Spare Part Supply Chain: The Case of Airlines: Utdallas - Edu/ Metin
Spare Part Supply Chain: The Case of Airlines: Utdallas - Edu/ Metin
1
utdallas.edu/~metin
CP
CP is a Hong Kong based airline
Established in 1946 to fly between HK, Australia, Southeast Asia. Introduced online
reservation system
Operational:
CP worldwide staff 18528; HK staff 20,050
Serves 119 destinations in 38 countries in 2009
Length of scheduled route network 481,000 km
Number of passengers 24,558,000
Financial
Revenue $8,631 M; Profit 605 M in 2009
3rd most profitable airline in the world
Major shareholders
42% Swire Pacific Limited
30% Air China Limited
3% CITIC Pacific
Alliance
Founding member of OneWorld: American Airlines, British Airways, Cathay Pacific, Iberia, Finnair,
Japan Airlines, LAN (Latin American), Mexicana, Malv Hungarian Airlines, Qantas and Royal Jordanian.
utdallas.edu/~metin
2
Fleet to Maintain
utdallas.edu/~metin
3
Spare Part Classes
Rotable, engine
Expendable
Integral (close fit, extensive contact),
dowel, sleeve
Non-integral (loose fit, limited
contact), spring, bulb
Consumable, fabrics
utdallas.edu/~metin
6
What are challenges?
utdallas.edu/~metin
7
How to handle shortages at CP?
Expensive AOG (Aircraft on Ground) order
Locating and securing part
Parts are similar; part databases have duplications
utdallas.edu/~metin
8
Aeorxchange.com:
Aviation (parts) supply chain solution
AeroBuy: catalog-based procurement system that facilitates optimum value in the
supply chain by connecting buyers and sellers.
Portal for acquisition of technical parts from OEMs, surplus suppliers, distributors, airline surplus inventory.
Search supplier database, view results or pedigree documents and create Request for Quotes (RFQs).
For normal provisioning.
AeroAOG: solution for managing AOG situations
An airline's loan/borrow/exchange business
Over 3.6 million unique part numbers stocked at 700+ global stations.
For special provisioning.
AeroRepair: manages the repair order lifecycle.
Search repair capabilities from hundreds of providers by specific location or region.
Monitor order status, TAT (turnaround time) performance and track delays with exception reporting and
status updates.
For normal/special provisioning.
AeroComponent: manages component support contracts for rotable parts where fees
are based on flight hours and cycles.
Manages the entire transaction process from part request to serviceable replacement.
Tracks actual contract performance levels against targeted service levels.
utdallas.edu/~metin
9
Outsource procurement of which parts?
utdallas.edu/~metin
10
Why to use a third party logistics company?
utdallas.edu/~metin
11
Policies of Southwest Airlines (SWA)
utdallas.edu/~metin
12
SWA Policies
It has been observed that spares were bought from other airlines often
at exorbitant rates. In other words, the airline that ships the part
charges a very high price for the part.
Most of the spare parts shipped from suppliers are shipped by either
FedEx, UPS or third party logistics providers.
For spare parts to be shipped to other facilities, use of a third party can
be a costly proposition as the airline can more or less ship it for
free, unless it is a hazardous material.
utdallas.edu/~metin
13
Baggage Handling System Service
Contractors can Benefit
Several gates at an airport are served by a single baggage handling
carousel. Carousel is a part of the baggage handling system
(BHS) and it is visible to passengers. If it fails, gates cannot
be served and aircraft will be grounded.
A BHS has belts, conveyors, rotating parts, an engine, etc.
utdallas.edu/~metin
15
Who else
can benefit?
utdallas.edu/~metin
16