Supply chain coordination snags Airbus and Boeing

Although airlines in general are having a hard time turning a profit now, there remains brisk demand for new aircraft from Airbus and Boeing. (Possibly because new aircraft are more fuel efficient.)

With a full backlog and a price tag around $200 million per aircraft, these companies do not want to delay delivery of any new aircraft.  But apparently they have had to park nearly finished aircraft due to some missing parts. For example, Boeing couldn’t deliver several 777s to Emirates because they didn’t received customized galleys from Snell, a German producer. 

The problem is that Snell didn’t anticipate the increase in volume and consequently didn’t build enough capacity. This is a good example of how a supplier’s capacity decision can have significant financial consequences for a buyer.

Wall Street Journal, Aug 8, 2008 – Lack of Seats, Galleys Delays Boeing, Airbus

Improving a process – US Airways’ on-time performance

Believe it or not, US Airways is now a lot better with on-time performance, even better than all of the other airlines (and this is hard to believe if you live in Philly, one of their hubs).  Apparently they are doing this with some good old basic process improvement techniques. For example:

- They have created a “rallying cry” to emphasize the importance of on-time performance.
- They support their rallying cry with financial incentives when goals are met.
- They have installed electronic displays for the baggage handlers so that they can monitor flight status and prioritize effort. A good example of providing workers with the necessary information needed to achieve a goal.
- They have runners that move bags between connecting flights when necessary.  This can be controversial. On the one hand it creates another process, which adds to variability. On the other hand, it prioritizes service where most needed.
- Buffer times has been added to schedules. And instead of doing this haphazardly, they appear to be adding buffers where buffers are most needed – on routes that experience the most uncertainty. This makes for a more efficient use of buffers.

To summarize, they are applying behavioral techniques (goals, incentives) and process changes to demonstrate that good on-time performance can be achieved by anyone.

Wall Street Journal, July 22, 2008 – How US Airways Vaulted to First Place