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Functions marketing: Take control of logistics to control business risk
Luleå University of Technology, Department of Civil, Environmental and Natural Resources Engineering, Mining and Geotechnical Engineering.
Volvo Aero.
HTU.
2001 (English)In: Proceedings from International Conference on Industrial Logistics ICIL 2001, Okinawa, Japan, July 9-12, 2001, 2001Conference paper, Published paper (Other academic)
Abstract [en]

This paper introduces the possibility of increasing the efficiency and minimizing the risk in functions marketing in the aircraft industry by focusing on better control of the logistic parameters. Functions marketing can be described as the marketing of a function rather than a product. The emphasis in this paper will be on the maintenance, i.e. repair and overhaul, of aircraft engines. Functions marketing rather than maintenance, is a clear trend in the industry today. It is often economic and financially attractive for the customer to buy a function rather than a product. Buying functions also support many companies’ strategies to focus on their core business.The primary economic advantages for the customer of aircraft engine maintenance, lies in the reduction of business risk, and the possibility to estimate the cost per engine flight hour. As a large part of the risk is transferred from the buyer of maintenance to the seller through the contract regulating the marketing of a function, it is crucial for the seller to have the knowledge and capacity to calculate and control the business risks involved. The maintenance cost consists primarily of the costs for repair and exchange of engine components. The capital costs and obsolete costs for these components are very large. The scope of maintenance works is, to a large extent, controlled by the conditions stipulated in contracts. A number of contracts indicate that the business risk, for the seller, depends on how the contractual agreement and the logistic parameters interact. In order to control the business risk, emphasis must be put on the ability to quantify and control the logistic parameters in question.This paper concludes with a structured discussion about modeling of contractual agreements when logistic parameters are included, and the risks that are associated with this interplay.

Place, publisher, year, edition, pages
2001.
Research subject
Mining and Rock Engineering
Identifiers
URN: urn:nbn:se:ltu:diva-39858Local ID: ec3cd14e-2e13-4483-af78-70f648af5ff5OAI: oai:DiVA.org:ltu-39858DiVA: diva2:1013377
Conference
International Conference on Industrial Logistics : 09/07/2001 - 12/07/2001
Note
Godkänd; 2001; 20131101 (jensva)Available from: 2016-10-03 Created: 2016-10-03Bibliographically approved

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