Opportunities and Challenges in Asia-Pacific Region

This week ASA is in Singapore at MRO Asia-Pacific.  On Monday we took advantage of our presence in the region to conduct a continuing education ASA Workshop for members able to attend.  The workshop addressed such topics as approved parts, traceabilty documentation, export and hazmat compliance, and C of C and commercial issues.  ASA workshops are a great way to stay up to date on the latest regulatory and industry changes to make sure a business remains compliant and at the forefront of industry trends.  ASA tries to schedule its international workshops to correspond with other industry events in order to make travel more cost effective for members.  If this is a strategy that is beneficial to your company we would love to hear from you.

Speaking of trends, the first day of the MRO Asia-Pacific conference agenda dedicated substantial discussion (as they usually do) to market forecast and trends. Some of these trends stand to benefit distributors, but others could mean challenges down the road for those companies that fail to take proactive steps adapt to changing markets.

In the opening session presented a discussion of trends in supply chain logistics. One of the largest takeaways was the change in inventory management practices, especially in the Asia Pacific region, from a just-in-case model, to a just-in-time (JIT) model.  This follows the trend in many other industries, including manufacturing and retail, which enable businesses to reduce costs by carrying less inventory.

Distributors are in an excellent position to benefit those customers shifting to a JIT model because distributors can help customers defray the costs associated with warehousing and inventory management, which is outside of the customers’ core competency. This applies to both operators and MRO facilities.

But the shift to a JIT model also presents certain challenges in Asia Pacific, particularly for AOG situations or other scenarios demanding quick turn times. In certain markets with well-established MRO markets, like Japan and Singapore, getting parts to the customer is often a fairly straight-forward exercise and can be done overnight from any number of locations around the world.  However, in less-developed markets and countries in the region, import and customs requirements can pose significant barriers, meaning delays of several days in clearing the shipment and getting the part to the customer. This means that those distributors that are able to more quickly get parts to their customer will be a competitive advantage.  One suggested strategy for meeting this challenge is to have the necessary inventory already in-country before the customer needs it.

Another trend in Asia Pacific is the MRO spend focused on the narrow body fleet–namely the 737 and A320 families. The narrow bodies currently account for approximately 70% of the MRO spend in the region. This trend should continue over the next decade for two reasons: (1) a significant number of these aircraft have been delivered over the last decade (and continue to be delivered); and (2) the commonalities that exist between the current gen aircraft and the Max and neo versions of the aircraft. Although next gen wide bodies like the 787 and A350 require less maintenance, the increasing number of these aircraft in the region may also present some opportunities for those distributors positioned to provide the new tech those aircraft demand.


Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s

%d bloggers like this: