Cathay Pacific: Spare Parts Management Process
Cathay Pacific
They have one spare parts management process but it has some drawbacks and issues need to be addressed to refine the process and to increase its efficiency. First main point is that these aviation spare parts is very expensive and thus has very adverse effect on Cathay Pacific’s balance sheet. They have sufficient inventory of these spare parts but of which significant percentage of parts are dead and inactive stock. They can’t simply get rid of these parts because for aircraft safety certain parts are necessary and can be required at any time.
The usage pattern of these spare parts is highly unpredictable and thus, future demand forecasting is another challenge task for Cathay Pacific. Aviation spare parts are mainly divided into two categories Critical and non-critical. Critical spare parts market is mainly dominated by the OEM (Original Equipment Manufacturer) suppliers where as there are many suppliers for non-critical spare parts and the switching option is available. However, this switching option is not recommended as these switching costs are very high.
Cathay Pacific use IT system for spare parts management but they don’t have collaborative IT system which facilitates communication between Cathay Pacific and their suppliers.
Cathay Pacific Airline needs a procurement process improvement to ensure the proper availability of spare parts at the very right time and the place where the part is required.
Solutions:
Global sourcing. This means reducing the number of suppliers and the selection of suppliers which are spread across the world. The reduced number of suppliers and the sharing of IT systems will help to build the trust amongst them and to build the long term relationship. Cathay Pacific already has its hubs in different continents. Selecting the suppliers’ close to these hubs will be a good move in the process of amelioration of supply chain. This will help to reduce the links in the existing supply chain and to reduce the
They have one spare parts management process but it has some drawbacks and issues need to be addressed to refine the process and to increase its efficiency. First main point is that these aviation spare parts is very expensive and thus has very adverse effect on Cathay Pacific’s balance sheet. They have sufficient inventory of these spare parts but of which significant percentage of parts are dead and inactive stock. They can’t simply get rid of these parts because for aircraft safety certain parts are necessary and can be required at any time.
The usage pattern of these spare parts is highly unpredictable and thus, future demand forecasting is another challenge task for Cathay Pacific. Aviation spare parts are mainly divided into two categories Critical and non-critical. Critical spare parts market is mainly dominated by the OEM (Original Equipment Manufacturer) suppliers where as there are many suppliers for non-critical spare parts and the switching option is available. However, this switching option is not recommended as these switching costs are very high.
Cathay Pacific use IT system for spare parts management but they don’t have collaborative IT system which facilitates communication between Cathay Pacific and their suppliers.
Cathay Pacific Airline needs a procurement process improvement to ensure the proper availability of spare parts at the very right time and the place where the part is required.
Solutions:
Global sourcing. This means reducing the number of suppliers and the selection of suppliers which are spread across the world. The reduced number of suppliers and the sharing of IT systems will help to build the trust amongst them and to build the long term relationship. Cathay Pacific already has its hubs in different continents. Selecting the suppliers’ close to these hubs will be a good move in the process of amelioration of supply chain. This will help to reduce the links in the existing supply chain and to reduce the