shipping case study
What’s the case mainly about?
The case is mainly about how Cathay Pacific to manage aviation spare part and optimal its aviation spare part management process, so as to reduce the huge cost by on this. Cathay Pacific is one of the leading companies in the airline industry, however, it also suffer from the high cost in managing spare part inventory. Cathay Pacific was founded in 1946, which provide only a few route with a small passenger plane at that time. It is a company that is innovative on using new technology in doing business, such as introducing the flight simulator and computerised reservation system. Nowadays, the Cathay Pacific is one of the top airline companies in the world, with profit about US$523 million in 2006 and providing service over 43 destinations throughout the world. However, due to the characteristic of the industry, Cathay Pacific has a total inventory value of aviation spare parts amounted to US$350 million, and 3% of them are dead or inactive inventory. The result for this is due to the complicated aviation supply chain, high standard requirement for the parts, limited numbers of suppliers and highly unpredictable demand on the parts. The case will be about how Cathay Pacific manage its spare parts supply chain, from procurement, inventory management, repair management to logistic management in order to reduce the cost and maintain the efficiency. Question 1:
What are the supply chain management issues for spare parts operations that Robert and Paul need to consider for their recommendation proposal? The aim of the recommendation proposal is to optimize the supply chain management of spare parts operation, so, those considerations must be inside the supply chain management flow which is from procurement to inventory management, then pass to repair management and lastly logistics management. Consideration of supply chain management issues:
1) Procurement
Within the procurement process, Robert and
The case is mainly about how Cathay Pacific to manage aviation spare part and optimal its aviation spare part management process, so as to reduce the huge cost by on this. Cathay Pacific is one of the leading companies in the airline industry, however, it also suffer from the high cost in managing spare part inventory. Cathay Pacific was founded in 1946, which provide only a few route with a small passenger plane at that time. It is a company that is innovative on using new technology in doing business, such as introducing the flight simulator and computerised reservation system. Nowadays, the Cathay Pacific is one of the top airline companies in the world, with profit about US$523 million in 2006 and providing service over 43 destinations throughout the world. However, due to the characteristic of the industry, Cathay Pacific has a total inventory value of aviation spare parts amounted to US$350 million, and 3% of them are dead or inactive inventory. The result for this is due to the complicated aviation supply chain, high standard requirement for the parts, limited numbers of suppliers and highly unpredictable demand on the parts. The case will be about how Cathay Pacific manage its spare parts supply chain, from procurement, inventory management, repair management to logistic management in order to reduce the cost and maintain the efficiency. Question 1:
What are the supply chain management issues for spare parts operations that Robert and Paul need to consider for their recommendation proposal? The aim of the recommendation proposal is to optimize the supply chain management of spare parts operation, so, those considerations must be inside the supply chain management flow which is from procurement to inventory management, then pass to repair management and lastly logistics management. Consideration of supply chain management issues:
1) Procurement
Within the procurement process, Robert and