www.octagonaero.com
 

Global Sales & Marketing

Sales Database

Sales Concentration

Key Advantages to Using Octagon

Company Profile

Octagon Aerospace, Inc. (Octagon) inventories and actively markets tens of thousands of part numbers providing aviation industry aftermarket support on aircraft interior components such as lavatories, crew seats, galleys, air stairs, coffeemakers, and ovens to over 600 unique customers worldwide.  Octagon is also an authorized distributor for original equipment manufacturers (OEM’s) of aircraft bearings, seals and other critical components.  Octagon owns an extensive inventory of factory new DC-8, DC-9, DC-10 and MD-80 airframe and related structural components, which are stored at it's 80,000 square-foot secure facility in Fillmore, California.  Additionally, Octagon provides both on site and off site consignment inventory marketing services to assist airlines and others turn their slow moving inventory into cash.

Octagon's newest line of business is in Powerplant services.  With the addition of aircraft engine technical and sales specialists, and with the Company's stronger financial structure, Octagon is now able to offer complete engine teardown and spare parts services for General Electric, Pratt-Whitney and other aircraft engines. 

Over the years, Octagon has developed excellent working relationships with many airlines and overhaul centers, including the added dimension of creating an expansive network of nearly 400 brokers who handle the placement of the aircraft parts into numerous small markets throughout the world.  Between 1996 and 2000 we became recognized as a primary supplier of aircraft interior products and developed a deserved reputation for highly responsive aftermarket service and support.

No other third party aftermarket source has brought together the unique capabilities that Octagon has been able to develop including:

The most experienced aircraft interior personnel with an;

Extensive knowledge of the OEM’s products and markets;

Broad experience in brokering both expendables and rotables;

Large selection of interior products in stock;

Focused sales team dedicated to moving its supplier’s inventory.

We work closely with our OEM’s to keep them up to speed on our sales efforts of their products by alerting them of our travel plans and providing copies of our trip reports.  Additionally, we send our OEM’s quarterly reports showing customer usage by part number, as well as providing valuable market analysis on the specific aftermarket conditions as it may affect their products to highlight both opportunities and potential problems before they become issues.  We track fleet changes at these airlines as well as remain in close contact with maintenance personnel to provide valuable feedback to our OEM’s.  We keep our OEM’s informed of the potential for PMA dealers to reverse engineer their parts so we can work together to quickly determine the best way to handle this situation before it can deteriorate our OEM’s profit margins.

GLOBAL SALES AND MARKETING

The movement by airlines to offload maintenance and spare parts inventory management and logistics to third party suppliers has shifted these demanding requirements to either original equipment manufacturers (OEM’s) or to spare parts distributors.  Since airlines demand just-in-time delivery, the requirement to stock and deliver parts inside most standard OEM lead times demands a comprehensive, sophisticated inventory management and forecasting solution. 

Many OEMs believe their expertise and therefore best use of scarce resources to maximize profitability and enhance customer support is through the use of outside distributors who specialize in a specific market niche to support their unique customer base.    Knowledge, focus and continuous monitoring of aircraft interior parts demand by experienced personnel utilizing sophisticated in house developed information management tools enables Octagon to provide superior levels of support for manufacturers of aircraft products to the aviation aftermarket.

Distributors, such as Octagon, may be better equipped to search for parts available on the open market or be in a better position to service the customer’s requirement with refurbished components to meet a rapid delivery.  If lead-time for a particular stock item is too long, as removed or overhauled parts can be provided.  Appropriate parts stocking and communication with this type of provider is mandatory for success. 

Additionally, airline’s constant competitive pressures to reduce cost and improve management of working capital has made it far more acceptable than in the past for PMA's to enter the marketplace.  Octagon assists OEM's in this area by working with the airlines and overhaul customers under long-term relationships by stocking the majority of their spare parts requirements.  Maintaining these relationships aides in stifling the demand for PMA parts from aircraft operators.

SALES DATABASE

Octagon’s primary focus in spare parts has been and continues to be analysis and logistics management of its supplier’s part numbers to the aviation aftermarket.  Over the years, Octagon has amassed a valuable database of information on aircraft part usage by customer and region.  

We believe by working more closely with the OEM as an authorized distributor, we can together refine this valuable database of information to improve customer satisfaction by reducing out-of-stock conditions while, at the same time, improving the OEM’s profitability by providing larger volume production requests for parts and reducing the demand for PMA parts in the marketplace.

SALES CONCENTRATION

Octagon sells its distribution inventory to over 600 customers worldwide.  However, a manageable number of our customers purchased over two-thirds of this volume annually.   Our number one customer represented 14% of sales.  The top five accounted for approximately 33% of sales and the top thirty accounted for nearly 66% of sales. 

Octagon supported a manageable number of large customers in 1999.  Since most of the volume is concentrated in these accounts, the staff at Octagon’ Simi Valley facility is sufficient to support its represented aircraft products throughout the world, especially when you take into consideration the 300+ independent broker network.   Since most of the volume is with these larger customers, Octagon’ experienced aircraft parts sales and customer service departments are able to concentrate their efforts with these critical high volume accounts.

Sales in 1999 were primarily concentrated in North America, followed by Europe, Latin America, Asia and the Middle East. Eighty-two percent of 1999 worldwide sales were in the North American region.  Of the North American sales by Octagon, 53% were with the airlines, 21% were with brokers and the remaining 26% were to repair and overhaul shops. 

Europe accounted for 9.8% of worldwide sales of aircraft spare parts.  Airlines, overhaul shops and brokers accounted for 63%, 21% and 16% of European sales, respectively.  Sales into the other regions of the world accounted for less than 9% of total sales with the majority of those sales being directly to international airlines.

Since most of the US manufacturer’s aircraft products are sold in North America, Octagon’ presence near Los Angeles enables it to communicate and deliver effectively with the largest customer base for those products.  Octagon sales and service department provide 24/7 AOG support to its airline and other customers worldwide.

In Europe, Latin America and other parts of the world Octagon customer base is more narrowly focused on a smaller group of customers.  However, since many of the North American based brokers sell internationally, we cannot fully identify how much of the total broker volume in the US is ultimately utilized by a foreign-based aircraft operator.

JUST IN TIME SERVICES

Airlines are demanding just in time inventory management from OEM’s.  Many aircraft parts manufacturers are not equipped to manage the high volume of daily demands for low quantity orders from the airlines for dozens of different part numbers. In these situations a just in time or AOG service from an authorized distributor provides another supply channel for the OEM’s customers.  Octagon has been providing this necessary service to the airlines for a number of years, specializing in Douglas airframe and a wide range of aircraft interior components, and most recently bearings, seals and other components.

KEY ADVANTAGES TO USING OCTAGON

Key reasons OEM’s consider using Octagon Aerospace as its authorized distributor include:

1.      Octagon possesses extensive aircraft product and aftermarket industry knowledge and we are willing to share this knowledge by presenting to our OEM’s a quarterly or semi-annual marketing analysis, including product specific sales data. 

2.      Octagon's sales, purchasing and management personnel have a combined 130+ years experience in the aviation industry wide-ranging contacts and valuable relationships among the aircraft interior buyers.

3.      Octagon's multi-year historical database of product sales may provide a valuable competitive advantage to OEM’s.  Octagon will be able to provide specific aftermarket product knowledge not readily available to some of our OEM’s competitors.

4.      Octagon's ability to consolidate the numerous small order quantities from airlines, overhaul shops and brokers throughout the world provide the OEM with higher volume, long-term purchase orders with scheduled deliveries enabling the OEM to manufacture product more cost effectively by taking advantage of natural economies of scale.

5.      Octagon's ability to forecast requirements up to 12 months or more by product group and part number will assist the OEM in preparing its production capacity plan.

6.      Octagon's level of service to airlines is unequalled.  We believe Octagon is far more responsive to the airlines in quoting prices and shipping product on time than any other OEM distributor.  We also believe that through our experienced aircraft aftermarket personnel, Octagon has the ability to communicate effectively with buyers to ensure the correct OEM part numbers are ordered, which improves the customer’s perception of the OEM and their products.

7.      Octagon's historical performance in delivering its OEM’s products on a just-in-time basis enhances the OEM’s product line to the airlines and to the industry in general, which may lead to new business with aircraft manufacturers.

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