The digital road to cost optimization for airline Maintenance, Repair, and Overhaul (MRO)
Amidst the "global reset" in the aviation industry, cost optimization is a recurring hot topic. Yet, many areas have been overlooked where innovation and digitalization can make a difference. A good example of this is the Maintenance, Repair, and Overhaul (MRO) sector, which is in the right position to become a mainstream target for transformation.
The global spending on MRO was about US$50 billion in 2020 and is projected to become US$68 billion in 2021 and US$97 billion in 2022, eventually reaching US$115 billion in 2030 with an average forecasted yearly growth of 1.7%.While there have been advances from Original Equipment Manufacturers (OEM) and MRO shops at improving workplace design and shy attempts at using digital technologies to optimize costs, we are yet to see the step-change transformation that the sector deserves. Perhaps the aviation industry's perceived acceptance of MRO as a "cost sink" is one reason. During a period that saw profound operational disruptions, every bit counts when it comes to controlling costs.
Technology to address core industry levers
Technologies like artificial intelligence have advanced to such an extent that it is possible to make a significant impact on the core levers of this sector: safety, reliability, and cost. Evidence of this includes the increased focus on MRO-related topics in innovation challenges and hackathons sponsored by key players in the aviation industry. The heart of the MRO sector is the skilled engineers and technicians whose years of experience and knowledge are integral to the reliability and safety of an aircraft. Their strict adherence to analogous processes, most of them derived from traditional engineering practices, keeps the checks and balances to the reliability of the whole MRO workflow. Handwritten maintenance reports, printed checklists, and hardbound OEM maintenance manuals are part and parcel of their daily lives. But technology can enrich and streamline this process-driven culture. Natural Language Processing (NLP) and computer vision can capture MRO data to automate existing manual and transactional processes.
There are pain points that are generally accepted as a part of the trade, whose elimination would lead to process improvements at a fundamental level. A voice-activated workplace assistant can take on-the-job observations and fill out forms, thereby making employee lives on the shop floor immensely easier. Such a system could also give inputs to an automated purchase request and spare parts reservation system. The objective is to create synergies between highly skilled professionals and advanced technology to drive process efficiency and reduce costs without compromising safety and reliability.
Furthermore, the MRO sector is sitting on troves of untapped data amassed over decades. Putting that data to good use will help reduce the uncertainties related to critical spares replacement timelines, supply chain estimates, and inventory management, for example. An advanced MRO platform can integrate different enterprise and engineering systems for comprehensive data analytics. Besides the obvious cost savings, the platform also helps reduce the regulatory risks involved in the aircraft handover process after maintenance.
Data science and the future of MRO
An effective digitization program with NLP capabilities at its core ensures that all required information is captured at the shop floor and quickly processed for action. Data science will play an integral part in the MRO space on various aspects ranging from residual life prediction of critical spares to forecasting machine health. The COVID-19 pandemic put a damper on this sector that was already slow to adopt digital technology compared to other areas in aviation. MRO spending dropped by 39% in 2020 when compared to pre-COVID-19 forecasts. While the focus has shifted from more flamboyant innovation in AR/VR, wearables, and drone-supported maintenance, there is still much room to improve data science applications in other use cases to reduce costs, such as preventive maintenance, predictive analytics, MRO planning, mobile technology, and aftermarket platforms. For a data-intensive sector like MRO, the opportunity to optimize costs by leveraging emerging technologies to enrich, streamline, and accelerate processes is enormous. Close collaboration between airlines, MRO shops, OEMs, and technology providers is key to identifying the most pressing use cases and unleashing innovation for the industry.
Vinayak Ashok is a Senior Business Consultant in IBS Software's Digital Innovation team with over 14 years' experience. As a digital enthusiast and design thinking practitioner, he identifies core challenges the aviation sector faces and guides teams in finding technology-driven solutions for them. He has hands-on experience in multiple domains ranging from oil, gas, and energy to aviation, handling functions including project management, operations, and consulting. Vinayak holds a Master's degree from the Indian Institute of Management and is based out of Kochi.