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Functions Marketing: Take Control of Logistics to Control Business Risks!

Svanberg, Jenny LU (2001) ICIL In [Host publication title missing]
Abstract
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... (More)
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

142

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. (Less)
Please use this url to cite or link to this publication:
author
organization
publishing date
type
Chapter in Book/Report/Conference proceeding
publication status
published
subject
in
[Host publication title missing]
publisher
ICIL
conference name
ICIL
language
English
LU publication?
yes
id
f5d7bbbf-e99a-4b07-b3d4-13f9285f01c9 (old id 1149960)
date added to LUP
2008-05-27 14:48:45
date last changed
2016-04-16 08:06:33
@misc{f5d7bbbf-e99a-4b07-b3d4-13f9285f01c9,
  abstract     = {This paper introduces the possibility of increasing the efficiency and<br/><br>
minimizing the risk in functions marketing in the aircraft industry by<br/><br>
focusing on better control of the logistic parameters.<br/><br>
Functions marketing can be described as the marketing of a function rather<br/><br>
than a product. The emphasis in this paper will be on the maintenance, i.e.<br/><br>
repair and overhaul, of aircraft engines. Functions marketing rather than<br/><br>
maintenance, is a clear trend in the industry today. It is often economic<br/><br>
and financially attractive for the customer to buy a function rather than a<br/><br>
product. Buying functions also support many companies’ strategies to focus<br/><br>
on their core business.<br/><br>
The primary economic advantages for the customer of aircraft engine<br/><br>
maintenance, lies in the reduction of business risk, and the possibility to<br/><br>
estimate the cost per engine flight hour. As a large part of the risk is<br/><br>
transferred from the buyer of maintenance to the seller through the contract<br/><br>
regulating the marketing of a function, it is crucial for the seller to have the<br/><br>
knowledge and capacity to calculate and control the business risks involved.<br/><br>
The maintenance cost consists primarily of the costs for repair and exchange<br/><br>
of engine components. The capital costs and obsolete costs for these<br/><br>
components are very large. The scope of maintenance works is, to a large<br/><br>
extent, controlled by the conditions stipulated in contracts. A number of<br/><br>
contracts indicate that the business risk, for the seller, depends on how the<br/><br>
142<br/><br>
contractual agreement and the logistic parameters interact. In order to<br/><br>
control the business risk, emphasis must be put on the ability to quantify<br/><br>
and control the logistic parameters in question.<br/><br>
This paper concludes with a structured discussion about modeling of<br/><br>
contractual agreements when logistic parameters are included, and the risks<br/><br>
that are associated with this interplay.},
  author       = {Svanberg, Jenny},
  language     = {eng},
  publisher    = {ARRAY(0xa8a41d0)},
  series       = {[Host publication title missing]},
  title        = {Functions Marketing: Take Control of Logistics to Control Business Risks!},
  year         = {2001},
}