Saab Aircraft establishes a new plane for service parts inventory requirements

Sweden is known for lakes, mountains, Ingrid Bergman, Abba and Saab.

That last name may be familiar as a manufacturer of rugged, safe and classy cars but the Saab company hasn't made them for a few years: it sold the car company in the 1990s. The Saab company has been an airplane manufacturer for decades. The Saab 2000, launched in the 1990s, flies at near-jet speeds, its pilot cockpit was the most modern in its class and the passenger accommodation matched long-distance jetliner standards. 

The Saab name is found in a variety of other settings, from naval radar, minesweeping and submarines to computers, microwave electronics and the antennas on communications satellites. With about 265 employees the company maintains 25,000 part numbers in inventory worth about US$250 million. In addition to parts, servicing and engineering support Saab Aircraft provides aircraft operators, repair statements, repair solutions and publications, and runs training for mechanics and crew. Altogether the company has established itself as an innovative and leading manufacturer. 

"The spare parts business has different kinds of support. We sell parts outright, rent parts and undertake ad-hoc exchanges. When we're undertaking commercial repairs we lease replacement parts during the maintenance time," said Bjrn Sonnert, director of logistics for Saab Aircraft. "It's a wide range of activities but the final consequence is the need to replenish supply." 

"Before we implemented Demand Solutions we had our own, highly customized system," Sonnert said. "We'd bought the source code and adapted it heavily to our purposes, which meant that we were tied in to it. We became trapped in our own solution and couldn't take on upgrades. We made the strategic decision to go for a robust, reliable system since our ERP vendor didn't have an acceptable forecasting or planning module. We surveyed the market and chose Demand Solutions from Demand Management, Inc. 

"It was set up exactly as we wanted from the outset and we found we were able to get the data we required in and out quickly," said Sonnert. "We can test different scenarios quickly and easily." 

Saab Aircraft's operations are complex, and in order to ensure management objectives were achieved the company launched the "One Part One Planner" programme with the goal of controlling inventory and improving forecasting and quality-of-service delivery. Demand Solutions made the transformation easier, enabled the objectives to be achieved and helped generate some considerable savings for the company. 

Since Demand Solutions was implemented Saab has been able to reduce inventory every year by staggering amounts. During 2004 the company reduced excess inventory by US$6 million, of which Sonnert believes US$5 million was active inventory. Transportation costs have also been cut as cross-shipping, direct vendor shipment and safety stock reallocation have all become reality.  

An unanticipated benefit of Demand Solutions was a spike in customer service levels, from 95 to 97 per cent. "Our intention was to cut costs; but the increase in customer service levels is a bonus," Sonnert concluded.