Derco Aerospace, Inc.

As Milwaukee-based Derco Aerospace, Inc. approaches its 30th year within the industry, the aircraft supply chain company’s business model continues to develop. The logistics and solutions provider is a subsidiary of Sikorsky Aircraft Corp., which is owned by United Technologies Corp. of Hartford, Conn.

With one of the largest aircraft spares and component inventories in the world, Derco supports military and commercial fleets in 66 countries. The company cultivates relationships with OEMs and leverages these established networks, performance-based logistics concepts and flexible fleet sustainment solutions to provide its customers with reliability and efficiency.

Mark Hoehnen was appointed president of Derco in January 2008, after spending more than 20 years with Derco and Sikorsky Aircraft Corp.

Hoehnen spoke with U.S. Business Review about the changing aviation market, the advantage of being a large corporation and Sikorsky’s desire to foster improvement throughout all aspects of its operations.

U.S. Business Review: Can you tell me about your company’s recent history?

Mark Hoehnen: Our business model has evolved over time, especially after we were purchased by Sikorsky Aircraft Corp. six years ago. It has become more sophisticated and more robust. Derco started as a transactional business; counting on making a profit with every piece part we sold. We realized we needed to capitalize on our talent and develop fleet sustainment capabilities such as engineering, upgrades and modifications. More recently, we have been driving toward performance based logistics concepts, which provide our customers increased availability and agreed upon metrics including fill rates and turn-around times. Also, we’ve established more long-term agreements with other suppliers and OEMs, which reduces costs.

USBR: How is the market changing?

MH: The industry trend is going more toward availability-based programs, like power-by-the-hour, where fleet operators rely on availability at a set rate.

ACE, our operating system, is a very user-friendly tool, similar to Six Sigma but more practically applied. Using ACE, we can analyze our current processes and look for improvements. These process improvements have given us the ability to win and maintain larger customer contracts such as the CC130 Hercules Primary Air Vehicle  Optimized Weapons Systems Management contract in Canada lead by a team called Herc Solutions, which includes material support by Derco.

The Canadian Government needed to increase availability of their CC130 fleet. Herc Solutions has worked together to increase aircraft availability through process improvements. ACE is our company-wide strategy. 

It is our approach to relentlessly improve the value we deliver to our customers and investors through ACE tools. ACE focuses on the drivers of customer and investor value: our processes and the people who run them.

The marketplace is heading toward these solutions. Since we support 66 countries, we have the data and experience to reduce risk and cost.

Derco drives down the amount of inventory in a customer’s supply chain. The more consumption data we receive from our customers, the more we can integrate with changing technical events.

This encompasses a lot of the value that Derco delivers to the market, such as adept forecasting, historical consumption, and integration of technical changes occurring in fleets.

USBR: What sets Derco apart?

MH: We have very good relationships with OEMs. Derco is an integrator – we make it easy for our customers to simplify their supply chain needs.

USBR: Describe your key strengths in the industry.

MH: There are companies similar to us supporting the military, but we’re the largest commercial supplier. We find that volume allows us to drive down costs.

It’s a cycle – the more customers you serve, predictability gets better, and more OEMs can rely on us buying on a predictable basis, which relates back to the customer in cost savings.

USBR: What is your corporate culture like?

MH: Derco is focused on continuous improvement. We have an employee scholar program, which encourages employees to foster individual growth. In addition, we value diversity – our customer base is so wide-ranging it is imperative our employee population reflects the customer-base we support. We expect world-class results; we treat the businesses we work with, as well as our employees, as partners.

USBR: What is your vision of the future?

MH: In the military aftermarket, there are fractionalized, small players. The industry is likely to see periods of acquisitions; in fact, Derco has proposed acquisitions to support additional customer needs and aircraft platforms.

Corporate Head Office

Transportation and Logistics International

Cringleford Business Centre
Intwood Road
Cringleford, Norwich, UK

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North American Office

Transportation and Logistics International

Finelight Media
207 E. Ohio Street Suite 351
Chicago, IL 60611

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