Where Last Time Buys Fit into the Aerospace Industry

There are some aerospace products that will never be considered obsolete. Many of the largest component manufacturers in the industry have been supplying nuts and bolts to aircraft specifications for decades — and other than oscillating between titanium, stainless steel, aluminum, and other exotic materials, those designs are not going away anytime soon. Other products such as fittings and valves are made-to-order by hundreds of smaller manufacturers, and can be acquired (following an extended lead time) regardless of the state of the market.

The primary reason for this has to do with the specificity required to keep an aircraft in flight. Once an aircraft design is completed, it is frozen — and any alteration to the construction that may affect weight distribution cannot be authorized for takeoff. The F-15 Eagle, for example, long a staple of the U.S. Air Force with no recorded losses in aerial combat, has remained virtually unchanged from its first flight in 1972.

In some cases, such sacrosanct adherence to the original drawings results in scenarios that are quite comical. If you happen to fly a Boeing 757 or 767, you might notice that some cockpits are still fitted with ashtrays despite laws banning smoking on aircraft have been in place since 1987. Why? Because the original aircraft designs from 1982 featured them, and even today they must be included to be authorized by the FAA for takeoff. In aerospace, the devil is always in the details.

Despite this unique feature, the aerospace industry has not been immune to obsolescence issues. In fact, they are one of the industries struggling the most with maintaining the critical inventory needed to keep military and commercial aircraft optimized with the best technologies aerospace OEMs have to offer.

This critical inventory takes the form of commercial-off-the-shelf (COTS) electronic components. In 1994, in an effort to minimize skyrocketing production costs Secretary of State William Terry mandated that all defense suppliers support their products with COTS inventory, which are widely available through retailers and not restricted to just military buyers. The new direction had its intended effect; not only were design costs significantly reduced, but market competition to become direct suppliers to a client as large as the federal government pushed component manufacturers to innovate at an astonishing rate.

While this has been an overall net gain for everyone involved, it’s only recently that the flaws of this model have become apparent. As OEMs across all industries continue to desire components with greater processing speeds and smaller footprints, OCMs have had no choice but to continually shorten the lifecycles of their components. Today, the average lifecycle of an electronic component is roughly half that of an OEM product.

On this scale, aircraft are the extreme outliers. A Boeing 747 is designed to endure approximately 30,000 pressurization cycles, which equates to about 30 years of service (747s are officially retired after 27 years). If the components necessary to service and maintain electronic equipment such as navigational receivers, transmitters, radios, and autopilots are available only two or three years before transitioning toward end-of-life, it’s easy to understand why aerospace OEMs are struggling.

This is where last time buys are instrumental for OEMs specializing in aerospace and defense. Last time buys not only can ensure that a product can be supported for as long as its lifecycle dictates, but ensure that the component in question can be implemented quickly. If any of these pieces of equipment are malfunctioning, an aircraft is designated AOG (Aircraft on Ground), and every moment a commercial aircraft is AOG is a moment the airline isn’t making money. Should the OEMs miss the opportunity to make a last time buy, an aircraft can be grounded for months while purchasing managers scan third-party channels for the component in question, some of which may not be authorized or offer inventory with complete traceability.

In many ways, the aerospace industry runs on last time buys, and it is more vital than ever for OEMs to have an obsolescence management strategy in place — one that is capable of being enacted swiftly and accurately the moment a product change notification (PCN) is issued.

And one solution, which has been utilized by Boeing, can do all this without the OEM spending a dime of upfront working capital.

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