Service life-cycle management (SLM) aims to streamline aircraft maintenance operations by eliminating unnecessary tasks and optimizing necessary maintenance. SLM analyzes historical maintenance data to determine the optimal timing and methods for maintenance. Major airlines and MRO providers are adopting SLM solutions from companies like Accenture to reduce maintenance costs, which represent a sizable portion of operating expenses. SLM leverages aircraft usage data and predictive analytics to do the right maintenance at the lowest cost.

1. Service life-cycle management (SLM)
The leading international magazine for the manufacturing and MRO sectors of commercial aviation

2. INFORMATION TECHNOLOGY
Service life-cycle management
As cost pressures intensify, many
airlines and MRO providers are
looking to service life-cycle
management solutions offered
by companies such as Accenture
to streamline their operations.
Like all the best ideas, SLM is
based on a simple premise:
that by eliminating unnecessary
maintenance tasks and
performing the necessary ones in
the right way, costs can be
reduced. But how exactly is this
achieved? Aircraft Technology
speaks to consultants at
Accenture and Forrester Research
to learn the answers.
Southwest Airlines, a past client of Accenture, has been “forward-thinking” in its efforts to
reduce maintenance costs, says Forrester Research VP Navi Radjou.
A ccenture can be considered a
pioneer in the field of service
life-cycle management (SLM)
solutions for the aviation industry. A
global management consulting,
centricity. “The first relates to doing
the right maintenance,” explains
Michael Denis, Accenture’s director of
aviation maintenance solutions. “In
other words, increasing the yield of
positive economic spread over a
complete business cycle.” Economic
spread here is an indicator of how
much wealth a company has created
for its shareholders after taking into
technology services and outsourcing scheduled maintenance. The second account the cost of capital; a positive
company which achieved net relates to doing maintenance the right economic spread indicates that the
revenues of $13.7bn in the fiscal year way, in a manner that increases A&P return on invested capital (ROIC)
ended August 31, 2004, its aviation [airframe and powerplant] mechanic exceeds the weighted average cost of
clients include American Airlines, productivity and resource capital (WACC).
British Airways, Southwest Airlines, utilisation.” He adds: “SLM is one Typically, major network carriers
KLM, jetBlue Airways, SR Technics, element of Accenture’s broader are profitable in strong economies
Pratt & Whitney, Airbus and Delta ‘Customer Centric Airline’ initiative but struggle during weaker periods
Air Lines, among numerous others. which focuses improvement efforts on due to the capital-intensive, cash
While the general term SLM was activities that customers value, such flow-sensitive nature of the industry.
originated at AMR Research, as safety, quality, cost, punctuality “Low-revenue growth and yield are
Accenture defines SLM operational and customer experience.” currently limiting factors for most
excellence, at its most fundamental airlines in generating a positive
functional level, as “the right Background economic spread, necessitating a
qualified person at the right place at So, what is motivating aerospace continued focus on cost reduction
the right time; with the right tools, companies to explore Accenture’s through outsourcing and shared
the right parts and the right service life-cycle management services,” says Denis. “A typical
information; doing the right solutions? “The airlines’ cost airline’s cost structure leaves few
economically opportunistic structure is prohibitive to consistent areas of significant control; however,
maintenance, seamlessly integrated profitability over a complete business MRO, which represents 11 to
throughout the organisation as well as cycle,” notes Denis. “If you look at 15 per cent of operating costs, is
the external value chain network”. It the profits and the cumulative controllable and represents one of
divides SLM into two overarching revenues over the past 50 years, the few such costs that has not been
categories: asset and component airlines have never created consistent fully addressed by most carriers.”
centricity; and mechanic and process wealth. Few airlines have achieved a
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3. INFORMATION TECHNOLOGY
Navi Radjou, a VP at independent Firms must use post-sales insights to tune upstream processes
technology research company Forrester
Research, notes that certain “forward- How to exploit post-sales insights Vendors that can help
thinking” carriers, such as Southwest Do root cause analysis on warranty data to detect design flaws Agile Software, EDS,
Airlines, have taken a lead in this area: Analyze maintenance records to boost design-for-supportability Kaidara Software, MSXI,
MatrixOne, Sopheon
“Southwest buys only one single
Boeing model because they’ve thought Analyze warranty data to weed out poor-quality part suppliers Optum, WorldChain, SAS,
Feed VMI suppliers with realtime data on spare-part availability Entigo, Apexon, Tradec
about the maintenance costs associated
with having a diverse fleet. In all their Analyze product geneology info to fine-tune manufacturing Tecnomatix Technologies,
decisions, such as their acquisition of processes that cause product failures Camstar, Datasweep
i2’s [Global Logistics Monitor] Study product usage patterns to identify opportunities to cross-sell First Internet Systems,
software, Southwest has given serious accessories and services, or upsell more expensive products Axeda, Questra
thought to service management,
Use predictive data collected from physical-sensing devices products Xelus, Servigistics, IBM,
whereas for many airlines MRO is an to continually update parts and labour forecasts Manugistics, Novient, SAP
afterthought because they have other Source: Forrester Research, Inc.
serious issues to deal with - unionised
pilots, for example.”
In tackling maintenance costs,
reduction of inventory must be the economies of scale and perform
priority, continues Radjou: “Spare engine or component maintenance “No single [piece of] software
parts inventories can tie up millions well, and want to distribute the fixed
can perform all of the complex
of dollars. Because you don’t exactly capital cost over a wider base; or
know when and where you will need they are going to outsource it engineering, maintenance
them, there’s a tendency to pile them because it’s a commodity activity.” management and
up across different warehouses and The case for outsourcing varies optimization functions
different locations. But airlines such across airlines: “There is a
as US Airways are now starting to misconception that you can’t make of aviation service life-cycle
use forecasting and demand planning money in heavy maintenance. It is management.”
tools to determine the exact amounts definitely the lowest-margin —Michael Denis, director of
they should hold, thereby reducing [business], but you can make money
working capital.” in heavy maintenance; otherwise aviation maintenance
In Denis’ view, airlines have TIMCO, Goodrich, PEMCO, AAR, ST solutions, Accenture
“taken great strides” in the areas of Aero and the rest of them wouldn’t be
reservation and distribution cost in that business. But what you can’t
reduction as well as reductions in do is profitably perform heavy
labour rates. He notes: “Rates have
been beaten down and the number of
people actually working at airlines is Firms must make service supply networks responsive
down. United Airlines has reduced
around 25 per cent of the workforce Tactics Benefits Vendors who can help
Speed warranty Faster processing boosts dealer/customer Entigo, Centor, Click
they had at 9/11. Fleet rationalisation processing loyaltyInvalid claims elminated; warranty costs Commerce, Motive
will, to some extent, take additional can be passed on to suppliers whose parts Communications, SAS,
time, but it’s being addressed. A lot are defective Syncata,
of processes that can be outsourced
Treat parts Fewer expedited shipments; optimized labour Baxter Planning Systems,
have been outsourced — catering, Reduced fix-time limits SLA-noncompliance risk Click Software, IBM,
and labour
call centres, servicing, finance and holistically and lowers customers cost-of-failure ObjectFX,
accounting, etc.” PointServe, ViryaNet
Outsourcing to achieve SLM Offer technicians Improved fix-time and labor utilization as Avexus, Critical Reach,
access to product technicians spend less time chasing product data Datastream. Enigma,
Outsourcing appears to be gaining
lifecycle info Helps customers extend their assets life cycles Intermec, MatrixOne,
popularity as part of a wider strategy MRO Software, PTC
to transform fixed costs to variable
costs, thereby creating the flexibility Gain real-time SLA compliance as budding product failures Axeda, Embrace
required to manage through data on are proactively addressed Networks,
downturns. Denis explains the product Usage data creates upselling opportunities First Internet Systems,
usage and Improved technician productivity and Graviton, Kaidara,
underlying rationale thus: “Aviation performance maintenance/repair accuracy Networkcar
maintenance organisations are going
to in-source because they have Source: Forrester Research, Inc.
Reprinted from Aircraft Technology Engineering & Maintenance - December 2004/January 2005 3

4. INFORMATION TECHNOLOGY
making money while Delta itself is
losing money and that clearly shows
what’s going on. Companies such as
Delta are actually turning what used
to be a cost centre into a profit
centre. You can draw a comparison
between what is happening in this
sector and what happened in the US
manufacturing sector, with a
redefinition of industrial core
competencies. In the ‘80s and ‘90s,
US manufacturers facing cost
pressures started shedding non-core
manufacturing activities and
outsourcing them, and a similar
pattern is developing among airlines.
CEOs are realising it’s better to make
certain costs variable by outsourcing,
rather than keep MRO expenses as
fixed assets on their balance sheet. I
wouldn’t be surprised if you start
seeing companies in the business
process outsourcing business, such as
IBM and Accenture, acquiring MRO
services companies.”
Denis, meanwhile, speculates that
small airlines (which he defines as
those with less than 100 aircraft) will
maintenance with a high labour cost, North America, yet their investment eventually outsource every
restrictive work rules and low labour in technology and process MRO/supply-chain function bar
productivity. improvement methodologies — such regulatory management; that medium
“Another misconception is that as lean management and Six Sigma — airlines (100 to 250 aircraft) will
labour rate and labour cost are the means that their people are just more outsource everything bar line
same thing, they’re absolutely not. productive and hence their total maintenance and regulatory
Two perfect examples are Delta Air labour cost is lower.” management; and that large airlines
Lines and Southwest Airlines. While Radjou also cites the example of (more than 250 aircraft) will have to
on the complete opposite ends of the Delta as being illustrative of wider choose between forming a for-profit
business model spectrum they have a trends: “Delta TechOps — the third-party MRO organisation,
couple of the highest labour rates in maintenance arm of Delta — is forming a niche MRO with the
“What airlines and alliances
will look for is a single provider
to help design and deploy
end-to-end process flows that
build upon the business logic
underpinning their various
best-of-breed applications.”
—Navi Radjou, VP, Forrester
Research
Low-cost carrier jetBlue Airways is among Accenture’s past clients, as is the manufacturer of this
aircraft, Airbus.
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5. INFORMATION TECHNOLOGY
majority of functions outsourced, or Functional Configuration via Effectivity
following the medium airlines out of Management (CMF) is the cut-in of
tracking, analysis and manage-
the “wrench-turning” and logistics ment of the functional design PLM
businesses. and operating performance SL
As for the airframe OEMs, Denis parameters of an asset, assembly SLM
or component. There is a Logical
predicts that an aversion on the part “as-designed” (FL) and Physical
of airlines to same-source aircraft “as-operated” (FP) version.
Design/Plan Scheduled and
financing, manufacturing and MRO changes in FL SP accounted for
Structural Configuration
services will continue to preclude Management (CMS) is the
OEMs from emerging as dominant tracking, analysis and manage-
ment of the structural piece of
players in the MRO “wrench- an asset’s Bill of Material (BOM,
turning” market. Indeed, legal EBOM, MBOM). There is a Logical
FP
“as-allowed” (SL) structure
challenges to FAR Part 21 ICA and Physical “as-maintained”
(instructions for continued (SP) version.
in response to
airworthiness) regulations could analysis of
Effectivity (δE) is the dimension
erode the OEM’s primary advantage that tracks and schedules changes
over independent repair stations: in one or more of the previous
two dimensions (CMF or
namely, the intellectual property CMS) in accordance with a L = Logical F = Functional S = Structural
rights to maintenance procedures. specific derivative. Change P = Physical F = Functional S = Structural
“The aspects of service life-cycle derivatives can include: EO/EAs,
Airworthiness Directives (AD),
management the airframers do want Service Bulletins (SB), calendar * 3DMC — © Accenture 2003 — Accenture holds three US/EU Patents
to be involved in are in-service time, operating time, cycles, and has five US/EU Patents pending on multi-dimensional configuration
environment or events management of complex assets and its use for engineering,
engineering, maintenance programme (e.g., lightning/EM radiation, maintenance and readiness-based service parts management.
management and IT, in order to bird strike, hard landing...).
maintain control of the aftermarket
parts business,” says Denis. “I think
they will continue to gain [in those 3DCM represents the DNA model for MRO.
areas] as airlines downsize their
engineering staff.” Other likely MRO trends, opines we could achieve with currently
Such downsizing might partly Denis, include standardisation — of available advanced tools and
be the result of an extension of the equipment, such as cockpits; of processes,” he asserts. “Airlines can
low-fare concept from domestic into logistics and maintenance aim to reach a point where they’re
international markets. “The low-fare management; and of IT systems — doing the right maintenance at the
carriers tend to accept the OEM’s across the airline alliances (such as right time, balancing economic and
MPD [maintenance planning STAR, Sky Team and oneworld); safety requirements.”
document] verbatim,” notes Denis. rising costs in the area of regulatory At the heart of doing the right
“They’re not investing in improving compliance (partly driven by the maintenance, he continues, is three-
maintenance programmes, component above-mentioned JAR 145 NPA 12 dimensional configuration
reliability, scheduling or other and FAR Part 21 ICA regulations, as management (branded ‘3DCM’),
maintenance engineering functions. well as increased frequency of CASS comprising functional configuration
Who’s going to pick up the slack? [continuing analysis & surveillance management. “Some of our
Airlines own the utilisation system] inspections); and continued benchmarking in designing three-
information required to improve domination of the off-wing market by dimensional configuration
reliability, maintainability and engine/APU OEMs, primarily due to management came from the medical
supplier performance. One of the the bundling of by-the-hour contracts industry. There’s a shift between
reasons you see Airbus forming a that leverage financing and execution. evasive medicine and preventative
global MRO network [under which medicine, and that’s what we’re
certain third-party MROs are given Doing the right maintenance basically trying to get to: the best
the Airbus ‘seal of approval’] is to It is Denis’ contention that solution, but also with the best
get to the operational data. To be maintenance planning documents operational and financial efficiency.
part of that network, you have to typically require airlines to perform “It’s hard to devise schedules that
share the data. But that’s a big issue more maintenance than is ensure everything comes together in
to many organisations, because if functionally required. “The MPD — the right place at the right time if
you’re in the MRO business for on a component basis and on an asset you don’t take it down to a very
profit, [that data represents] basis — has significant excess in it: granular level, and this brings us to
competitive advantage.” we [as an industry] are ‘gold-plating’ the problem with most of the current
maintenance and we’re getting a IT out there, especially ERP vendors.
lower yield on that maintenance than
Reprinted from Aircraft Technology Engineering & Maintenance - December 2004/January 2005 5

6. INFORMATION TECHNOLOGY
SYSTEM SYSTEM SYSTEM DEGRADED
AVAILABILITY NON-AVAILABILITY AVAILABILITY
FMC
Time and cost NFMC-x
to failure (TTF) Cost of poor quality
Time and cost (COPQ)
to support (TTS) Time and cost
to maintain (TTM)
Lethality
PLM Reliability Supportability Maintainability Survivability
SLM Operation Logistics Maintenance Operation
Scope of Lean & TOC
improvement
methodolgies
Six Sigma
Planning must take into account that aviation assets experience both the OEM’s product life-cycle (PLM) and the operator’s service life-cycle (SLM).
I spoke to a senior executive costs, you really can’t price your Radjou likewise notes the rising
maintenance manager recently who services properly. Doing maintenance popularity of predictive maintenance
said, ‘We know what it costs to do a right requires three-dimensional techniques, citing the example of
check but we have no idea what it configuration management to Delta’s decision to deploy
costs to do any particular piece of autonomically synchronise SmartSignal’s engine condition
maintenance within that check.’ information, production and monitoring software to detect
What’s required is activity-based logistics.” ‘Autonomic’, he explains, potential problems before they force
costing at a granular level, to is a medical term referring to the grounding of the aircraft. “Every
facilitate financial tracking at the human nervous system, which hour a plane is grounded they lose
unique serialised component level. automatically and autonomously runs hundreds of thousands of dollars and
Ultimately, if you don’t know what it the viscera organs. suffer an erosion in customer
loyalty,” he reasons.
Indeed, Denis claims Accenture’s
3DCM — which he describes as “the
DNA of aviation maintenance” —
contains the potential to reduce
commercial aviation MRO costs by
40 per cent. He explains: “3DCM
is the enabler of the physics and
engineering of maintenance so that
we can make a paradigm shift from
RCM [reliability-centred maintenance]
to CBM [condition-based
maintenance] and cost-efficient
predictive maintenance — real-time
degradation analysis, diagnostics,
prognostics and, ultimately,
readiness-based sparing.”
Formulating SLM solutions
Distinguishing service life-cycle
management (“the operator’s view”)
from product life-cycle management
(“an OEM’s perspective”), Denis
explains Accenture’s approach to the
market for aviation SLM solutions
Air Canada is among the airlines that has realised cost savings via SLM capabilities. thus: “There’s no ‘one size fits all’
6 Reprinted from Aircraft Technology Engineering & Maintenance - December 2004/January 2005

7. INFORMATION TECHNOLOGY
solution, as there are multiple
markets within what we call
3DCM
‘aerospace & defence industries’. So,
step one is to understand or help
Supply chain management
develop a company-specific strategy. Maintenance programs, planning
A next-generation SLM solution scheduling, & execution
creates economic value by closing the
eAI
execution gap between strategy, Finance &
business design and process performance
i ng management
execution as measured by both Operations &
c en
ter
corporate-level critical success customer relationship on
at i
management niz
rga
factors and granular key process Human performance management &
o
re
ctu
indicator performance metrics.” ite
Enterprise process arch
Certain questions need to be
IT platform
addressed before embarking on an
SLM project, he explains: “Basically,
what’s the probability that the
component will fail, and what’s the
contribution of that failing to the
total degradation of the asset? We do The full aviation SLM business architecture is comprised of four capability hierarchies (MRO,
these tradeoffs all the time. The SCM, CRM/Ops and FPM) built upon three platforms (Organization & Human Performance,
failure profile of components is not Process and IT) and synchronized via three dimensional configuration management (3DCM).
binary, it’s not that they just
suddenly stop working; their knowledge, wisdom] model — and reliability); the second, supply and
condition actually degrades, and applied it to our conceptual model so service management; the third,
that’s where MSG-3 and condition- that we could understand the operations and customer contact
based maintenance come into play. interrelations between capabilities management; and the fourth, finance
But what if you could functionally and physical enablement, that being and shareholder value management.
track the degradation of an asset the technology and the process. By linking corporate-level critical
based on true condition parameters? Take, for example, opportunistic success factors to key process
“What we are seeing is a shift from maintenance scheduling. Let’s say indicators, the theory runs, business
surrogate parameters to the actual you have a failure and you have to performance can be measured and
functional parameters, because if you open, inspect, remove, install, test, improved through Six Sigma, lean
can track the rate changes of those etc. The question to ask is, what practices and the ‘Theory of
parameters — temperature, pressure, other maintenance should the Constraints’, a management
amperage, voltage, whatever — you mechanic accomplish at the same philosophy which holds that the
can start tracking true on-condition time, so as to optimise his invested output of any system will be
requirements and thereby track time? Well, to figure that out you constrained by the least productive
degradation. If you can track need to do degradation analysis for sequential step in that system.
degradation, then you can perform predictive maintenance; then, on a
prognostics for predictive structural basis, you need to Potential benefits
maintenance. Thirty years ago when understand the zonal location and The ultimate goal, says Denis, is
the industry shifted from re- the associated maintenance enterprise profit optimisation: “If
manufacturing to RCM, we didn’t requirements for anything in that someone in the chain isn’t performing
have the tools or computing power to location.” three-dimensional configuration
accomplish this. Today there are Under the DIKW model, originally management manually or through
COTS [commercial off-the-shelf] tools developed by IEEE, a business technology, you’re never going to
and unlimited bandwidth to capability architecture imputes, optimise the service life cycle of an
accomplish CBM and predictive based on the strategy, the asset. And there is no single system
maintenance.” hierarchical relationships between that can do this. Few airlines would
To facilitate predictive capabilities and functional views of entertain using their ERP to run their
maintenance, Accenture developed a the business. There are, according to reservation systems. [But] on the
conceptual model and approached Accenture, four views that make up surface a reservation system is really
various IT vendors with a view to the full capability model for aviation nothing other than an inventory of
building an appropriate system. Says SLM. The first view covers potential seats, a pricing distribution
Denis: “We took a fairly standard maintenance capabilities of those seats and an order-to-cash
decision support and IT framework (maintenance programmes, planning, accounting system. So why would
— the DIKW [data, information, scheduling, execution and one think any single [piece of]
Reprinted from Aircraft Technology Engineering & Maintenance - December 2004/January 2005 7

8. INFORMATION TECHNOLOGY
software can also perform all of the companies such as Mxi and airline implemented a standard
complex engineering and maintenance SmartSignal will need to decide COTS solution to provide diagnostic
management functions of aviation which ‘ecosystem’ or partner network capability on its fleet of A319, A320,
service life-cycle management?” (or networks) they want to be a part A330 and A340 aircraft. The
Radjou agrees that no single system of, to fit into a world where a lead solution included a case-based
can be expected to deliver end-to-end contractor such as Accenture or SAP learning system that automatically
service life-cycle management. “A lot will be heading up a portfolio of increased fault isolation and repair
of companies have SAP managing specialist companies. We can help rates by associating successful
their financial transactions and Mxi them decide what type of corrective maintenance with the
doing their MRO and are using subcontractor they wish to be in a fault code and configuration. By
forecasting tools from companies such particular network... For the users, these means, the airline realised a 30
as Servigistics and Xelus on top of we have assessment tools they can per cent reduction in A320 aircraft
that. Our prediction is that, in the deploy to evaluate vendor capabilities fault messages via the onboard asset
future, they’re going to ask one and decide which ones are best for health management system. Further
vendor — and I would suggest four their requirements. We can also keep analysis indicated that maintenance
candidates: SAP, Oracle, IBM and them abreast of business and delays normalised to aircraft
Accenture — to help them integrate technology trends and advise them on utilisation dropped proportionally
all the existing best-of-breed best-in-class integration technologies during that same time period,
applications they have. The first two, or portal technologies they could use achieving savings of $6,000 per
SAP and Oracle, would bring in the to integrate their legacy systems.” It aircraft per year. “On 300 aircraft
ERP backbone, the other two their should be note that AMR Research, as this one small element of SLM saved
systems integration capabilities. What the originators of SLM theory, the airline an estimated $1.5m and a
airlines and alliances will look for is a constitutes a major competitor to complete SLM capability could save
single provider to help design and Forrester Research in these areas. tens of millions,” says Denis.
deploy end-to-end process flows that So what are the financial benefits To airlines operating in today’s
build upon the business logic SLM can deliver? Denis cites the wintry economic environment,
underpinning their various example of a project carried out by savings of this magnitude would
best-of-breed applications.” Air Canada, which needed to be very welcome indeed. G
But what of Forrester’s role in all increase its on-time departure/arrival
this? “We will be helping both sides: rate while simultaneously increasing For more information
the vendors and the users,” says labour productivity and reducing
Radjou. “On the vendor side, logistics costs. To this end, the Defense
Jack Woodward
Lieutenant General, USAF (Ret.)
Jack.L.Woodward@accenture.com
703-947-1213
Aerospace
Ray Grainger
Raymond.E.Grainger@accenture.com
310.726.2938
Airlines
Patrice Vinet
Patrice.A.Vinet@accenture.com
33.15.323.5685
SCM Service Management
R. Douglas Derrick
R.Douglas.Derrick@accenture.com
Delta Air Lines, despite relatively high labour rates, has achieved one of the industry’s 678.657.4254
lowest labour costs, thanks to its operational efficiency and investments in lean, Six Sigma
enabling technology.
8 Reprinted from Aircraft Technology Engineering & Maintenance - December 2004/January 2005