ERP as cornerstone for Aviation 4.0

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ERP as cornerstone for Aviation 4.0

The whole world is talking about Industry 4.0 which has increasing implications at the manufacturing process and the future of our work. Within Industry 4.0 the integrated connection of the industrial production with a digitized planning process, the autonomous governing of the production with high process transparency shall become real. The communication between production and components with an aim to manufacture the final product by using the most efficient way of production is at its core. To achieve integrated planning as the first step before any production can be started, it is a requirement that planning represents the production as precisely as possible. Thus, the production side is able to react immediately in case of abnormalities. Consequently the planning and production must be connected in real time. In an ideal world this connection will be dynamic to find feasible alternatives quickly in case of disruptions.

To extend this ideal world, there is the need for an additional step, to ensure a consistent end-to-end process of planning-production-result monitoring: this additional step means that controlling and finally profitability reporting needs to be integrated in real time as to have a sound feedback of past activities in order to facilitate further planning. Basically the IT world has identified three cornerstones of Industry 4.0:

1. A highly efficient Manufacturing Execution System (MES)

2. Internet of Things (IoT)

3. Production that checks itself

In our view, a fourth cornerstone needs to be added: the system which is required to manage these three cornerstones, integrate them with planning and function as a link to the decision maker in the company. This fourth cornerstone of Industry 4.0 is the Enterprise Resource Planning (ERP) system which serves as the center piece of a company’s IT integration to achieve 4.0 level and which is indispensable from a certain enterprise size onwards.

The question is, how do we get the link from Industry 4.0 – as a 4.0 for the manufacturing industry – to a 4.0 for the airline industry – the Aviation 4.0? The easy explanation is what CIOs and CEOs have decided in the past: what is state-of-the-art for the manufacturing industry must be state-of-the-art for the aviation industry. Unfortunately, this has produced a mess at most airlines concerning ERP implementations, although airlines – even without manufacturing tangible goods – are a kind of manufacturer too. Why? It’s because they “produce” seats – seats that are moved from an origin to a destination.

The crucial difference to a conventional manufacturer is located in an airline’s workflow that does not follow the workflow of a factory, which is: buying material, storing it, producing tangible goods and storing them before they are sold. Airlines are a service company and not a classical manufacturing company and “seats” not occupied during a flight can’t be stored for later usage. This is indeed a fact for many services offered and used by an airline – they can’t be stored but need to be consumed at the time when they are produced. And this is the reason why ERP systems can’t be implemented at airlines without properly incorporating their “production” processes because ERP systems were developed for the manufacturing industry.

As seen in many past ERP implementation projects, the proper configuration of an ERP system remains a challenge for most airlines. The reason for failure is two-sided. Firstly, the airline’s organizational processes are a mystery to ERP experts and suppliers who usually offer their services to general manufacturing companies. Secondly, airlines mostly don’t know the opportunities an ERP system offers while both parties – ERP service provider and airlines – speak a completely different language. Thus, budgets which overrun on time and money in ERP implementation projects are the norm. In order to avoid these cost overruns conventional processes of work tasks just become “electrified” through the ERP system. Consequently, the ERP system is just used by the airlines as expensive “bookkeeping software” but not to its full capabilities.

To effectively deal with this issue, the call is to hire specialized suppliers and consultants who know ERP systems and airline processes by heart to ensure a successful switch to Aviation 4.0 of the airline. These experts will consult in helping to implement an integrated IT solution from planning to production and to production management with a real time profitability report – the notable Route Profitability calculation.