MRO Service Provision and Contracting in Aerospace Supply Chain (Funded by Start-Up Grant)
Airplanes are complex engineering systems that have long life spans and require high quality MRO service (i.e. Maintenance, Repair, and Overhaul) to achieve high operational performance. With the global expansion and diversification of airline fleets, MRO service is rapidly growing in market size but also in operational complexity. The emergence of “performance-based contract”, also known as “power by the hour”, is reshaping the structure of MRO service industry. Under a performance based contract, a service provider is compensated based on the operating performance of the service receiver. Performance based contracts promise significant efficiency gains by consolidating service operations in a supply chain, but their implementation requires re-allocation of responsibilities and re-alignment of incentives, which are difficult tasks that involve strategic decision making with complicated operational implications. The proposed research aims to develop a theoretical framework and a set of decision support tools to facilitate analyzing, designing, and implementing performance-based contracts for MRO service provision in aerospace supply chain.
The increasing diversification of customer needs and shortening of product lifecycles make it an imperative for companies to compete on a platform basis with product lines rather than individual products. However, product line design and product platform planning are challenging tasks that require intricate balance between satisfying customers’ heterogeneous needs and controlling the associated engineering complexity and cost. In practice, product line design and product platform planning decisions are often made based human experiences in a fashion of hit-or-miss. The proposed research is positioned at the interface between engineering and marketing, and the objective is to develop a coherent theoretical framework with effective decision models and tools to optimally balance customer and engineering preferences so that product line design and product platform planning can be conducted systematically on a scientific basis.