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American Airlines Supply Chain Key Parts Challenges Cathy Stukel MD Inventory Management & Distribution 1.

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Presentation on theme: "American Airlines Supply Chain Key Parts Challenges Cathy Stukel MD Inventory Management & Distribution 1."— Presentation transcript:

1 American Airlines Supply Chain Key Parts Challenges Cathy Stukel MD Inventory Management & Distribution 1

2 Broad Maintenance Network American Airlines 250 cities in 40 countries 1,900 daily departures 5 Fleets (Boeing MD80, B737, B757, B767, B777) 620 Aircraft Maintenance & Supply 198 supply warehouse locations 2 main supply bases (TUL, AFW), with 12 mini-warehouses 8 Class 1 warehouses (DFW, JFK, LGA, MIA, ORD, STL, LAX, SFO), 25 sub-locations 26 Class 2 warehouses Scheduled Maintenance – All stations: PS Checks – 40 stations: A Checks – 8 stations: engine replacements, interior checks, and B Checks – 2 maintenance bases (Tulsa, Alliance Ft. Worth): C Checks Unscheduled maintenance – Maintenance at the gate – Overnight maintenance of non-critical finds during the day 2

3 Parts Profile AA stocks over 295,000 unique part numbers ($1.6B investment) Not all part numbers are stocked at all locations – we manage over 550,000 station-part#s (active in last 3 years) We use almost 32 million parts in a typical 12 month period There are two very unique types of parts managed: 3 Parts Parts used Profile# of Unique% of AnnualPer Aircraft% of Inventory Part No.UsagePer dayInvestment Rotables6%1%167% Expendables94%99%14333%

4 Low, Sporadic Demand 4 Demand for most spare parts is low and highly sporadic Expendables: – Only 19% of part numbers have been used system-wide greater than 3 times during the proceeding 12 months – Only 2.3% are used consistently every month – 82% of airline parts-related delays and cancellations attributed to Expendable parts, are for parts with Zero prior usage at that station in the prior 12 months Similarly, 67% of Rotable parts have been used system-wide 3 or fewer times in the last 12 months Hits = # of times a part was issued to a mechanic (not the quantity issued)

5 Changes to Aircraft Routing Aircraft routing changes substantially, creating a short planning horizon at a specific aircraft/part level Supply Chain needs to know where a specific aircraft (tail #) with a specific part need will terminate for overnight maintenance in order to send parts – 60% of terminating locations change from previous day plan – 20-30% of plans still change after 7 pm the day of planned maintenance Aircraft are not currently routed/re-routed to locations based on part(s) availability as a standard practice so parts must be/or go-to where plane is, causing a high number of – Parts chasing planes – Unused part requests The above causes inventory to be more decentralized, more insurance parts to be carried and increases inventory costs 5

6 Supply Chain - Supplier Support Better alignment of Supplier Support with AA Supply Chain goals: Consistently provide the Right Part, at the Right Place, at Right Time, and at Right Price – Consistent Lead Time performance and reduced Lead Times where possible – Pricing and lead time data using industry databases (i.e. Aeroxchange, ATA Spec 2000) minimum on an annual basis – Provide continuing provisioning data Provide accurate and timely end-to-end visibility of part location and key status information to our customers (Mechanics) – Electronic Data Interchange – PO & RO order confirmation, shipment notification, supplier generated order changes Pro-actively manage exceptions impacting part availability – Electronic Data Interchange – promise date change notification – AOG PO support within 4 hrs 6

7 Americans Supply Chain Efforts In order to improve interactions with the supply base: Provide forecast information to suppliers who are EDI compliant Place electronic POs for aircraft parts Work toward part scanning – which may drive labeling requirements for the supply base Proactive invoice exception management 7

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