E x e c u t i v e b r i e f

Powering maintenance,repair and overhaul foraerospace and defense

Siemens PLM Software

Powering maintenance, repair and overhaul

The numbers are staggering.

The global commercial aviationfleet includes more than 17,600active aircraft whose 2007operating budget for maintenance,repair and overhaul (MRO)exceeds $41 billion and whoseinventory of spare parts is valuedat $50 billion.1

The U.S.Air Force budgets $60billion for MRO and $600 billionin property, plant and equipmentto manage more than 374,000operational assets andsubsystems with a maintenanceforce of over 680,000 people.2

In 2007 the active military fleetof aircraft totaled nearly 39,000.13

Just as importantly, futureMRO spending is projected togrow substantially in bothaviation sectors.The worldwidecommercial aviation fleet isexpected to experience steadygrowth at 4.5 percent CAGRover the next ten years with thefleet exceeding 27,450 active

aircraft by 20173.While newgeneration aircraft and lowerlabor costs will produce adecline in MRO unit costs, theseadvantages will be offset byregional jet expansion and theadvent of higher thrust enginesthat require exotic alloys, singlecrystal casting configurations andmore difficult repair techniques.4

The net-net: commercial aviationis expected to face MRO coststhat will grow from $41 billion in2007 to nearly $51 billion in2012 and over $62.5 billion by20175. Faced with heavy capitalinvestment and a cash-flowsensitive business, commercialoperators have few alternativesother than trying to controltheir MRO expenditures.

U.S. military aviation also facescost pressures.An aging fleet,modernization initiatives, supplierconsolidation and outsourcinglimitations produce a differentmix of issues with equallypressing cost-containment

demands. Both the U.S.Air Forceand Department of Defensewant to reduce the cost ofmaintenance so that moremoney can be spent on newaircraft and new systems.

With this in mind, theDepartment of Defense islooking for ways to trim $12billion a year that it spends onMRO – but without compro-mising the readiness andperformance of its active fleet.6

For example, the U.S.Air Forcehas developed MRO-related goalsfor a variety of initiatives at thenext operational level, includingobjectives for depot maintenanceand transformation, purchasingand supply chain managementand its product support campaign.7

Converging MRO trendsThe upshot of these MRO costpressures has caused commercialaviation operators, the U.S.AirForce and other defense servicesand agencies that maintaincomplex operational assets (suchas ships, tanks and other weaponssystems, platforms and supportinginfrastructures) to examine eachother’s MRO initiatives to look forcommon solutions.The objectiveof all of these enterprises isremarkably similar: to turn theirfixed MRO costs into variablecosts that can be effectivelymanaged under cyclical conditions.Equally important, enterpriseswant to increase the utilizationof these fixed cost investments.

U.S. Air Force Material Command Initiatives8

Initiative Objectives

Deport maintenance 25 percent decrease in flow daystransformation 100 percent on-line delivery

10 percent decrease in costs20 percent increase in aircraft availability

Purchasing and 50 percent drop in sourcing cycle chainmanagement supply time

20 percent increase in supply materialavailability

20 percent decrease in purchase andrepair dollars

Product support 10 percent decrease in lifecycle(draft) campaign costs

Actual project lifecycle cost within10 percent of bids

20 percent increase in weaponsystems availability

For global commercial aviationoperators, the goal is to controltheir operating costs across a“complete business cycle” thatincludes both good and badeconomic fluctuations9. For theU.S.Air Force, the goal is to“keep warfighters in the air”during both “up-and-downcycles” in a way that balances themilitary’s most extraordinarymission-critical needs with acost-effective inventory.10

The end result is a convergenceof MRO objectives with bothcommercial and militaryoperators looking to four keyMRO initiatives:• Long-term MRO contracts that

incorporate performance-basedlogistics

• Total asset management• Lean MRO processes• Knowledge-based MRO

enterprise transformation

Performance-based logisticscontracts have become prominentin both civilian and militaryaviation because they enableoperators to offload investmentsin spares and other MROcapabilities. In essence, anoperator contracts with asupplier on a long-term basis todeliver a particular kind ofservice-related performance.

Sometimes, the contract takesthe form of a per-hourmaintenance cost or a specificreliability guarantee. Suppliersmight deliver a level of readinessthat the U.S.Air Force requiresor a cost-per-landings guaranteethat a civilian operator requires.11

In all instances, the challenge isfor the supplier to determinewhat service personnel andequipment resources are neededto fulfill the contract, as well asto deal with the fluctuations inworkload that rise or fall aseither the economy or the worldsituation changes.

Total asset management enablesowners and operators tounderstand their capital assetsand the related parts, tools andequipment inventories thatsustain these assets as theyevolve across a lifecycle thatextends from acquisition todisposal.The ability to access andaccurately understand theconfiguration and location ofthese assets, inventories andtools enables organizations tooperate, support and servicethese resources on a more costeffective basis.

Total asset management alsohelps organizations understandhow specific parts, tools andequipment are used by variousservice teams.The goal is toallow enterprises to optimizetheir working capital by predictingfuture material needs, aligninventory levels with tangiblemaintenance requirementsand understand the optimumtime when given parts shouldbe replaced.

At another level, the analysis ofasset design and performanceenables organizations to improvereliability and readiness in

PBL metrics

MICAP

PLM enabled forperformance-based logistics

Baseline

ReceiveInspection

and/orteardown

Inspection and/or

teardown

Identify configuration

Identifyconfiguration

Plan

Plan

Schedule

ReceiveSchedule

Ship

Ship

Service

Service

Order parts(RSP%)

Receive parts

MICAP

NMCS

Order parts(RSP%)

Receive parts

NMCS

Depot quantity Depot quality

Delinquent deficiency reports

Depot quality

Delinquent deficiency reports

Depot quantity

Configuration-driven MRO facilitates cycle time reduction by optimizing the MRO process, removing/reducing unnecessary tasksand ensuring that the service process is ready and able to support the adoption of performance-based logistics contracts.

conjunction with Six Sigmaobjectives.Along these lines, theU.S.Air Force has leveraged thiskind of analysis in working withengine manufacturers to increase

mean time between repair(MTBR) from 200 to 2000 hoursper engine while simultaneouslyreducing the Air Force’s inventoryspares requirements.

Lean MRO enables serviceorganizations to eliminate non-productive tasks from the MROprocess, improve service teamperformance and increase theyield of scheduled maintenance.Lean MRO targets all aspects ofwaste – from enabling serviceteams to execute best-practiceMRO processes to productivityimprovements that target bothservice team managers andservice technicians.

Typical lean initiatives enableservice organizations to removeunnecessary tasks from theservice event’s critical path, aswell as allowing service teams tomaximize information re-use,manage the complexity thatarises from asset variation andreduce the time spent performingtangential tasks, such asinformation searches and datadownloads.

Knowledge-based MRO enterprisetransformation allows serviceteams, service managers andservice technicians to reduceMRO cycle time, improve first-time fix rates, eliminate repeatedcorrective service visits andincrease wrench time.The key tothis improvement is providingservice team members withhighly accurate product and assetknowledge for planning purposes,as well as delivering serviceknowledge at the point ofmaintenance in a format directlyrelated to the service taskat hand.

The goal of these improvementsis to increase the throughput ofthe MRO process by optimizingthe utilization of an enterprise’scapital resources and improvingtheir related return oninvestment. Reduced MRO cycletimes result as organizationsoptimize their service plans –including eliminating unnecessarysteps from the MRO process’critical path before the assetarrives at the service depot.

Today’s newest IT solution –configuration-driven MROAs you might expect, all of theseMRO initiatives – performance-based logistics, total assetmanagement, lean MRO andknowledge-based MRO enterprisetransformation – involve the useof information technology.

Ray Valeika, senior vice presidentof Delta Airlines’ TechnicalOperations Division, sums it upnicely.“The future of maintenanceis not about turning wrenches;it’s about information” and howit is used.12

One of the newest and mostcomprehensive IT approaches toMRO improvement is calledconfiguration-driven MRO – andinterestingly enough, it can beused by owners and operators,third-party MRO suppliers andOEMs (looking to enter theMRO business) as a solution forimplementing all four majorMRO initiatives.

Basically, configuration-driven MROis an integral component inproduct lifecycle managementthat enables service organizationsto capture, manage and access acomprehensive and highlyaccurate set of informationabout individual and aggregatecapital assets within an MRO-related context. Once thisinformation is collected, itprovides enterprises with coreknowledge that they can use fordecision support across their

entire product lifecycle.Thisknowledge also can be leveragedin workflow-driven processesthat can be tightly focused todeliver metrics-driven lean andSix Sigma MRO objectives.

While configuration-driven MROcan be discussed from manyperspectives, five key attributesestablish it as a crucial solutionfor driving MRO improvement.

• Configuration-driven MRO is alifecycle solution. It enablesservice organizations toaddress MRO over longperiods of time. Bothcommercial and militaryoperators need to deal withfluctuations. Configuration-driven MRO can be closelyintegrated with changeprocesses that require theservice organization to accountfor change on a systematic andrepeatable basis that runs from

initial deployment to assetretirement.

• Configuration-driven MRO is ametrics-based solution that caneasily measure and account forservice performance.Organizations that expect toprovide performance-basedlogistics contracts have tounderstand what resources areneeded to fulfill the contract, aswell as how to deal withfluctuating workloads.

DD250 customeracceptance or

inherited baseline MRO OperationsManufacturingEngineeringConcept

Asdelivered or

as isAs

maintainedAs

used

Product structure

Physicalconfiguration audit

Baselineconfiguration data

Serializedpart numbers

Asset master records

Planmaintenance

Reserve parts

Functional andconfigurationfault isolation

Work cards

Work flow

Execute

Log book

Environment

Malfunction

MTBF

Performanceproblems

Damage

Time/lifelimited

FRACAS

Asbuilt

Asdesigned

Asconceived

M-BOM

Functionalconfiguration

audit

Serializedparts

Logistics

Asplanned

FMECA

Tasks

Skills

Hours

Parts

Tools

Materials

MIL-STD-1388-2B

IETMs andtech

manuals

Eng BOM

Geometry

Nastran

FEM

Engineering ordersunder changemanagement

Performance,reliability andmaintainability

Predictedperformance,reliability andmaintainability

Actual performance,reliability andmaintainability

Maintenancehistory

Delta

Engineering changes(service bulletins, etc.)

Configuration-driven MRO is the logical extension of the OEM product lifecycle – providing crucial technology for all enterprises that are responsible for supporting complexoperational assets across lengthy life spans.

• Configuration-driven MROprovides a historical record thatservice organizations cananalyze to predict theirmaterial needs and managetheir inventory effectively.Managing inventory is crucial totoday’s civilian and militaryoperators. Configuration-drivenMRO enables organizations tounderstand their maintenancerequirements and align these

requirements on a fine-grainbasis for the purpose ofoptimizing inventory levels.Equally important, configuration-driven MRO lets service teamsunderstand what the optimumtime is for replacing givenparts, thereby maximizing anasset’s readiness and uptime, aswell as enhancing platform/fleetavailability.

• Configuration-driven MRO is abest-practice tool that facilitateslean MRO. Service teams canestablish MRO processes withcompressed workflows,continuously monitor servicevisits and analyze accumulatedservice experiences with an eyeto studying and thenimplementing alternate flows ifand when these alternativesdemonstrate real business

value. In essence, configuration-driven MRO enablesorganizations to capture andre-use both knowledge andbest practices for newprograms, as well as forupgrades and enhancements.

• Configuration-driven MRO isgeared for speed. Point-of-service knowledge delivery –including wireless mobility atthe point of maintenance – iscentral to configuration-drivenMRO’s mission.The delivery ofaccurate, up-to-date and highlytailored asset knowledgeenables the service team tounderstand, plan and rapidlyexecute the service visit.Configuration-driven MROensures that the right parts andskill sets are on hand beforethe technician begins theservice visit. Configuration-driven MRO makes certain thatthe correct information isavailable for any asset underservice, including inspectionrequirements, serviceprocedures, allowableconfigurations and life limitcycles.The result: first-time fixrates rise and repetitivecustomer visits plummet.

To put all of this in perspective,consider one more factor.Configuration-driven MRO is asystematic and repeatableapproach intended for companiesand government services/agencieswhose central mission is tosustain their enterprise’s capitalassets in a cost effective mannerthat ensures both readiness andreliability. Configuration-drivenMRO is adept at reducing MROturnaround time (TAT) andoverhaul cycle time.

Configuration-driven MRO is anatural outgrowth of productlifecycle management.As such, itplays an integrated and seamlessrole in digital lifecyclemanagement from requirements

to retirements, thereby providingenterprises with the ultimate-force multiplier. Configuration-driven MRO’s heritage providestools and capabilities that havetheir roots in a time-tested,mission-critical technology.Configuration-driven MRO canbe adopted by commercialoperators looking to adoptservice lifecycle management(SLM), as well as by defenseservices/agencies that implementintegrated digital environments(IDEs) to improve sustainmentwithin the standards-basedDefense Acquisition ManagementFramework.

1 2007 World MRO Forecast,TeamSAI,April 2007.

2 Aviation Week ExecutiveRoundtable, General G.S. Martin,April 2005.

3 2007 World MRO Forecast,TeamSAI,April 2007.

4 Ibid.

5 Ibid.

6 Aviation Week ExecutiveRoundtable, presentation byGeneral G.S. Martin, 2005

7 “Fleet Readiness and Performance-based Logistics Summit,” CaroleRichard Hedden,Aviation WeekExecutive Roundtable,April 18,2005

8 Ibid.

9 Aircraft Technology: Engineering &Maintenance,Aviation IndustryGroup, February-March 2005

10 “Government MRO Goes Leanwith Industry Help”,AviationToday, June 09, 2005

11 Ibid.

12 “MRO Moving Toward StrategicAlliances,” Edward H. Phillips,Aviation Week & SpaceTechnology,April 2004

13 “Leveling Off:An Overview of theGlobal Military Aircraft MROMarket,” Hal Chrisman,AeroStrategy,April 2007

© 2008 Siemens Product Lifecycle Management Software Inc. All rights reserved. Siemens and the Siemens logo are registered trademarks of Siemens AG.Teamcenter, NX, Solid Edge,Tecnomatix, Parasolid, Femap,I-deas, JT, Velocity Series, Geolus and the Signs of Innovation trade dress are trademarks or registered trademarks of Siemens Product Lifecycle Management Software Inc. or its subsidiaries in the United Statesand in other countries. All other logos, trademarks, registered trademarks or service marks used herein are the property of their respective holders.

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About Siemens PLM SoftwareSiemens PLM Software, a business unitof the Siemens Industry Automation Division,is a leading global provider of productlifecycle management (PLM) software andservices with 4.6 million licensed seatsand 51,000 customers worldwide.Headquartered in Plano,Texas, SiemensPLM Software’s open enterprise solutionsenable a world where organizations andtheir partners collaborate through GlobalInnovation Networks to deliver world-classproducts and services. For more informationon Siemens PLM Software products andservices, visit www.siemens.com/plm.

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