Southwest Airline

Supply Chain Management

Requisites for providing excellent services
Excellent response Managing the supply
time & Minimum chain and inventory
delays efficiently

Reduced aircraft Increasing the

groundings productivity

Ensuring timely Information visibility

availability of parts among various
for maintenance departments
 Supply Chain Map
Information
Technology Supplier
I2 Technologies, Allegro

Catering &
Fuel Service Hygiene Suppliers
Fuel Suppliers
Company Travel
Red Rock
SkyTanking Agents
BioRefinery

Aircraft Supplier CUSTOMERS

Boeing ; Model 737-
700,800,MAX

Spare Parts Direct Sales

Local Inventory
Supplier
OEM & PMA firms Pays per usage model Long term lease for
for terminal aircraft maintenance
passenger airports centres

Ground Facilities
and Services
Route Structure
Southwest principally provides point-to-point service, rather than the “hub- and
spoke” service provided by most major U.S. airlines.

HUB & SPOKE MODEL:

 The hub-and-spoke system

concentrates most of an airline’s
operations at a limited number of
central hub cities.

 Other destinations in the system are

services by providing one-stop or
connecting service through the
hub.
Route Structure
POINT TO POINT MODEL:

 By not concentrating operations through one or more

central transfer points, point-to-point route structure
provides more direct nonstop routing.

 Approximately 77 percent of the Southwest’s

operations were non-stop during 2018.

 To complement this model, Southwest’s entire fleet is

composed of narrow bodied aircrafts with a
maximum seating capacity of 175.

 Southwest’s point-to-point service has also enabled it

to provide its markets with frequent, conveniently
timed flights and low fares.
Utilizing the Data and Insights
“What we want to be able to do is provide it whenever they want
it, whenever they need it, at the right cost point, and to meet their
needs”- CTO, Southwest airlines

• Enhancing the information system has helped the carrier from

a capacity management perspective, being able to get the right
capacity, with the right applications, at the right time.

• It has made their system more transparent to end-users, so

they also feel involved and a part of the system
Lean System in Place
• Customer Centric Approach
• Bags fly free- They do not charge for the 1-2 bags to avoid while the
competitors charge around 120$ for the same.
• Ticketless Travel- In order to avoid long queues they have come up with E-
Ticketing, web check in services.
• Eliminate waste in value system
• Reduction in the idle time at congested airports by faster turnaround
• All employees are committed towards ensuring timely take offs and landing.
• Smooth functioning of all the activities to avoid any form of rework
especially in reticketing or rescheduling.
• Provide affordable service without compromise in the quality
• It uses one type of aircraft –the Boeing 737 which is fuel efficient, that
reduces the variable maintenance cost.
• The airline does not serve meals on board and no luxury seats are offered
Southwest Cargo Companion
• Southwest Airlines Cargo has introduced Cargo Companion, is a
comprehensive asset tracking service.
• This provides Customers with 24/7 visibility regarding the location
and environmental status of high-value and time/temperature-
sensitive items shipped via Southwest Airlines Cargo.
• State-of-the-art wireless asset tracking devices that monitor the
location, shock, light, temperature, pressure, and humidity of cargo
during transit.
• Regular updates and alerts to customer through frequent email
notifications on the progress
Supply Chain & Inventory Management Solution

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.
 It helps Southwest replenish its store of parts and
ensures that "the right parts are in the right location
at the right time.“

The software can recommend the best mix of parts

for each location that will satisfy the customer
service requirements of that location at the lowest
I2 Service cost.

Parts Planner If excess inventory builds up in certain service

locations, the software will recommend the most
cost-efficient way to transfer that excess inventory to
locations with parts deficits.
By using what-if analysis, planners can quantify the
cost to the company of operating at different levels
of service
 i2 Demand Planner helps improve 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.

The i2 Southwest can recognize demand shortages before they

become problems, thanks to the visibility provided by
Advantage i2's solutions
I2 Service Budget Optimizer helps Southwest use its
historical data of parts usage to generate forecasts of
future parts usage.
These solutions gather data from Southwest's legacy
systems and provide useful information to Southwest's
managers
 Benefits since implementation

01 02 03 04
Increased availability Increased speed and Reduced parts Increased service
of parts intelligence of inventory by 15 levels from 92
decision making percent, saving the percent earlier to 95
company over $30 percent afterwards
million,
 Reduce
• Which factors should be reduced well

Four Action below industry’s standards?-Lounges,

Meals, Prices

Framework Eliminate
• Which of the factors that the industry take
for granted should be eliminated? -Hub
Connectivity, Seating class choices

Raise
• Which factors should be raised well above
industry standards? -Speed, Friendly
service

Create
• Which factors should be created that the
industry has never offered? -Frequent
Point to Point to departures
THANK YOU!!