Southwest Airlines, the world's leading low fare, high frequency, point-to-point carrier, is also one of the most profitable, and it wants to stay that way. As the fleet and routes serviced by Southwest continue to grow, so has its supply chain, especially its spare parts and maintenance operations.
In June 2000, Southwest created its Next Generation Maintenance Automation Team to deliver a well planned, comprehensive maintenance and engineering solution that would provide operational improvements, significant cost savings and increased financial controls. To support the team's requirements, it selected i2 Technologies' Service and Parts Management to help manage the supply chain.
According to Southwest's manager of inventory control, Richard Zimmerman, there were three primary reasons i2 was selected. First, i2 has a good understanding and respect for Southwest's corporate culture and an exceptional understanding of what customer service means. "The people at i2 provided thoughtful, innovative and understandable solutions to complex supply-chain problems. The customer service we received and continue to receive from i2 is outstanding." Second, the products fit Southwest's vision of the business goals. The company was convinced that the i2 products selected would deliver results. Finally, i2 was flexible and willing to adapt the product to meet specific requirements. The solution did not require a transformation of Southwest's operations, but rather allowed the company to operate in a method that supported the internal customer while the solution supported how Southwest worked.
The company implemented the i2 Service and Parts Management solution in a phased approach.
Zimmerman says that the i2 team members were there every step of the way.
"They provided insightful advice as the software implementation moved forward and we developed new ways of managing our supply chain," he says. "The quality of on-site i2 consultants was world class. They quickly adapted to Southwest's unique culture and blended extraordinarily well with the project team. i2 became members of the Southwest Airlines family."
According to Zimmerman, i2's Service and Parts Management solution has allowed Southwest to significantly increase service levels, from 92 percent to in excess of 95 percent. Additionally, approximately $30m (15 percent) of excess inventory has been identified as a result of using the i2 tools. The company has saved well over $2m by changing its materials sourcing and procurement.