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Case Study: Using digital solutions to drive efficiencies at APLUS
Author: Wilfredo E. Regalado, Director Corporate Finance, Strategic Planning and Information Technology, Aviation Partnership Philippines (APLUS)Subscribe
Wilfredo E. Regalado, Director Corporate Finance, Strategic Planning and Information Technology at APLUS shares their digital line MRO project
Before going into the detail of this case study, it will be useful to include some information about the business to which it refers. Aviation Partnership Philippines (APLUS) is a joint venture between Singapore International Airlines (SIA) Engineering Company (SIAEC) and Cebu Pacific. The business serves more than thirty airline customers supporting some 8,500 flights per month in normal times and 9,500 flights per month in peak season. There are two peak seasons in the Philippines, Christmas season in the months up to January and summer season from March to April. With thirty different airline customers, servicing them is a big challenge for the business with stations located on five different islands on the main tourist spots around the Philippines (figure 1).
The partnership is an MRO for line and light maintenance with, as its major customers, the shareholders SIA Group and Cebu Pacific.
Being a joint venture with a subsidiary of SIA, APLUS has the full support of SIA Engineering Company with regards to technical engineering personnel, cross-deployment, training with a common training syllabus, working together with APLUS’s line maintenance network and even parts management (figure 2).
That means the MRO can just concentrate on the core business of providing the service. If there are any issues, SIA is just a phone call away and not too far away in real terms.
APLUS currently enjoys different approvals from the Philippines (CAAP), Singapore, Malaysia, China, Taiwan and Qatar. At the time of writing, we were applying for EASA Part 145 and 147 (figure 3).
As an MRO company, APLUS has some business challenges as do most businesses. Because it works with a diversity of fleets and regulations, APLUS handles twelve types of aircraft across eight regulatory authorities. It’s a diverse business which also makes it difficult to operate in a manual and paper based environment. Multiple systems were in place for Planning, operations, Finance and HR making the process cumbersome and error prone. The operation is spread across different islands with those five major bases across the Philippines and handles an increasing number of aircraft every year (figure 4).
To give an idea of some of the complexities that APLUS faces, one of the major customers is planning to increase their fleet by thirty aircraft in the next two to three years plus the business has to deal with both wide-body and narrow-body aircraft, different engine types and different configurations. There is also diversity in contracts with operations in PBH, fixed price, blended, ground handling and aircraft certification… all things that a customer wants APLUS to do. There is also full support and parts support on components and engines as well as expendable and consumables. It’s a significant task to seamlessly integrate all of these different elements because, especially in the diversity of the contracts, each customer has their own SLA (Service Level Agreement), APLUS offers different levels of rates with even the escalation dates being different; so using a standard spreadsheet, as in the past, was a challenging task.
APLUS started in 2005 and it’s been operating in standard form until 2013, a good time over which to accumulate data in a paper format. However, since 2014, APLUS has migrated Ramco’s cloud based Aviation solutions to face these challenges with a system that was more able to deal with complex operations.
PROCESS IMPROVEMENT OPPORTUNITIES
There are business improvement opportunities to hand but what the business needs to do is segregate customer statistics and provide serial numbers: APLUS tries to track each part from purchase, to warehousing, to installation on the aircraft and putting it on record. There are customer level preferences on every alternate part which represents a big process improvement because everything was being done on paper with hard copies. It relied on the memories of mechanics and some tasks were being deferred because the mechanics could not figure out what to do and had to physically go back to the manual. Every time there was a task to be completed, the mechanics had to refer back; or if there was a need for a new part they would have to return to the warehouse to see whether there was available stock for that particular item.
With the integrated system that APLUS has implemented, and which we’ll look at in more detail below, the mechanic only has to encode and enquire from his iPad to see whether the part is available from the warehouse (figure 5).
That done, the mechanic can notify the warehouse that he needs that part and the warehouse will dispatch the part to where the mechanic is working; so time walking to and from the warehouse has been saved, and deferrals of tasks have been significantly minimized. There is control on contracts, and parts provided for customers as well as responsibilities because parts have to be defined in the APLUS system as to whether they’re customer owned, owned by APLUS or still in transit… everything can be tracked in the system. These are the business opportunities that APLUS has in mind, having come from a very basic, hard copy driven environment. The company wanted to minimize the need for manual interventions and to make the business seamless. The objective for an airline is to fly the aircraft on time and the goal for an MRO is to make the aircraft available in time, every time. The goal for APLUS is to minimize the time an aircraft is out of service being worked on.
One purpose of this article is to help readers to give a good reason for their respective CFOs to support digitization and a digitalization project, because most CFOs’ minds are fixed on the bottom line. Also, we will later see the impact of the transformation from the basic IT system to an integrated one resulting in a significant improvement in profitability at APLUS and in the return for shareholders.
This (figure 6) is a sample of what APLUS has.
The mechanics can check availability and get the parts that they need at the ramp using the iPads provided and on which they can see the task to which they have been allocated with a progressive accomplishment; each time the mechanic receives a task and work order, as each stage has been completed they can mark with the time stamp provided by the system. It’s all driven by the system and done in real time. And since most tasks are, for example, for event-driven contracts, this is needed to make sure that every event, and every task is properly billed to the customer. Relying on the memories of mechanics as to whether they used that particular part of carried out that particular activity on a job order was not very good for the business because sometimes people forget to report it on paper. The job will have been done but they might forget to report it then remember after a day or two, which can cause a query from the customer as to why the bill is changing after a delay. Also, aircraft reliability is the most important thing here.
This (figure 7) is a snapshot of what the user can see from the system, from the portal, in this case, whether a part is company owned, customer owned or still in transit?
Users can choose from a number of options, can see the part number and everything that they need on their iPad. The objective is to minimize and/or eliminate paperwork from the mechanics, leaving them free to concentrate on their expertise, which is to fix the aircraft. Documentation, references, availability are all handled by the system to ensure mechanics have the tools, the parts, everything they need. Through the system, APLUS supports the mechanics to enable them to do their job efficiently as expected and deliver the specific SLA to the customers.
The system also shows which is the aircraft in question, at which base it is located, what the mechanic is doing on a particular job and where is the part actually located; for example, if the user is in Manilla and needs a particular part but the part is located on another island, that part can be sent to Manilla so that it doesn’t need to be ordered. In the central warehousing, APLUS initiated a minimum/maximum ordering system where the company identifies when the level for the quantity of a particular part number reaches the level, the system will automatically generate a purchase request. Anything that can be automated – approval, purchase, everything – will be automated, dependent on the confidence of the CEO or CFO who have previously had the confidence of signing hard copies. But the system can handle paperless approvals which can be tracked by email. The notification can be defined so that the system will handle everything efficiently, especially for those items that are regularly recurring where the system can re-order at regular intervals based on use. The key is that everything needs to be defined such as economy of scale, what quantity needs to be stored, the space that is needed to be used, so that it will also be profitable.
THE PATH TO SUCCESS
The key thing to come out of figure 8 is that there has to be a lot of collaboration from the time when APLUS defines the very basic needs that a customer has up to the time when the customer pays and the money is collected.
APLUS defines from contract level, whatever items or rates are in the contract are entered into the system, line by line so that the system can refer back to the contract every time it is processing a task. For example, with transit checks there are tasks that are non-deliverable if the part is not available; so what was done was to eliminate the need for the mechanic to identify whether a particular task is deliverable or not because, sometimes they’ll just say, ‘Oh, this is not deliverable so I’ll just do it very quickly’. That is now eliminated and the decision making process from the supervisor has also been eliminated.
Once the contract is encoded to the system ,it allows the mechanic to concentrate on his finishing the work per work order while the system decides whether the work he completed is billable or not based on the contact . it’s a lot of paperwork that has been eliminated because the system just refers to the contract and checks the actual accomplishment, how many minutes, is it within the agreed SLA, everything can be defined, and then a lot of things can be automated, The system can actually print the invoice immediately after the task has been completed and accepted by the customer.
SAVING TIME: SAVING MONEY
Six years ago, it used to take two days for a task to be completely documented: mechanics handle a lot of tasks in the day and used to complete all their paperwork at the end of the day, sometimes forgetting something: then there was a day for the customer to approve the work. Today, that whole process takes just minutes and the customer can see what activity has been completed or what part was put in place. These are just a few of the improvements that we have gained using the principle that every five minutes makes a difference (figure 9).
But, in reality, we’ve cumulatively saved a lot more than that. There has been a reduction in the average transit check time of ten minutes. That is a big number when we’re talking about finance. There has also been a reduction in the material available waiting time by 15 minutes because there is no more need to hire an expediter to let the mechanic go to the warehouse, send a request, prepare the paper and then wait for the storekeeper to release the item. Within a minute, the storekeeper will send the mechanic a notification and send the part to the mechanic at the aircraft. For example, in the Philippines, in Manila, there are four terminals but the APLUS warehouse is at the company’s office so it takes a lot of time if the mechanic has to go back to the warehouse: they need to cross the runway, there’s a lot of waiting whereas, with this new system, the warehouse will just schedule the dispatch immediately and send the part to the aircraft. It saves a lot of time.
APLUS has been running in a Ramco Aviation Software Cloud environment for five years, i.e. since the Cloud was still in its infancy, but the board of the company was convinced to go straight to Cloud because there is no need to buy a lot of computer frames; everything runs on the Internet. APLUS uses iPads and a simple server in the office but it’s important to have very strong internet connectivity: APLUS processes a lot of data from iPads to the Server because mechanics refer back to the manuals every time they do a job.
Mechanics take photographs of the aircraft and everything they do, then they can sign digitally in the iPad and everything is in the system and being handled by the system but users can print and sign manually, if they wish. APLUS included that because some mechanics were not sufficiently confident in the system. In fact, after the first year, APLUS decided to remove some of the legacy spreadsheet software and all the paper from the system so that users had no option but to use the new system and work on the screen.
I hope that this article has provided you with some ammunition to convince your CFO and the board to make the change to digitalization by showing them what digitalization can do for the business.
Wilfredo E. Regalado
A Certified Public Accountant with more than 20 years of CFO-role experience from hybrid or full IT environments; Wilfredo is proficient in developing and implementing a variety of management functions. He has an excellent IT vision and leadership skill in designing, implementing, executing and enhancing computerized environment to lead companies into digital transformation in order to meet various business requirements, provide new ways to generate revenues and improve the profitability.
Aviation Partnership Philippines
Aviation Partnership (Philippines) Corporation (APLUS Phils) is SIAEC’s line maintenance joint venture with Cebu Pacific based in the Philippines. The joint venture provides line maintenance services to Cebu Pacific Air and third-party airline customers at four major international airports as well as secondary airports. The joint venture provides line maintenance services for Boeing 777, 737NG, A320, A330, ATR42 and ATR72. Services include technical ramp handling, light aircraft checks, engine change and other value-added services.
The SIAEC (SIA Engineering Company) Group provides aircraft maintenance, repair and overhaul (MRO) services to more than 80 international airlines carriers and aerospace equipment manufacturers worldwide. With certifications from more than 20 airworthiness authorities, SIAEC provides complete MRO services in airframe, component, engine, aircraft conversions and modifications plus has component, engine and modifications joint ventures forged with the world’s leading engine and component manufacturers.
The Cebu Pacific Group is a Filipino airline group that operates subsidiary low cost-carriers; Cebu Pacific and Cebgo. The group aims to create the largest budget airline network between Asia and the Philippines. CEB’s 72-strong fleet is comprised of 52 Airbus (one A321neo, seven A321ceo, 36 A320 and eight A330) and 20 ATR (eight ATR 72-500 and 12 ATR 72-600) aircraft, one of the most modern aircraft fleets in the world.
Ramco Aviation software offers Maintenance solutions on cloud and on premise with multi-tenant capability and next-gen mobility, catering to the needs of Heli-Operators, MROs, Airlines, Defense and Charter operations. Next-gen mobility solutions for maintenance operations are available through an app ecosystem where MRO supervisors, mechanics, pilots, storekeepers and customers can seamlessly execute critical operations on the go, from anywhere, anytime.