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The challenges of online aeronautical parts locator systems February 17, 2011

Posted by ludozone in Aerospace, eBusiness Applications/Services, International Business Development, Internet Marketing, Online Supply Chain Management.
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A recent magazine article (PDF) and subsequent post on LinkedIn started an interesting discussion regarding the phantom inventories that have plagued most Aviation Parts Locator services for many years. The contributors argued that integrated inventory systems and/or feedback functions could potentially help with the problem.

Phantom inventories, the exaggerated or completely fake listing of parts, quantities, or condition code, is just one of the issues faced by these systems. As a buyer, you might find that your RFQs do not get answered. Of course, this is also one of the only industries where prices are still not published and a buyer actually has to ask for the privilege of spending their money. For suppliers, there is the frustration of distinguishing themselves from their lesser quality competitors. Also, most suppliers receive many “price fishing RFQs” from pretend buyers not really interested in doing business.

So although I sympathize with the opinions of those who commented, the issue is really related to dishonesty in the industry. Phantom inventory can be managed equally in an integrated system than in an excel spreadsheet. Until dishonest or at least misleading suppliers, buyers, and parts locator platforms are exposed and driven out, there will be little progress. This can only be achieved through transparency, quality, and community.

First, we should work to get rid of misleading online parts locator services. As the article pointed out, some of these platforms continuously reload inventories that were previously deleted. They also steal information from other platforms, or harass potential subscribers with incessant phone calls. Let’s expose these companies in forums such as LinkedIn and let the community know. Also, we should request transparency from these platforms. Is it ethical for an open parts locator service to be affiliated with an actual part reseller? Can the search results really be trusted?  Isn’t there an inherent conflict of interest? Let’s ask that these platforms disclose their ownership and other business activities. If they refuse, we can do it for them. Finally, it should be clear what each platform charges for subscription and why they feel it is worth it. Why is it that subscription price is such a mystery with these platforms?

Talking about pricing, we should demand price transparency from suppliers. A part in a specific condition with specific documentation should have a fixed price. The only difference between suppliers should be availability and delivery. We should be able to see part prices immediately and just get a quote for delivery. There is no reason part prices should be secret. That business model has passed. Serious suppliers should embrace transparency and quality so they drive away the misleading suppliers that list phantom inventory. Even if dishonest suppliers list the same prices, they won’t be able to beat the delivery time and handling quality of suppliers who actually have the part. So let’s reward transparency by doing more business with suppliers that list prices in locator services.

By doing so, we will also drive away the fake buyers. If prices are displayed, there is no reason for price fishing. There is also a better feeling from the buyer that they are not being “price raped” when dealing with AOG situations. Only delivery should be more expensive in this case, not the actual part price. This will create a more efficient process, with better quality and competition.

The advantage of doing business in the 21st century in a relatively small industry such as Aviation, is that the community can yield enormous power over outdated and efficient business processes. So instead of creating technology to fix an old process, online parts locator services should use technology to change the industry through transparency, quality and community. And as members of the community, it is now our responsibility to make this happen.

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Comments»

1. Sean Melia - February 17, 2011

Ludo,
Great blog! Maybe technology has finally made the ‘aggregators’ redundant. It used to be that sending multiple EDI requests (S1STOCKS, S1QUOTES) to multiple sources, then sorting through the responses, was a time consuming and expensive endeavour. And, because of resistance to SITA and Arinc, we couldn’t get to everyone via EDI anyway. But now we have technology like SOAP available that allows us to (relatively) unobtrusively and cheaply ‘ping’ as many sources as we want – at least the sources who would adopt SOAP. That would help sort out the listers of phantom inventories, but it would be one-by-one and not universally shared – that is to say each buyer would have to go through the process of weeding out the ghosts. Anyway, these are just quick thoughts. These are serious issues, so lets keep the dialogue going!

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