Aerospace and defence face big challenges ahead, not least from the potential fallout of Brexit. With cost control set to become even more important, it’s imperative that firms take a more strategic approach to buildings maintenance, repair and operations (MRO)
The UK’s aerospace and defence industry is performing strongly right now, according to latest statistics from ADS, the trade body for the UK’s aerospace, defence, security and space industries. Its annual industry snapshot, published just days after the vote on EU membership in June, reported turnover within aerospace rising by £1.9bn to £31.1bn in 2015 and by £2bn to £24bn in 2014 within defence .
However, this is a competitive industry and many firms fear the impact Brexit will have given that Europe is one of the UK’s top three export markets. As such there will need to be an ever-greater focus on cost efficiency.
Aerospace and defence order books tend to be dominated by a few big-ticket, long-term projects rather than a “churn" of smaller orders, for example the Royal Navy’s new Queen Elizabeth-class aircraft carriers. Against such a high capital backdrop, one important area where cost control and efficiency can be achieved at a day-to-day level is within MRO procurement to help maintain buildings – in other words, the cost of day-to-day purchases of mechanical, plumbing and electrical spares, replacements and components.
“It’s easier to make the case for keeping tight control on MRO spend for plant and other operationally critical machines, but it’s just as important to look at MRO spend on buildings,” says Helen Alder, head of knowledge and product development at the Chartered Institute for Procurement and Supply. “Many organisations have numerous large buildings and over the course of a year spend significant amounts on maintaining these.
“With buildings maintenance, it’s important to prioritise MRO requirements (either if you have an in-house facilities management team or it’s outsourced) so that critical areas, whether that’s lighting, plumbing or air conditioning etc, that might affect your overall operations can be serviced in a timely manner. This comes down to working with suppliers to identify key MRO products and ensuring you have a list of key suppliers that will be able to provide parts as and when you need them.”
In addition to these regularly purchased items, Keith Johnson, Industry sector manager at RS, points out that there are also a significant number of one-off purchases. “Typically we find that 60-80% of the items companies in this sector buy are one off purchases,” he says. “As such, it’s crucial look at the actual MRO process to ensure that it’s as streamlined and efficient as possible, otherwise hidden costs like the time it takes an employee to order each individual item really mount up.”
Choose the right suppliers
As Johnson explains, it’s important to choose suppliers that understand the industry: “Within the sector there will often be many activities, which means organisations need access to suppliers that can provide a wide range of tools and parts. A drill for use on a building will not be fit for purpose for someone drilling a composite panel on an aeroplane, for example. So there can be a need for very specialised tools alongside more generic ones. You need to work with a supplier that has expertise and understands the sector; someone who can bring a specialist supplier to the table, if need be.”
"You need to work with a supplier that has expertise and understands the aerospace and defence sector"Keith Johnson, Industry Sector Manager, RS
When it comes to buildings maintenance, the industry faces a number of challenges. As Johnson highlights: “A lot of the buildings in this sector are often quite old and some will be very large; there may be huge hangars, for example, and there may be a wide variety of buildings to maintain.”
Sites will often be technologically complex with the need for clean rooms or sterile environments or, say, wind tunnel testing units. In addition, if dangerous products – chemicals, fuels or armaments – are being used or tested, sites may also be geographically dispersed or remote.
Regardless of these challenges, aerospace and defence companies need to keep production uninterrupted, buildings in good working order and ensure that stock procurement, handling and storage are as efficient as possible.
"By putting a well-thought out, strategic MRO process in place for all buildings maintenance, it's likely it will have minimal impact on critical work"Keith Johnson, Industry Sector Manager, RS
This is where taking a more strategic approach to MRO can pay dividends, suggests Johnson. By developing a proactive MRO strategy and adopting a structured approach to your supplier selection and management, you can consolidate your supply chain, improve automation (for example, through integrated eProcurement systems and electronic catalogues), gain a better picture of who is buying what, where and when (and whether they need to be), and potentially free up building space and working capital by reducing the amount of stock you are sitting on “just in case”.
“By putting a well-thought out, strategic MRO process in place for all buildings maintenance, it’s likely that both planned and unplanned work will have minimal impact on critical work,” says Johnson. “In addition, by working with a smaller group of trusted suppliers that have knowledge of the sector, it’s possible to get the right parts at the right time, first time.”