Inventory Control in the Military Aviation Industry : A logistic study of repairable spare parts at Saab Support and Services in Linköping

Abstract: Service and spare part logistics has experienced an increased interest throughout the last decade, as it comprises a large share of companies’ turnover and companies have realized the strategic value of having effective after-sales. Saab AB provides the Swedish Armed Forces with service and maintenance of twenty helicopters mainly based at Malmen air base, Linköping. To provide great service, spare parts need to be kept in stock. Numerous spare parts are expensive, desirably kept on a low inventory level and sent to repair shops throughout the world when broken. These spare parts are identified as repairables and together with an irregular and low demand, inventory control of these spare parts is difficult. This has led to the purpose of this thesis: “Develop a method for determination of repairable inventory levels with regards to costs and helicopter availability, and suggest suitable repairable inventory levels for Saab Support Solutions Malmen.” Relevant theoretical theories within this field was identified as among others; Delivery service, Inventory control of spare parts, Forecasting spare parts, Inventory control of repairables and Cannibalization, the act of robbing components between helicopters. The existing theories, especially regarding inventory control of repairables shows the difficulties with applying existing inventory control models for businesses within the same field but with different prerequisites. Relevant parameters affecting repairables inventory levels within Saab’s business was then identified based on the inventory control theories. The study was limited to investigate 19 repairables, since this simplified the extent of the study by limiting the range but still provided a sufficient foundation to base conclusions on. The repairables were chosen because they fulfilled one or several of the conditions to; be very expensive, have long lead times or have experienced many stock outs. The study was divided into three parts for further investigation; what helicopter availability is, how factors except repairables affect helicopter availability and how repairables affect availability and costs. These areas formed main questions, a basis for mapping and analysis questions formed in order to find a way to fulfill the study’s purpose. In order to achieve credibility, the study’s execution was continuously documented. Information needed to answer the mapping and analysis questions was gathered mainly through interviews with key personnel at Saab and the Swedish Armed Forces and through IT-systems used by the two parties. Some facts proved to be easily accessed and highly valuable to the study, while other information was unavailable. During the study, it was identified that Saab and Försvaret’s view on helicopter availability differ in several aspects. They do not fully agree on when a helicopter is available, or who is responsible when a helicopter is unavailable. Both stakeholders may benefit from a closer relation and a common view on helicopter availability. Saab should control their repairable inventory to cover for 3000 yearly helicopter flight hours used by Försvaret, but be prepared to cover for approximately 4000 yearly flight hours. This study further concluded that helicopter availability is only slightly affected by factors other than repairables. Expendable spare parts are usually kept in stock due to their relative low costs and therefore only slightly affect the availability. Overhaul needed on the helicopters do affect the availability, but is hard to improve and will have the same impact almost regardless of used flight hours. The largest improvements can be done by improving repairables inventory levels, to a point when inventory stockouts do not occur and cannibalizations is unnecessary.viThis is however a tradeoff between cost and repairable availability and has to be discussed between Försvaret and Saab, as well as the acceptable level of cannibalization. This study concluded that it is impossible to calculate optimal repairable inventory levels given the conditions in this study. Repairable inventory levels can however be estimated, and procedures how Saab as well as similar businesses can proceed is presented. The study however presents how to estimate suitable inventory levels for operations similar to the studied business of Saab Support Solutions Malmen. The negative impacts of cannibalization are impossible to anticipate, and both Försvaret and Saab stated that zero cannibalizations are preferable. This study further concluded that the costs of keeping inventory to cover for repairable fail variations and prevent all cannibalizations would need to be unreasonable high. Therefore, repairables inventory levels was suggested for four different scenarios. The scenarios was combinations of 3000 and 4000 yearly flight hours used by Försvaret, together with almost zero cannibalizations and an ABC-classification of repairables that allows cannibalizations comparable to today’s levels. The final responsibility to agree upon appropriate repairable inventory levels is incumbent Saab and Försvaret.