventory (while becoming a favored supplier of airlines) by providing much faster service (by having the parts and shipping them right away) than what’s traditionally expected.
Here lies another win-win scenario. This means that airlines can stock less parts while suppliers advantageously position themselves to win more POs.
Technology will be the catalyst to move the aviation industry forward. Specifically automated buying holds the key for suppliers and buyers alike. Through mutually beneficial tools and partnerships a greater supply chain can be had for all.