Poor demand forecasting costs companies an average of 3-5% in lost revenue.

For aircraft MRO supply chains, inaccurate planning can mean grounded planes and frustrated customers.

I once worked with an MRO provider struggling with excess inventory and stockouts.

By segmenting their spare parts and aligning planning with maintenance, we reduced inventory by 20% while increasing service levels.

The key was getting the supply chain and maintenance teams to collaborate closely. When a big repair contract came in, we were able to adjust forecasts quickly to ensure on-time delivery. It showed the power of agile, data-driven demand planning.

That's just one example of how optimizing demand planning can greatly impact an operation.

In this post, we'll cover 9 practical tips to level up your spare parts forecasting game:

1. Align Demand Planning with Maintenance Schedules

Maintenance schedules should serve as the foundation of your demand planning strategy.

Supply chain teams can ensure critical parts are available when needed by integrating forecasts with planned maintenance activities.

This coordination reduces downtime and prevents unnecessary delays.

Best practices include using shared software platforms for real-time updates and fostering collaboration between MRO teams and procurement staff.

For example, implementing a cloud-based communication tool can enhance visibility and enable quick adjustments in case of unexpected schedule changes.

2. Use Demand Segmentation

Segmenting demand allows you to classify spare parts based on their criticality and variability, enabling a more tailored approach to inventory management.

High-priority items, such as engine components, require greater focus to avoid disruptions, while less critical parts can follow a leaner strategy.

Applying the Pareto Principle can further streamline efforts by concentrating on the 20% of parts contributing to 80% of demand.

For instance, focusing inventory planning on frequently used parts like filters and brakes helps prevent overstocking less critical items.

3. Implement Advanced Planning and Scheduling (APS) Systems

Advanced Planning and Scheduling (APS) tools are a demand planner's best friend.

They synchronize forecasting, inventory, and procurement for a holistic view of supply and demand.

For example, using an APS system to model "what-if" scenarios can help you prepare for unexpected demand spikes, ensuring better preparedness and adaptability.

Look for solutions with robust simulation capabilities and real-time data integration.

The right system can supercharge your planning processes.

4. Focus on Continuous Training for Your Team

A skilled and knowledgeable team is key to effective demand planning.

Investing in your team's forecasting and analytics capabilities pays dividends in planning accuracy.

For example, offering workshops on data analysis can help your staff interpret forecasting data more accurately.

Additionally, online certifications in supply chain management can provide team members with the tools to implement advanced strategies, such as vendor-managed inventory systems or predictive analytics.

Empowering your people is one of the best investments you can make.

5. Factor in External Influences

External factors like economic conditions, regulatory changes, and supplier disruptions significantly affect spare parts demand.

To mitigate these challenges, keep your team informed about macroeconomic trends and aviation industry updates.

Proactive strategies, such as diversifying your supplier base or establishing contingency stock for high-risk parts, can reduce the impact of unexpected disruptions.

For instance, monitoring geopolitical developments that affect global supply chains can help you anticipate potential delays or shortages.

Develop "what-if" scenario plans to stay agile no matter what comes your way.

6. Develop Collaborative Supplier Relationships

No planner is an island. Strong relationships with suppliers can significantly enhance demand planning accuracy.

Sharing forecasts and production plans with your suppliers can dramatically improve their responsiveness.

Regular communication with suppliers ensures you receive timely updates on lead times, stock availability, and potential disruptions.

For example, establishing partnerships with vendors that offer just-in-time delivery options can reduce the need for large safety stock inventories while ensuring parts availability.

Strong supplier partnerships are key to agile MRO supply chains.

7. Leverage Predictive Maintenance Insights

Crystal balls may not exist, but predictive analytics is the next best thing.

Predictive maintenance strategies, which rely on sensor data and condition monitoring, can transform demand planning.

By understanding when a part is likely to fail, supply chain teams can align inventory levels more precisely.

For example, if sensor data indicates increased wear on hydraulic seals, pre-ordering these parts prevents delays without overstocking.

Investing in IoT-enabled equipment can bring predictive maintenance capabilities into your operations.

Incorporating these predictive insights into your forecasting models can take accuracy to the next level.

8. Embrace Data-Driven Decision Making

Demand planning thrives on accurate data.

Using real-time data from maintenance logs, flight schedules, and inventory systems allows for precise forecasting.

For instance, tracking usage rates of commonly replaced parts like fasteners or hydraulic components helps refine stock levels.

Investing in analytics tools that aggregate and analyze this data ensures that your decisions are based on actionable insights rather than assumptions.

9. Measure and Optimize Forecast Accuracy

You can't manage what you don't measure.

Establishing KPIs like Mean Absolute Percentage Error (MAPE) and forecast bias allows you to objectively track performance.

But don't stop there - conduct regular forecast post-mortems to identify improvement opportunities.

For instance, analyzing trends from seasonal maintenance activities can help you prepare for recurring demand patterns.

Continuous measurement is the foundation for continuous improvement.

Effective demand planning is a cornerstone of operational success.

What forecasting challenges are you facing in your supply chain?

We'd love to hear your experiences and discuss how these tips can help.