I N T E R A C T I V E S E S S I O N : O R G A N I Z AT I O N S
SOUTHWEST AIRLINES TAKES OFF WITH BETTER SUPPLY CHAIN MANAGEMENT
“Weather at our destination is 50 degrees with some broken clouds, but they’ll try to have them fixed before we arrive. Thank you, and remember, nobody loves you or your money more than Southwest Airlines.”
Crew humor at 30,000 feet? Must be Southwest Airlines. The company is the largest low-fare, highfrequency, point-to-point airline in the world, and largest overall measured by number of passengers per year. Founded in 1971 with four planes serving three cities, the company now operates over 500 aircraft in 68 cities, and has revenues of $10.1 billion. ...view middle of the document...
For Southwest, which prides itself on its excellent customer service, getting passengers from one location to another with minimal delay is critically important. Repairing aircraft quickly is an important part of accomplishing that goal. The company had $325 million in service parts inventory, so any solution that more efficiently handled that inventory and reduced aircraft groundings would have a strong impact on the airline’s bottom line. Richard Zimmerman, Southwest’s manager of inventory management, stated that “there’s a significant cost when we have to ground aircraft because we ran out of a part. The long-term, cost-effective way to solve
that problem was to increase productivity and to ensure that our maintenance crews were supported with the right spare parts, through the right software application.”
Southwest’s management started looking for a better inventory management solution, and a vendor that was capable of working within the airline’s unique corporate culture. After an extensive search, Southwest eventually chose i2 Technologies, a leading supply chain management software and services company that was recently purchased by JDA Software. Southwest implemented the i2 Demand Planner, i2 Service Parts Planner, and i2 Service Budget Optimizer to overhaul its supply chain management and improve data visibility. I2 Demand Planner improves Southwest’s forecasts for all of the part location combinations in its system, and provides better visibility into demand for each part. Planners are able to differentiate among individual parts based on criticality and other dimensions such as demand volume, demand variability, and dollar usage. I2 Service Parts Planner helps Southwest replenish its store of parts and ensures that “the right parts are in the right location
at the right time.“ The...