As seen in Airside International, December 2014

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in an age when outsourcing is all the rage, most airlines and many airports have sub-contracted many or all of their gse-related operations — and if they haven’t, they are probably actively considering it. yet the provision of spare parts for gse is a niche within a niche — and a vital one to the global aviation industry, writes Chris Lewis

PartsCollage-lorezThere is one particular international company that specialises in the provision of GSE spares – Sage Parts. It is, as far as executive vice-president Michael Bloomfield knows, the only company in this market sub-sector that operates all over the world, employing around 400 people in its various offices.

He explains: “GSE spares is a very difficult, small niche segment of the aviation industry, with very low volumes. It’s not organised, like the market for spares for automobiles, or even aircraft. This is an industry in which 100 units would be considered a big run.”

Sage can trace its origins back to 1969, when it started out as a GSE maintenance and specialist products company that then found itself in the parts business. But on buying the company in 1998, Bloomfield and partner Mark Pollack – president and CEO – set about turning it into a global supplier of GSE parts. “Back then, there really wasn’t an aftermarket for GSE parts,” Bloomfield says. “There was for almost anything else – even things like mobile phones or computers – but there wasn’t for GSE.”

Sage provides not just parts, but complete solutions, he remarks. “We can be a single source, owning all the inventory and providing personnel to manage them. It’s very common for us to go into the major airlines, in the US, Canada, Europe or Asia, and provide a complete GSE spare parts department.”

Not only does this take away all of the administrative burden for the customer, Bloomfield insists, including the headache of maintaining parts inventory and managing logistics, but as a GSE parts specialist, “we also have a very aggressive cost reduction programme.” Because providing GSE parts is such a niche area, a company that can aggregate supplies in what is generally a very low-volume business can offer considerable cost savings over an airline or handler trying to source parts itself, he points out.

The vast majority of the company’s work is in the commercial civil aviation field. It does a small amount of business in the corporate jet area, but so far has not considered moving into other market segments such as military aviation – although maybe that could happen one day, Bloomfield remarks.

Sage’s service does not end with simply sourcing parts – in some cases, it re-engineers components where those supplied have been found lacking in some way.
Many of the parts used were actually originally designed for other applications like mining, construction or materials-handling equipment. “The components chosen are not necessarily best for the airport ramp, so we go through a re-design process, for example for axles, gear
shifters, steering mechanisms or radiators. We’ve probably re-designed 2–3,000 different items now.”

Moving equipment about an airport might not seem to be as arduous as say, a mine or a construction site, but it does place particular demands on critical components. For example, a lot of GSE components are not designed to be left outside in all weathers. Rain, humidity, ultraviolet light, dust and exposure to chemicals such as deicing spray can all take their toll.

Significant quantities of GSE are also in continuous operation for long periods; nor is an axle designed for, say, a forklift truck, necessarily up to the task of towing a train of heavy baggage carts. Moreover, airside operatives’ main priority is to get aircraft quickly on their way, not giving their GSE much tender loving care. “There are no Sunday drivers on an airport,” as Bloomfield puts it. Suffi ce to say that many of Sage Parts’ re-designs are
now sought by GSE manufacturers as components for new equipment, he adds.

THE SOURCING CHALLENGE
Given that GSE is such a diverse area and that there are so many manufacturers involved, often with very small production runs, it might be thought that actually sourcing
parts could be a challenge. However, this isn’t usually the case – in part because the GSE industry has borrowed so heavily from other industries, most items can
usually be fairly easily obtained.

Parts often tend to be locally sourced, which also helps, and age isn’t necessarily a barrier to keeping GSE working. Although major airports frequently do have strict age limits for their equipment inventories, most GSE is fairly rugged and it is not uncommon to find 1970s built
tugs or tractors still operating. Bloomfield recently came across a tractor dating from the 1940s in Australia.

Sage now maintains 36 stocking locations around the world, allowing a full range of required parts to be kept at the point of use at major airports. These locations – which are increasing in number all the time – are backed up by four distribution centres for the US, Europe
and Asia. Asia represents a particularly strong growth area for the company at the moment, where current operations are based in Hong Kong and Singapore. Sage also has a growing presence in the Middle East and in Latin America, where it has a footprint in Santiago, Chile, and is actively considering expansion into other markets such as Brazil, Ecuador or Peru.

In fact, Sage is finding that the expansion of its network is often running ahead of that of the original equipment manufacturers’ own servicing networks. Where the fi rm does not have a stocking location, it can ship items quickly by common carriers such as UPS or FedEx. Parts can be shipped to airline maintenance bases or, in many cases, direct to a technician’s workbench. Orders can be placed by phone, email or through e‑commerce media. As well as parts, the company can also supply other consumables such as soaps, gloves, tools or batteries.

“Sage provides not just parts, but complete solutions”
Michael Bloomfield, executive vice-president, Sage Parts

Because the GSE market is so under-developed, original equipment manufacturers (OEMs) have taken some time to get used to the idea of a third party selling their spares, Bloomfield admits. The OEMs are currently the main competitor to Sage, he says, and the company can find itself acting as both customer and competitor for many OEMs.

Many of these manufacturers have positively welcomed Sage’s participation in the business, while others have been perhaps less enthusiastic, but no OEM has refused to supply Sage. And sometimes the roles are reversed, with the company on occasion supplying parts to
the OEMs. The fact that it supplies parts for so many manufacturers’ equipment – and many manufacturers use the same components – gives Sage a lot of buying power, in many cases better than the OEMs themselves.

Sage uses computer algorithms to predict demand for parts in what can be an uncertain business. “Sometimes we fantasise about being in the automotive parts business, because it is by comparison so predictable and the volumes are comparatively large,” Bloomfield jokes. And, over the years, Sage has learned the main triggers for GSE parts demand – principally the de-icing season, the Christmas rush (which puts a big strain on parcels and cargo operators) and the summer holiday rush. However, it is not as simple as predicting when, for instance, the first frosts will bite – airlines and handlers will start preparing
their de-icing equipment long before then, perhaps as early as midsummer.

There is also a category of parts that Sage exempts from its normal demand algorithms – critical part requirements. These are typically parts with long lead times or ones that are in some way critical to customers’ operations and are always kept in stock. However, keeping GSE parts in stock, but without carrying ruinously expensive inventory costs, is a bit of an art, Bloomfield comments. “In any one year, we stock around 25,000 unique items and we will probably deal with 95,000 unique non-stock items. And one interesting statistic is that 25% of all our transactions are for parts consumed less than three times a year. At the same time, only 9% of items purchased are used more than 25 times a year.” (The latter is
high-volume in GSE part terms but would still be in the once-in-a-blue moon category in the automotive industry.)

Experience counts for a lot in this segment; Sage has employees who have worked with GSE for up to 45 years. In fact, it is this sheer complexity that has ensured that Sage remains a unique sort of company, Bloomfield considers. “Today we have a database of over 6 million items, and we have all the information on cross-referencing and compatibility. Any competitor would have to somehow acquire that and it’s not something you can buy. In fact, there are times when the GSE manufacturers will call us asking for information about their own products.”

FACILITY MANAGEMENT
Sage Parts fulfils its customers’ needs in many different ways. In some cases, it has taken over its customers’ own spare parts departments. But it can also offer retail facilities, and in other places operates unmanned sites. At London’s Heathrow International Airport, it runs the spares operation for handling equipment leasing company Rushlift, but this also doubles as a retail facility for Sage’s many other customers in and around the airport, holding stocks of spares for dozens of different types of GSE. Rushlift staff have access to the facility to collect parts at times when the ‘public’ facility is closed, and it also acts as a good ‘shop window’ for Rushlift’s equipment maintenance services.

The building is a former American Airlines (AA) facility and located upstairs are the carrier’s former stock of GSE spares. Sage has taken ownership of these spares and they are gradually being used up. When exhausted, AA will purchase parts from Sage’s regular stocks.

As far as Sage’s own stock is concerned, it falls into three main categories, says sales representative Simon Chilcott-Coombes. “We have regular servicing kit – things like filters or bulbs; parts that frequently get knocked off like mirrors; and critical parts that are not necessarily asked for often, but for which there are long lead times and which, if not available, could put equipment out of action for weeks or even months.”

Sage works with its customers to establish which parts are in fact mission critical, he continues, adding: “With GSE, especially in the UK, not many handlers now have spare machines.” So the company’s operation really is on the front line of keeping aircraft in the air, not only at Heathrow, but at airports up and down the UK.

The company’s central database, and maintaining a good rapport with customers, are two factors essential to success. “It really is a two-way street – partnership is really critical,” Chilcott-Coombes explains. This can be a mine of information, not only for Sage itself, but for its customers too.

There are Sage operations at the bigger airports, like Gatwick or Manchester; for others, parts can be delivered from the company’s main distribution centre at Preston in north-west England. Sage took over a smaller GSE parts company called T123 a few years ago and this has become the kernel of its UK operation.

While GSE companies at Heathrow tend to keep equipment for only 10–15 years, it doesn’t necessarily then get retired – a lot ends up at smaller airports in the UK, or even overseas. So Sage is kept busy finding parts for machines that are 20 or even 30+ years old.

There isn’t much that stumps Chilcott-Coombes and his colleagues. There is a reasonable degree of commonality between GSE equipment of similar types and capacities and, if need be, items can be shipped in from company headquarters in New York. “You can never stock everything, but we do have a dedicated sourcing team,” he says.

The main challenge today concerns parts being superseded by newer versions; the new ones may in turn need different mounting brackets, which can tax maintenance engineers’ ingenuity, but in almost all cases a solution can be found. If a part is truly unavailable, Sage can also manufacture new ones, though that is obviously an expensive option, especially given the stringent tests that will be required.

AIRSIDE GSE
Sage may be the giant of the GSE spares industry, but there are still plenty of smaller local suppliers that can offer a highly bespoke service. Supplying GSE parts is very much about what you know, remarks Mike Cardy, managing director of Farnborough-based Airside GSE (no connection with Airside International magazine). People who have had problems fi nding specific parts elsewhere often turn to Airside GSE, and it can be “for anything and everything”, he says, although aircraft towbar parts are a particular favourite. Customers can be found right around the world.

Another part of the company’s business is GSE repair and refurbishment, and the supply of spares is a natural extension of this. Parts can be from OEMs, from other suppliers or, if necessary, Airside GSE can have its own parts made to specification by a network of UK-based engineering companies, all within a 40–50 mile radius of Farnborough.

There is a brisk market in second-hand GSE and it’s often the older equipment that has customers on the phone to Cardy looking for hard-to-find spares. He wouldn’t necessarily claim to be the cheapest supplier, but he can find many items that other companies cannot. It’s rare for him not to be able to source any desired GSE component – other than when someone wants an OEM part but without going through the OEM or its agent; some OEMs like to control parts supply themselves and may be
unwilling to release information.

Cardy spends many hours on the phone advising potential customers, giving them the benefi t of his 50 years in the industry, including many years as a draughtsman. Often, the biggest difficulty is in identifying what the part is in the first place, which is where his years of experience in the industry can prove invaluable. “Yes, there are people who have a volume buying price advantage over me – but you can pick up the phone and talk to me direct,” he says.

It can be annoying if the prospective customer then decides to source parts elsewhere, but that is an occupational hazard in the spares business. Airside’s only stipulation is a £100 (S$163) minimum order, recently introduced. Cardy adds: “We tend to get all the difficult enquiries. That can be for equipment made 30 years ago and the original manufacturer has disappeared – but things can usually be re-engineered, or changed, if need be – for example, putting someone else’s towhead on a towbar.”

Cardy has no particular aversion to non-OEM parts where appropriate. Sometimes, customers will specify OEM parts, particularly for anything like a towbar hook that touches an aircraft – fear of being presented with a million dollar repair bill tends to make people very cautious – but for other components, fi lters for instance, there’s no reason not to specify cheaper generic parts. Again, he can advise as necessary – it’s all part of the service.

BEST IN CLASS
But GSE manufacturers themselves do still have a big part to play in parts supply. At JBT AeroTech, global aftermarket manager Josh Parkin believes that his company has “a best-in-class global sales and service network” which offers customers easy access to JBT technical support personnel and parts 24 hours a day, 365 days a year.

He informs: “We are fortunate to have a very loyal customer base. Those who purchase parts from JBT understand our strict quality standards and value when deciding where to purchase replacement parts for their JBT equipment. We, together with our global distributors and partners, carry large, prepositioned inventories based upon anticipated customer requirements to ensure high spare parts availability. Our service and parts personnel have many years of experience helping our customers get the right part for the job the first time around.”

JBT customers are employing a variety of sourcing techniques, ranging from the local direct purchase of parts, to centralised purchasing departments, to fully outsourced parts management. However: “As an OEM, we are happy to support our customers’ access to JBT’s high-quality parts through any of these models. Having fast access to high-quality components that are specially designed for use in our equipment helps drive higher equipment performance, up-time and safety.”

Parkin says that JBT is known in the industry for offering low total cost of ownership (TCO) – meaning that taking into account equipment purchase, operating costs, repairs costs and residual values, “our products cost less to own over their useful life. We also have successfully helped many of our customers reduce costs by offering special parts packages and kits. These kits can help to streamline preventative maintenance, can be used to enhance machine performance or upgrade unit configuration.”

He also has this warning: “We fi rmly believe that the most cost-effective replacement part both from a purchase price and a reliability perspective is to purchase genuine JBT parts that were specifi cally designed to work in our equipment. Non-genuine parts put the equipment at greater risk of degraded performance, system damage and breakdown.”

“Our service and parts personnel have many years of experience helping
our customers get the right part for the job the first time around”
Josh Parkin,global aftermarket manager, JBT AeroTech

Parkin points out that JBT’s customers stake their reputation on providing consistent, high performance service and GSE up-time is directly related to turning around aircraft safely and on time. “Each piece of GSE, from a tow tractor and cargo loader to passenger stairs and pre-conditioned air units, plays a critical role in airport operations. It needs to work each time, every time, regardless of the location.”

LOGISTICS SUPPORT
In the past few years, the logistics industry has evolved to provide specialist services to the spare parts and servicing sector. While none of the big logistics specialists has yet, to our knowledge, identified GSE parts as a discrete market segment, there are companies that specialise in the aerospace sector and make regular deliveries in and around airports. One of these is Unipart Logistics, which has a major relationship with Rolls Royce Aerospace, explains global industrial logistics director Bernard Molloy.

Unipart can offer locally and centrally-held stocks of parts, fast and dependable customs clearance where goods have to be moved across international frontiers and not only a highly sophisticated track and trace system, but sophisticated value stream mapping to actually forecast demand for spares based on past history or similar equipment – all designed to take the guesswork out of spare parts stock holding.

The company can map its customers’ global stocks and, where a component cannot be sourced locally, identify the location of the nearest one. Its IT systems have been designed to cope with the complexities of maintaining the parts supply chain for a 20,000-component aero engine, so should be able to cope with the demands of virtually any other industry, Molloy argues.

Unipart has its roots in the British motor industry and today works in a number of sectors, including materials handling, the rail industry and even for satellite TV companies. And with its engineering background, it can reproduce components, even where engineering drawings are not available.

Parts and components don’t necessarily have to be of high value to benefit from the sorts of services that Unipart can provide, Molloy points out. “We work in any area where there are mission-critical parts – in any industry where customers cannot afford downtime. The product value is incidental.”

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