Maintenance Repair and Overhaul Industry
The aerospace and defense industries have turned MRO into a powerful tool for establishing customer intimacy and surviving fluctuations in turbulent times.
Recession-resilient companies in the aerospace and defense (A&D) industry have mastered a tactic that can provide a valuable model for the new breed of companies—or any manufacturer—worried about budgets cuts.
During the lean defense spending era of the late ‘70s, the A&D industry learned that revenue needs to come from more than government spending. The emergence of the aftermarket service industry saved many A&D contractors from post Vietnam-era budget cut peril.
The “secret weapon” not only paid off, but also produced an unexpected result—the development of a new level of customer intimacy, which helps those service-invested companies coast through challenging economic times both in the ‘70s and through the newest era of recession woes.
The role of service in developing customer loyalty is a valuable lesson that should be studied by any company in any industry that is subject to volatile market conditions. This is now clear: The service operation can be a saving grace.
Looming budget cuts and reductions in defense spending undeniably pose threats to growth for some A&D manufacturers, suppliers and contractors. Any fluctuation in U.S. government spending has a far-reaching ripple effect. Vendors, supply chains and related engineers and contractors worldwide feel the impact when changes in programs, priorities and expectations emanate from Capitol Hill.
This should hardly be a surprise.
Volatility in the A&D industry is inevitable as the influence of politics, world unrest, instability of emerging nations and isolationists’ sentiments and domestic focus swing like a pendulum.
Despite this reality, the powerhouses of the A&D industry survive. Many, in fact, flourish, often thanks to their divisions that provide preventive maintenance, inspections, break-fix repairs or complete system overhauls. After all, when spending for new equipment decreases, service on the old equipment tends to increase.
The companies who have efficient systems in place for managing the service operation will win those MRO (maintenance, repair and overhaul for commercial and defense aircraft) contracts.
Service must be efficient in order to be cost effective and profitable. Because of its complexity and labor intensive operations, the service division must be managed with extreme attention to cost control, technician productivity and streamlined processes.
There is no room for gaps in communication caused by disparate systems, delays due to lack of parts availability or questions around configurations, schematics, components, warranties or program mandates.