0900-0930 DL Outsourcing Strategies
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Transcript of 0900-0930 DL Outsourcing Strategies
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Harry Chowbey,Managing Director, Supplier Operations and Cabin Mtc.
Outsourcing Strategy:The Right Formula for Success
October 20, 2011
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1Table of Contents
Delta Air Lines
Delta Air Lines 2
Strategy 5
Footprint 10
Key Metrics 15
Performance 20
Strategy Footprint Key Metrics Performance Questions
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2Overview Delta Air Lines employs 80,000 employees
worldwide Serves more than 160 million customers each
year Has a world-class airline loyalty program;
award-winning BusinessElite service; and more than 50 Delta Sky Clubs in airports worldwide
Named Most Admired Airline Worldwide
Delta Air Lines Strategy Footprint Key Metrics Performance Questions
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3Delta TechOps Delta TechOps is the largest airline MRO
in North America and the third largest worldwide
Is one of the most experienced MROproviders in the world with more than 70 years of aviation expertise
Employs more than 9,600 maintenance professionals
Provides full-service maintenance to Deltas fleet of more than 750 aircraft
Serves more than 150 aviation and airline customers from around the world, specializing in high-skill work such as engines, components, airframe and line maintenance
Delta Air Lines Strategy Footprint Key Metrics Performance Questions
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4Supplier Operations
Delta Air Lines
Supplier Operations has four main groups: Airframe, Engines, Components, & CabinMaintenance
It is the branch of Delta TechOps responsible for outsourcing maintenance to over 35 locationsaround the globe
Core values are governed by safety, quality, turnaround time, reliability and cost
Airframe
Engines
Components
Cabin
Strategy Footprint Key Metrics Performance Questions
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5Why Outsource?
Background Strategy Footprint Key Metrics Performance
An outsourced supplier is an extension of your company.Outsourcing is about partnering, not contracting!
Question you should ask: Can someone else do it better, faster and cheaper; safely?
Expectations from outsourcing: Quality Reliability Timeliness Cost savings Strategic benefits
Questions
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6Organize the Idea & Assess the Benefits
Background Strategy Footprint Key Metrics Performance
What are you trying to accomplish? Is your organization struggling in a
particular area? Are there leaders in the area who
can do the job better, faster, cheaper?
Are they your competitors? Can you create a partnership that
would be mutually beneficial?
Questions
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7Develop a Plan & Framework
Background Strategy Footprint Key Metrics Performance
Design a plan that is quantifiable and measurable
Know the goal and have a firm expected end-result
The plan is your blueprint for success
Design a reliable system for tracking: Quality Cost Reliability Performance
Questions
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8Gather the Right Information
Background Strategy Footprint Key Metrics Performance
Learn who the key players are Familiarize yourself with your
potential partners business and understand their: Safety record Reputation Strengths and weaknesses Work ethic Limitations Current customers Performance metrics
Do your homework before creating a partnership
Not every supplier can be the right partner
Questions
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9Choose the Right Partner
Background Strategy Footprint Key Metrics Performance
The right partner takes on a vested interest in your success and understands: Your business Your values Your needs Your expectations
Becomes an enabler to make success happen
Completes the work safely, better, faster and cheaper than you can
Questions
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10
Global Presence
AirframeAero Mexico Guadalajara MD88 HMVHAECO Hong Kong B767 HMV, B747 checksSASCO - Singapore A330, B747 checksAMECO Beijing China 747-Checks / Lie-Flat SeatsEGAT Taipei, Taiwan B777 PSVs / Lie-Flat SeatsSan Antonio Aerospace San Antino - B757 HMV & checksMobile Aerospace - Mobile, AL A319/A320 checksAAR Indianapolis, IN 737, MD90 HMVAAR Miami, FL MD90 PTSTIMCO Greensboro, NC - ModsLeading Edge Victorville, CA PaintLeading Edge Greenville, MS PaintEvergreen Mesa, AZ - StorageSCA Victorville, CA Storage
EnginesPratt & Whitney Cardiff, Wales GE90Pratt & Whitney (ESA) - Singapore PW4168Pratt & Whitney Christchurch, New Zealand V2500Pacific Gas Turbine Corp (PGTC) San Diego, CA JT8DIsraeli Aerospace Industries (IAI) Tel Aviv JT8D SNECMA France, Mexico & Montreal CFM56-5Rolls Royce (TAESL) Dallas, TX Trent 895Evergreen (EGAT) Taipei, Taiwan CF6-B8F, V2500MTU Hanover, Germany V2500
ComponentsNordam Singapore Thrust Reversers Triumph Airborne Structures - Hot Springs, AR - Thrust ReversersNordam USA Tulsa, OK Thrust ReversersHoneywell and Triumph both in Phoenix, AZ - APUsHoneywell Memphis, TN Wheels & BrakesMessier-Bugatti Walton, KY Wheels & BrakesMeggitt ABS Akron, OH Wheels & BrakesAAR - Miami, FL Landing GearGoodrich, Troy OH Wheels & BrakesUltimate Aircraft Composites Miami, FL - Thrust ReversersMichelin Kansas City, MO Tires GoodYear Stockbridge, GA TiresBridgestone Mayodan, NC TiresWeber Aircraft Atlanta, GA SeatsFlight Line Products Valencia CA Interior Products
Outsourced Maintenance to over 35 Locations 12 Cabin Maintenance Stations
Delta Air Lines Strategy Footprint Key Metrics Performance Questions
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11
Outsourced Airframe Maintenance
Delta Air Lines Strategy Footprint Key Metrics Performance Questions
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12
Outsourced Engine Maintenance
V2500 - MD90 CF6-80C2B8F - B767-400 Trent 895 B777ER
GE-90 B777LR PW4168 A330CFM-56-5A A319/320
Delta Air Lines Strategy Footprint Key Metrics Performance Questions
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13
Outsourced Component Maintenance
Thrust Reversers
Landing Gear
APUs
Delta Air Lines Strategy Footprint Key Metrics Performance
Wheels and Brakes
Questions
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14
Cabin Maintenance
Delta Air Lines Strategy Footprint Key Metrics Performance Questions
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15
Maintenance Cancellations
Maintenance D0 Rate
MEL Count
Aircraft Out of Service
Operational Difficulty Index
Avoid Aircraft Damages
Eliminate on the job injuries
Produce an excellent product
Dependable product
No days out of service
No Air Turn-backs or
Diversions
Deliver on-time every time
In 2010 completed 392
Airframe maintenance visits
and completed 103 Engine
maintenance visits with 100%
on-time delivery
Always on plan or below
Manage yearly budget of
$780M
Created E-cost program which
provided real-time expense
management
Saved over $100M year to
date
Key Metrics
Delta Air Lines
SAFETY & QUALITY RELIABILITY
TURNAROUND TIME COST
PERFORMANCE
Strategy Footprint Key Metrics Performance Questions
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16
Quality Ensure all suppliers are in compliance with
OEM, Federal Regulations, and Deltas MM, ADs, SBs, and EOs
Monitor aircraft open-up initial inspection for defects and appropriate corrective action
Emphasize quality and safety at all MROs thru leadership discussions and process improvement:
Daily Safety Inspections Safety Stand-Downs as necessary Include quality discussion at all
Quarterly Business Reviews (QBRs) Track suppliers for product quality through
core reports and metrics structure Lead all safety-related investigations
Background Strategy Footprint Key Metrics Performance Questions
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17
Reliability Ensure all Delta assets leaving MROs
meet or exceed contractual requirements
Engine log page reviews for 30 days after installation
Measure airframe metrics for a 21-day period after check completion and track:
Operational Difficulty Index (ODI) Technical Dispatch Rate (TDR) Pilot Write-Ups (PIREPS)
Review unscheduled engine removals (UER) for root cause and drive back to the suppler if applicable
Facilitate Quarterly Business Reviews (QBRs)
Background Strategy Footprint Key Metrics Performance Questions
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18
Turn-Around-Time Monitor, track and hold MROs
accountable to contractual performance Hold daily discussions with on-site
management teams from tag-on to tag-off dates
Establish early detection of potential schedule slippage allowing for corrective actions
Provide MRO with feedback regarding turn-time performance and identify improvement opportunities
Single point-of-contact for supplier engine program
Coordinate airline required technical training at supplier locations
Background Strategy Footprint Key Metrics Performance Questions
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19
Cost Hold weekly meetings with site teams
to discuss costs vs. plan Invoice Reconciliation performed by
Site Managers via e-Cost Technology Invoices reviewed by Director and
General Managers for over & above expenses
Discussions with MRO as necessary over disputed items
Identify cost pressures, opportunities, and develop initiatives to ensure plan is met
Business Performance Group supporting operations staff with tools to help track their businesses
Background Strategy Footprint Key Metrics Performance Questions
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20
Utilize the 5 is for SuccessBackground Strategy Footprint Key Metrics Performance Questions
1. information
2. initiative
3. intelligence
4. intuition
5. insistence
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21
Process Mapping
Background Strategy Footprint Key Metrics Performance
Be sure to have a road map to guide you for whats ahead:
Follow-up, Follow-up, Follow-up On-site Management Safety Tracking Quality Oversight Timeline / Critical Path Take Initiative Effective communication and
follow-through
Questions
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22
On-Site Management Properly staff the operation to
provide oversight at the supplier site Maintain the appropriate level of
communication with external partners
On-site managers are assigned to each MRO facility
Site and Project Managers possess extensive experience on aircraft type being serviced at MRO
All are A&P licensed and have received appropriate level of DAL training
Site Managers assume business manager function for their locations
Background Strategy Footprint Key Metrics Performance Questions
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23
Remote Management
Include General Managers for Airframe, Engines, and Components
Business Performance Group works closely with staff on key metric measurement
Regular site visits to all MROs Periodic requested MRO
management visits to Atlanta Daily morning conference calls with
Airframe/QA on-site teams Quarterly Business Reviews (QBRs) G10 Summits Daily interface with DAL functions to
ensure efficient outsourcing
Background Strategy Footprint Key Metrics Performance Questions
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24
Measuring Airframe Production
Background Strategy Footprint Key Metrics Performance
TOTAL
0
200
400
600
800
1,000
1,200
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Supplier #1
050
100150200250300350400450
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Supplier #2
0
50
100
150
200
250
300
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Supplier #3
0
20
40
60
80
100
120
140
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
NOTE: Production figures EXCLUDE drop-in activity.CHART LEGEND
PlanActual
Questions
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25
Measuring Airframe Performance
Background Strategy Footprint Key Metrics Performance
QualityCAT-1 Aircraft Damage Incidents
2010 YTD August
PerformanceOut of Service vs. Plan
2010 YTD August
ReliabilityODIs
2010 YTD August
CostInvoice Variance to Plan
2010 YTD(B)/W
($1,800)($1,600)($1,400)($1,200)($1,000)
($800)($600)($400)($200)
$0$200
Supplier#1
Supplier#2
Supplier#3
Supplier#4
Supplier#5
Supplier#6
Supplier#7
0
1
2
3
4
5
Supplier#1
Supplier#2
Supplier#3
Supplier#4
Supplier#5
Supplier#6
Supplier#7
0
1
2
3
4
5
Supplier#1
Supplier#2
Supplier#3
Supplier#4
Supplier#5
Supplier#6
Supplier#7
-7.7 -4.1 -2.7
3.612.1 16.8
125.5
(20)0
20
40
60
80
100
120
140
Supplier#1
Supplier#2
Supplier#3
Supplier#4
Supplier#5
Supplier#6
Supplier#7
D
a
y
s
Questions
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26
Measuring Components Reliability
Background Strategy Footprint Key Metrics Performance
R
e
l
i
a
b
i
l
i
t
y
-
A
P
U
A
v
e
r
a
g
e
M
T
B
F
B
r
a
k
e
s
L
a
n
d
i
n
g
s
p
e
r
O
v
e
r
h
a
u
l
T
h
r
u
s
t
R
e
v
e
r
s
e
r
s
L
o
g
I
t
e
m
R
a
t
e
03,0006,0009,000
12,00015,00018,000
M
D
-
8
8
B
7
6
7
-
4
0
0
B
7
7
7
M
D
-
9
0
B
7
5
7
A
3
1
9
/
A
3
2
0
A
3
2
0
A
3
3
0
D
C
9
7
4
7
-
4
0
0
H
o
u
r
s
Actual MTBF Goal
0500
1,0001,5002,0002,5003,000
B
7
3
7
-
7
0
0
B
7
3
7
-
8
0
0
B
7
5
7
B
7
6
7
-
3
0
0
B
7
6
7
-
3
0
0
E
R
B
7
6
7
-
4
0
0
E
R
B
7
7
7
7
7
7
L
R
M
D
8
8
M
D
9
0
L
a
n
d
i
n
g
s
p
e
r
O
/
H
Actual Goal
0.03
0.11
0.05
0.00 0.00 0.00
0.03
0.00
0.02
0.04
0.06
0.08
0.10
0.12
M
a
r
-
1
0
A
p
r
-
1
0
M
a
y
-
1
0
J
u
n
-
1
0
J
u
l
-
1
0
A
u
g
-
1
0
S
e
p
-
1
0
Log Item Rate Goal is < .1
Questions