Acronyms in aviation are plentiful. So plentiful in fact, there are some abbreviations that have more than one meaning. That’s why when someone asks “what does ERP stand for in aviation,” the answer may not be straightforward.
Not to fear! We will jump into some of the more common abbreviations of ERP and take a deep-dive on one in particular, covering some of the benefits, disadvantages, and more.
What Does ERP Stand For in Aviation?
In aviation, ERP stands for Enterprise Resource Planning. ERP systems organize your internal processes for various parts of your business, like inventory management, supply chain, sales, accounting, and more. ERP systems are essentially a "system of record" for your business data.
There are also a few other, unrelated “ERP” abbreviations in aviation that you might not be aware of:
- Emergency Response Plan
- Eye Reference Point
- Extracted Route Points
- Effective Radiation Power
In this article, however, we will stick to Enterprise Resource Planning software for aviation.
Enterprise Resource Planning (ERP) in Aviation
Enterprise Resource Planning, in principle, is the integration of real-time analytics and tools to manage various aspects of business operations. It’s supposed to be a “mission control” for business functions including sales, finance, supply chain, and more.
In practice, however, ERP systems are complex, heavyweight software apps. The value you get out of them depends almost entirely on how much work you put into setting them up.
Many businesses in the aviation industry face the same challenges. These include the utilization of labor and raw materials, the complexity of regulation and managing engineering work, navigating a global industry, and of course, high operational costs. Let’s see how ERP tools can help you navigate this challenging industry.
Benefits of ERP Software for the Aviation Industry
1. Inventory and Supply Chain Management
For companies in the aviation industry, inventory management is one of the more important business functions to optimize. The ultimate goal is to reduce the amount of capital tied up in excess inventory without running the risk of long lead times and delayed deliveries.
ERP tools track inventory, such as when new items are received, products are held in consignment, goods are sold, inventory is out for repair, and more. This provides a snapshot of your inventory’s health allowing for more informed decision making in real-time.
Having a digital snapshot of your inventory helps you monitor your raw materials purchases, work-in-process throughput, and the stockpile of finished goods. Aircraft Maintenance, Repairs, and Operations (MRO) companies are especially reliant on ERP systems because frequent, but unforeseen, repairs place a large strain on supply chain management and operations.
Having an ERP system to facilitate the sales process is mutually beneficial for your team and customers. Although Requests For Quotations (RFQs) require some manual data entry, quotes can be prepared for customers more accurately and you are less likely to mistakenly send “no quotes”.
For example, upon receipt of the RFQ, the requested items and quantities can be checked against the real-time inventory and an accurate price can be quoted based on actual costs.
When a purchase order is placed, workers in the warehouse can reference order data in the ERP system to expedite the manufacturing (if applicable), assembly, and shipping processes.
3. International Scale: Regulations and Currencies
It’s one thing for a business to deal with customers on a global scale, requiring the localization of marketing materials and customer support documentation.On top of that, in the aerospace industry, international government regulations are another level of complexity to navigate.
From bilateral agreements to certify airworthiness and meeting the requirements of local CAAs to maintaining sound business practices and abiding by international tax codes. Importing and exporting parts, planes, or people is highly regulated and scrutinized. ERP systems help manage the regulatory hurdles and keep paperwork organized and up-to-date.
Another consideration for a global scale is the various currencies and foreign exchange rates in the course of transacting with international organizations and governments. ERP systems can seamlessly manage multiple currency exchanges, tax code compliance, accounting, and more.
4. Company Scale: Interdepartmental Efficiencies
As companies grow and departments become more and more isolated, the time it takes teams to complete tasks increases significantly.
The finance department, for example, may be in another building, another city, another country, or distributed globally. If the supply chain manager needs approval from finance to replace essential machinery in their supply chain, every hour of inefficiency can cost the company millions.
ERPs can help create a symbiotic relationship between departments and even offer a line of communication between departments.
Enterprise resource planning software is often referred to as one of the “crown jewels” of a business’s cybersecurity exposure. ERPs are prime targets for hackers given they house a company’s financial documents, manufacturing blueprints, personal information about employees, and much more.
The security of an ERP system depends heavily on how it’s set up. Whereas ERP systems are built securely in some ways, many of them are older systems which haven’t yet integrated modern best practices for internet security (e.g,. encryption).
In addition, the way these systems are commonly used creates vulnerabilities. For example, many companies allow employees to access their ERP servers remotely by Microsoft Remote Desktop, which creates a significant risk.
ERP Implementation in the Aviation Industry
While some ERPs are built for general business operations, the aviation industry—and MRO more specifically—has specialized needs.
Aviation-focused ERP workflows are customized for the types of transactions that parts sellers, buyers, and repair businesses use, e.g., exchanges, complex repairs, on top of more vanilla outright sales. They also typically have modules for managing regulatory paperwork, like form 8130s.
Established aviation companies rely on legacy ERP systems that become difficult to manage and even harder to leave. Migrating to a new ERP system is challenging. However, if it can increase productivity or enhance security, it might be worth exploring.
The choice of which ERP to implement in your aviation business largely depends on the size and business model of your company. The MRO or technical operations divisions of large companies, like airlines, would likely be deciding between ERP systems like:
- Oracle e-business suite
- Microsoft Syspro
While medium-sized and smaller players in aviation typically choose between:
- Quickbooks (using third-party inventory management integrations)
ERP vs CRM
For startups or more digitally-inclined companies, other products may be as effective for managing records as a legacy ERP system.
Large ERP software products universally suffer from what’s known as “feature creep,” where the sheer number of features overwhelms the user experience. It’s also incredibly difficult to do many things well, which is why there are some companies who decide to unbundle their ERPs and use multiple products that focus entirely on their use-case.
In recent years, aviation suppliers are just using a CRM system, without an ERP at all. CRMs are more focused on a smaller set of customer-focused functionality, and tend to that well. Although some ERPs have CRM-type features, they don’t do it especially well. It’s also possible to link many of these systems together using the Rotabull API.
The move towards unbundling software in the aviation industry is understandable, since customers want good user experience and don’t want to feel trapped by a legacy product that’s too difficult to move away from. At Rotabull, we’ve built an easy-to-integrate and easy-to-use tool giving you the flexibility to work with or without an ERP all while driving more RFQs and selling more parts. Sign up for a demo to learn more.