Making the most of Maintenance Repair, and Overhaul (MRO) in aerospace and defense

With the average operating margin from the aftermarket business globally estimated at 2.5 times that of new equipment sales, it’s easy to see why A&D companies would explore this opportunity—especially when providing critical MRO services can help air fleets combat escalating costs and stay mission ready longer. But to deliver the most value, A&D original equipment manufacturers (OEMs) need to recognize that MRO is about more than spare parts and wrench turning. Rather, it should involve a nuanced ability to anticipate customer needs and bring together a range of players to offer a seamless and integrated customer experience.

A new MRO paradigm

It’s not unusual for OEMs to look to aftersales and MRO as an additional revenue stream. Aircraft need new parts or maintenance and an OEM can provide it. But MRO’s real value lies in the ability to create a lasting impression of a product with the customer. By providing better MRO services, an A&D company can shape how a product performs and is perceived in the field. It’s an impactful loop where the company can influence the overall customer attitude by providing exceptional service and helping to keep current aircraft flying—which feeds into more products purchased in the future.

MRO services, however, should evolve beyond the transactional if they want to deliver this value. That is, OEMs connecting with the customer over the full lifecycle of the product. Right now, many OEMs are doing this by changing the value arrangements around MRO, providing longer term service level agreements or subscriptions that can help improve certain results—like the availability of parts when needed or the time an aircraft is down for repair.

The five Ps of MRO

To deliver on these agreements, OEMs should have the ability to look across and integrate the range of players involved in MRO, coordinating among owners, operators, wrench turners, spare parts providers, and dealers or distributors. OEMs that manage MRO so that everyone can contribute to the equation should achieve the ultimate goal—that is, keeping an aircraft operational for the most amount of time for the least cost overall.

This level of service agreement also requires a departure from the traditional linear process of MRO. An A&D company can’t take apart an aircraft, find what’s wrong, order a part and so on and expect to deliver a superior customer experience that minimizes downtime and cost. Instead, OEMs  may consider following the four Ps of MRO: predict what and when maintenance is needed, plan how that maintenance will be carried out, position the right resources and parts, process the actual work, and then monitor and manage the performance of the whole system.

To do this A&D companies should consider expanding their capabilities when it comes to customer experience. This means better communication with customers before and after purchasing; understanding what they value, where the pain points are, and using that to tailor agreements and create an integrated and holistic offering. A&D OEMS can leverage learnings from other industries—such as auto manufacturing—that have spent significant time focusing on customer aftersales and understanding the importance of customer dialog. Smart technologies can also help, with sensors enabling predictive maintenance, analytics enabling proactive planning, and AI streamlining customer interactions.

Differentiating with new thinking

Ultimately, delivering differentiated MRO services means A&D OEMs may need to shift their thinking. In the past, companies would distinguish themselves by offering a leading product and leaving it at that. And while that is still, of course, a major objective of an A&D OEM, superior MRO services can extend the customer relationship beyond the point the product leaves the factory.

This communication contains general information only, and none of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms or their related entities (collectively, the “Deloitte organization”) is, by means of this communication, rendering professional advice or services. Before making any decision or taking any action that may affect your finances or your business, you should consult a qualified professional adviser.

No representations, warranties or undertakings (express or implied) are given as to the accuracy or completeness of the information in this communication, and none of DTTL, its member firms, related entities, employees or agents shall be liable or responsible for any loss or damage whatsoever arising directly or indirectly in connection with any person relying on this communication. DTTL and each of its member firms, and the irrelated entities, are legally separate and independent entities.

Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (DTTL), its global network of member firms, and their related entities (collectively, the “Deloitte organization”). DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more.

©2024. For information, contact Deloitte Global.