Toma Matutyte, CEO of parts specialist Locatory.com.
Toma Matutyte, CEO of parts specialist Locatory.com, discusses why airlines are looking more at just-in-time inventory management and how the company is taping into artificial intelligence to help parts procurement efficiencies.
What is the demand for parts this year in terms of percentage increases?
Demand is on the rise. Indeed, we have been talking about a 33% increase last year and we are confident to say that such a significant upward trend is holding strong. In fact, we're projecting a robust two-figure growth, although, as for now, it is hard to come up with a certain number, as the fluctuations in demand are still huge. Yet, we have healthy growth of one-third in year-to-year data when we compare overall activities on our marketplace.
Which parts are more in demand from airlines, and what do you believe are the reasons for this?
What's particularly interesting is which specific parts airlines are clamouring for. For example, we're seeing a surge in demand for landing gear components. This makes perfect sense. With airlines flying their aircraft more than ever, there's naturally going to be more wear and tear. They're also prioritizing preventative maintenance these days, which means more regular replacements to keep those planes safe and operational. As for now, we also see a significant uptick in demand for APU components, fuel system components and parts for engine control systems, especially for Boeing 737NG aircraft fleets operating CFM56 engine derivatives, such as the CFM56-7B.
Conversely, where are you seeing market shortages for parts related to aircraft and engine programs and what are you seeing in relation to lead times?
Sourcing for the parts of older, yet extremely popular CFM56 derivatives, such as CFM56-3, becomes increasingly challenging, therefore lead times can be extended. Such parts for other popular variants of this engine, for example, fuel control units for CFM56-5A/ 5B/ 5C engines, are also relatively hard to find. With CFM56-5A/5B and 5C engines powering a significant portion of Airbus A320 family aircraft fleets, the demand for fuel control units highlights the surge in maintenance operations of mature engines, which remain in high demand, despite their age and rising upkeep costs. It's quite interesting that we also recently saw a spike in demand for components of engines which are very new, such as Leap-1A seal assemblies or fuel metering units on A320neo aircraft.
How are airlines' parts procurement strategies changing? How is Locatory.com adapting?
We are observing a shift towards just-in-time inventory management as airlines and other aircraft operators are optimizing storage costs. As increased reliance on reliable suppliers is also becoming more obvious, Locatory.com is solidifying partnerships with reputable vendors to guarantee part availability and our community recently reached 20,000 active members. We are also seeing an increased focus on longer-term contracts, so we’ve adapted flexible options to cater to these evolving strategies. Understanding any specific part demands is of great importance for us. It allows us to strategically manage our inventory and source these parts efficiently. We're building strong partnerships with reliable vendors and offering flexible contract options to meet the evolving procurement strategies airlines are adopting, like just-in-time inventory management.
The current market situation presents a fascinating dynamic within the power-by-the-hour (PBH) model for aircraft parts procurement. While PBH offers undeniable value in terms of cost predictability, recent global supply chain disruptions and price fluctuations have introduced elements of uncertainty. This is prompting some consumers to explore a more nuanced approach so they tend to have a marketplace account in advance to not found themselves in situation when they wouldn’t be able to find the part they need on a very short notice. Consumers are likely to retain the core benefits of PBH for their essential operations. However, they are also seeking ways to mitigate risks associated with potential supply constraints, price volatility and unforeseen shortages.
Is Locatory.com tapping into new technologies such as artificial intelligence for parts inventory management? Which other technologies are you also prioritizing?
Locatory.com is leveraging new technologies like artificial intelligence (AI) to improve parts inventory management. While AI plays a big role behind the scenes, we have developed a user-friendly tool called Amber AI that utilizes some of this intelligence specifically within the email workflow. And while AI plays a broader role in our overall inventory management strategy, Amber AI is a good example of how we're harnessing technology to make email-based parts procurement process significantly smoother and more efficient.
Overall, digitalization is at the core of everything we do. We're on a mission to become the absolute leader in the digital marketplace for aircraft parts, and that goes beyond just convenience. We're harnessing the power of technology to create a smoother, more efficient, and ultimately more successful experience for airlines. First up, we're looking for ways to pour some resources into advanced data analytics. There is a huge potential to employ modern, sophisticated algorithms and machine learning sifting through the massive amount of data flowing through our platform. This would allow more accurate predictions on what parts will be needed, allowing both airlines and vendors to optimize their inventory. And, of course, a streamlined parts procurement experience for everyone involved.
Naturally, a user-friendly platform is key. That's why we're constantly investing in improving the user interface and user experience. We're aiming for an intuitive and efficient platform that allows airlines to navigate parts procurement with clear search functions, a user-friendly interface and a real potential of implementing even some data visualization. We also aim to establish ERP connectivity with different tools as we are looking forward to enabling our clients to perform and execute all the procurement and listing procedures they want more efficiently.
