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CAVU Café: Royboy’s Prose & Cons

*Note: The views expressed in CAVU Café: Royboy’s Prose & Cons blog are those solely of the writer and are not necessarily shared by the Aviation Suppliers Association or the Association’s staff, members, or Board of Directors.

 

   About Roy Resto

 

THE USE OR MIS-USE OF CONDITION CODES FOR NEW, FACTORY NEW, OR NEW SURPLUS PARTS

According to the book “Slang: The Topical Dictionary of Americanisms” by Paul Dickson, during WW II the use of slang by American and Royal Air Force flyers got so deep, that the newspapers had to run occasional articles to point out that bombs were eggs, anti-aircraft balloons were pigs, student pilots were kiwis, etc. Unsurprisingly, Dickson points out that aviation contains a great deal of slang or jargon, and this extends to our colleagues who are directly involved in the vocation of sales or purchasing of aircraft parts.


For anyone involved in sales or purchasing, price is the primary behavioral motivator affecting nearly every action. Any factor that can enhance or detract from a stated price will be leveraged for negotiation. Such is the use of the terms “Factory New” and “New Surplus”. These describe the status of the part, and common condition codes are FN and NS respectively. We should share straight out that these two terms have no regulatory definitions.


Whenever I try to bring sense and order to an issue, I defer to Royboy’s Hierarchy of Aviation Definition Needs. In their order, these are:

  1. Defined by aviation regulation
  2. Defined by aviation standards such as Published Quality or Technical Standards
  3. De-facto use

By the way, after having completed my Military and Post Graduate studies, there was a time in my life when I thought that if I heard the term “Maslow’s Hierarchy of Needs” one more time, my body would engage in reverse peristalsis (Slang: puke, ralph, barf, up-chuck, hurl). Picture Royboy’s Hierarchy within a pyramid for flashbacks.


Having already established that FN and NS have no regulatory definition, is there anything reflected in published standards? Not really, but what’s out there? I’m a fan of the many definitions contained in the Air Transport Association’s Specification 106, commonly referred to as ATA Spec 106 titled “Sources and Approved Parts Qualifications Guidelines”. What are some of the relevant definitions contained there?


NEW: A product, assembly, accessory, component, part or material produced on conformity with approved data that is accompanied by a manufacturer’s material certification at the time of sale, and has no operating time or cycles


NEW-UNUSED (SURPLUS): A product, assembly, accessory, component, part or material produced on conformity with approved data which has been released as surplus by the military, manufacturer, owner-operator, repair facility etc., has no operating time or cycles, and may be accompanied by the manufacturer’s certification at the time of sale, and which is being sold by a person other than the original equipment manufacturer.


SURPLUS: Indicates a specified quantity of an item which is over and above that required to meet forecasted stock requirements in support of normal stock operations


Discussion of New Surplus: From the ATA language, we can make some reasonable statements regarding the characteristics of a NS part; they are:

  • The part is new: it has no operating time or cycles
  • The part is ‘surplus’ in the minds of the current owner of the part as defined above
  • Most importantly, that owner was someone who had the potential to use the part; to install it, such as an aircraft or engine manufacturer, airline, repair station, or military operator. This is the key differentiator.
For a moment, assume for this discussion that my use of the term ‘distributor’ means a distributor who does not have the potential to use or install the part as would an airline or repair station. Below is a chain of custody flow scenario to show what should be the part’s stated condition code:


New Part>Sold to a Distributor>Sold to another Distributor>The part is still represented as New


New Part>Sold to an Airline>Sold to a Distributor>The Part is now represented to the market as New Surplus (NS)


Discussion of Factory New (FN): Deferring to Royboy’s Hierarchy of Aviation Definition Needs, our discussion must reflect de-facto use, since there is no regulatory or aviation standard definition. FN has always inferred the ‘freshness’ of the part; in other words that it just came off the factory line with its birth documents. There is great variance in opinion as to how long this condition code should be carried. For example, a distributor receives a quantity of parts directly from the factory line, and some of them remain unsold on the shelf. Three years later a part sells; is it still ‘Factory New’?, How about two years later or one year later? For most people, saying a part is FN after it has sit on the shelf for three years probably crosses the line of credibility, and should be sold as New vs. Factory New. So what’s reasonable regarding the time line of how long to call it FN?


There is another widely observed de-facto practice we should perhaps borrow from to establish the line of credibility as to when to change a part’s condition code from FN to New. For parts with Airworthiness Tags, certain customers want the tags to be no older than 2 years. The often heard phrase, is to send the part back out to a service provider to have its tag ‘refreshed’ or to get a ‘fresh’ tag. If you apply this common threshold to FN parts, you could call it FN for up to 2 years from the date on its birth paperwork.


HIERARCHY OF SALES AND PURCHASING PRICING:


For devotees of Pyramidal Hierarchies, here’s another, the pricing hierarchy. I’m placing it here in this blog because some of you not involved in purchasing or sales may be wondering why are there such coded distinctions in the purchasing/sales community? The unique codes were created to reflect pricing strata. From highest to lowest, here is the hierarchy, Ceteris Paribus (all things being equal):

  • FN (Factory New)
  • New
  • Rebuilt
  • Overhauled
  • Repaired, Inspected, Modified/Altered (all 3 commonly referred to in the purchasing/sales community as ‘serviceable’)
  • Repairable
  • As-Removed
  • As-is

Reality Check: Note that I said Ceteris Paribus, all things being equal when referring to the pricing hierarchy. In reality, the market establishes price, and the market is pretty dynamic. Again, for the non-purchasing/sales community, the only purpose in inserting this information is to give some indication as to why there are so many condition distinctions; it’s strictly financial.


POTENTIAL ABUSES: With all this established, we have to spend a little time giving an overview of how some of these are routinely abused. In all fairness, some of these are intentional, and some are not; some result from greatly defended positions, you decide.

  • Parts are represented as ‘New’, but the trace or chain of custody of the part shows it should be ‘New Surplus’.
  • Parts are represented as FN, but have been on the shelf for an unreasonably long time; they should be sold as new.

Where money is involved, the temptation to engage in dodgy (English slang for ‘not to be trusted’) transactions will exist. On the other hand, in the absence of clearly defined terminology such as might exist in regulations, the potential for variation in parts representation is great.


I know many of you have opinions on these topics. Don’t hesitate to leave comments on the blog site!


Time to leave (Slang: Bug out, split, vamoose, peace out, hit the road, pull chocks, take off, skedaddle, beat it, bail, cut out, mosey, pack it in, scram, see a man about a dog )


Roy Resto is fully profiled on linked in at:


http://www.linkedin.com/in/royresto/

Posted By Roy Resto | 3/18/2013 10:34:16 AM
 

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