DHL wins EUR 10.6 million deal with KPMG and expands Singapore Aerospace Hub
- DHL Supply Chain gives KPMG option to revive insolvent firm through new innovative solution
- 25 million parts and associated trace documents spread over 100 locations to be consolidated in six months
- DHL Aerospace Hub in Singapore to expand 55 percent to 70,000 square feet
To support the Aero Inventory rebuild, DHL is expanding its Aerospace Hub in Singapore by 55 percent.
DHL Supply Chain has developed an innovative solution to track and consolidate almost 25 million parts and their associated trace documents scattered over 100 locations and worth an estimated EUR300 million to give KPMG (as administrators of Aero) the option of managing insolvent UK firm Aero Inventory out of administration. The solution also means a three-year contract worth EUR10.6 million for DHL and the expansion of its Aerospace Hub in Singapore by 55 percent to 70,000 square feet.
Andrew Mitchell, Vice President, Business Development, Asia Pacific, DHL Supply Chain, said: "We are absolutely delighted to be partnering with KPMG and Aero Inventory in this exciting and unique venture. As the administrator, KPMG has engaged us to establish a robust supply chain for the future incarnation of Aero Inventory. We look forward to bringing our worldwide logistics and warehousing solutions experience to this project and are confident we can help to make the Aero Inventory business a growing one once again."
Rebuilding Aero Inventory
DHL Supply Chain's solution to uncover, recover and consolidate inventory from places as diverse as El Salvador and China, plus the development of a proper ongoing sales channel, will enable KPMG to maximize the sales value of the inventory as well as give them the option of rebuilding Aero Inventory into a viable business.
To achieve this, DHL will create three gateways in Canada, Hong Kong and Japan to consolidate parts released from Aero Inventory worldwide and then ship them to Aero Inventory's single, global hub which DHL will run out of its Aerospace Hub - set up in 2007 - in Singapore to supply airline clients all over the world.
The solution, which will require the services of DHL's Global Forwarding and Express divisions as well, leverages the company's vast global network and experience, to withdraw all parts from customer locations worldwide - including Australia, Canada, China, Indonesia, Japan and the USA - and have them distributed out of a global hub in Singapore. Singapore was chosen as the location for the hub for better inventory management with key drivers for that decision being warehousing and freight costs, operational and sales strategies and access to major air routes.
DHL Supply Chain will maintain Aero Inventory's global hub; DHL Global Forwarding will ship the parts in through its various gateways and DHL Express will send many of the components via Express service to airline customers. The hub will start receiving inventory from January 2011 and sales will become operational in April. Under the deal, DHL aims to consolidate the entire inventory in Singapore by January 2012. This specialist aerospace facility will host one of the world's largest inventories of aircraft parts, capable of supporting the major aircraft fleets of many of the world's airlines and MROs.
Jim Tucker, joint administrator of Aero Inventory and restructuring partner at KPMG, said: "Signing the deal with DHL, one of the best known names in logistics, shows our commitment to re-launching Aero Inventory as a world leader in the sale of consumables and expendables (C&E) to the airline industry. Since our appointment as administrators in November 2009, we have been restructuring Aero Inventory to put it on a solid footing for the future. Reconciling the massive inventory spread across the world to the central hub in Singapore is the focus of the restructuring process and will give Aero Inventory's customers clear visibility of available stock and trace documentation."
Added Mitchell: "We had no reservations about rising to the challenge and taking up this project. Our dedicated DHL team has developed an excellent supply chain prototype, and this is a classic case of close internal collaboration between DHL's specialist business units where we have been able to leverage our expertise across DHL Supply Chain, DHL Global Forwarding and DHL Express."
KPMG are administrators for Aero Inventory, a company that up until November 2009 offered airlines and MROs such as Qantas, All Nippon Airways, Air Canada and Haeco, a unique service involving buying, storing, leasing and maintaining an inventory of various consumables and expendables for aircraft components such as airframe structures, engines, wheels, brakes, electronics and interiors. Aero Inventory purchased stocks of components from customer airlines and as part of a unique service offering in the industry, sold them back to the airline at the point in time when they were needed. The DHL solution enables KPMG to provide a valuable result to its stakeholders in creating an alternative to a "fire sale" that may have netted considerably less.