5 Key KPIs For Inventory Planning Every Airliner Should Focus On

KPIs, or Key Performance Indicators, are units of measurement that allow businesses to track their success and evaluate how effectively they are achieving their objectives.  When choosing which KPIs to use, utilize the SMART acronym.

A. Specific – Are your objectives clear?
B. Measurable – Can you quantify your objectives?
C. Attainable – Are your objectives realistic?
D. Relevant – Are your objectives related to your overall business?
E. Time – In what amount of time do you expect to meet these objectives? 

Inventory planning is a must for any international or American airline housing spare parts for maintenance purposes.  Airlines don’t want to deal with an extended AOG situation resulting from a lack of parts, but it’s unrealistic to house a whole aircraft’s worth of spares that may, or may not, be needed. Five important KPIs regarding inventory planning capabilities that every airline should focus on include the following.
  1. Inventory Turn - Stock being issued/overall inventory value= Inventory Turn. Usually low, parts don’t typically fail that often.  It may be beneficial to sell or exchange parts, which are slow-moving, rather than have them sit in inventory.
  2. Inventory Per Tail - The amount of inventory you have, per aircraft.  Some aircraft have more expensive parts than others, so be sure to keep aircraft type in mind.
  3. Inventory Investment - Includes all operational/capital spending (repair costs, holding costs, etc.).  Budgeting for this really depends on demand– flight hours, upcoming maintenance checks, and busy seasons should all be factored into this.
  4. Inventory Service Level - Determined by the level of stock you have sitting in your warehouse.  It’s the amount of time a part is available (where it is available, and for how long).
  5. Inventory Cost Per Hour of Flight - Operating costs/flying hours= Cost Per Hour Of Flight
    Remember it is important to consistently review, revise and reevaluate your KPIs.  As your business changes, so should your objectives and goals.

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November 1, 2018

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