Can a $300 part be mission critical, to a billion-dollar business? Well, it is if it happens to be the last $300 part available and the one needed to get a Boeing 777 off the ground from Seattle to Dubai. I recently came across just this event in an article by Deena Kamel “Emirates says Flight was Delayed After Delta Withheld $300 Spare Part,” Bloomberg, last modified Feb 9, 2017, https://www.bloomberg.com/news/articles/2017-02-09/emirates-says-flight-was-delayed-as-delta-withheld-300-spare.
Shared Parts Amongst the Competition
The airline industry has an agreement amongst carriers that they will share parts if and when one is needed to support each other’s operations, as per article. Competition is a big part of the airline business, but the industry attempts to keep all planes in the air by sharing spare parts when one is needed.
But this system broke down for Emirates when they required a minor hydraulic component. They didn’t have one and the one provided them by Delta Air Lines was taken back after it was initially offered. It is unclear if the part was installed on the Emirates plane or just in the process to be installed. Delta’s reason for pulling the part back from their peer, “it was the last part of its kind in Delta inventory.” And Delta has a policy that maintains they must always have at least one part on hand per location at all times. So even though they had initially granted Emirates the part, it had to be pulled back just in case Delta had a failure of their own. This caused a six-plus hour delay for the Emirates flight, and led to some very unhappy Emirates’ passengers as their 14.5-hour flight just became 20+.
How Could this Have been Avoided?
A couple lessons come to mind as I ponder this story –
1. Have a Plan – Service is an unpredictable beast. As I think back to my days in warehouse management, even when we had more information than we thought we needed we often found ourselves at the mercy of the smallest hiccups which changed our day. This case is no different, a $300 part delaying a whole flight destined to travel across the world seems absurd. However, even though Emirates had a plan and a back-up to that plan, there was still a breakdown. Their plans and partners need to be tested and ready for changes in conditions. Understanding which parts are mission critical, which should be stocked for a rainy day, which partners have the surplus to support your equipment, and which partners can be relied upon is imperative. Forecasting service demand and having combined visibility into partner inventory will provide more than peace of mind – it will provide certain that issues can be resolved.
2. Know What’s in Inventory – Despite not being on the “losing end” of this story, Delta must also understand their vulnerability here. The service team on the ground in Seattle didn’t have visibility into the parts inventory and needed to be told by central headquarters that this particular part needed to be held on to. As soon as this part became the last part available under this number, notifications and triggers should have gone off to notify procurement to source more. This occurrence should have also been communicated to the Seattle team to let them know not to offer the part up in the first place. This lack of visibility and communication between top and front lines across the service chain resulted in more than just bad press; and all of it could have been avoided.
3. Parts Have an Impact on the Customer Experience – Parts often get a bad rap. Unless they are needed, they often are an afterthought. But as this example proves, one part can greatly impact a business and the travel plans of an entire plane. I don’t think consumers will research which airlines are using which parts management solutions as part of their selection criteria, as price and comfort will most likely reign for the time being. But if enough flights get grounded because the right part isn’t available at the time of need, customers will begin to equate the likelihood of having a great flight experience with the likelihood that ACME Airline has an efficient service supply chain.
This example of a failed service call highlights the impact of parts fill rates in relation to first time fix and resolution rates for organizations. We recently held a conversation between a few service executives and discussed some of their challenges in regard to parts management. Fill rates and their impact on SLAs and resolution was a particularly engaging portion of the call. For these organizations, the path to improving part fill rates organizations relied on enhanced parts planning, increased visibility across the entire service supply chain, and comprehensive performance management of partners. If Delta had visibility into their inventory or had communicated the process properly, they would have been able to decline the request from Emirates earlier on. Therefore, allowing Emirates to search for another partner avoiding the customer service and PR headaches of this delayed resolution. Both sides of this equation need to re-evaluate their operations and ensure a critical error like this is an anomaly.
Tell Your Service Parts Story
We plan on tackling more aspects of parts management throughout the year. If you are interested in joining our Parts research group, please follow this link.* We will launch the first TSC benchmark for the parts group in mid-March 2017. If you would like to participate please join the research group. If you just want to know what research projects we’re working on, come back for updates HERE.
(* Participation in research groups is reserved for practitioners only. Consultants and technology solution providers are not allowed to join and will be referred to other ways of getting involved.)