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Project Zeus
| 18 November 2010 | Page 1
The History
Accenture 2003
Project Challenge
A TUI Group initiated review of group airlines maintenance
organisations
• Objective: To identify opportunities with cost savings potential
• Findings – 4 options to pursue
Outsource all E & M group requirements to a strategic partner
Local re-engineering and the implementation of a single
Engineering IT system
(GEMS = group engineering & maintenance system)
Single MRO
Competency centres
• Scenarios evaluated and presented to the TUI board – decision: -
Further investigate „outsourcing all of E&M‟ and „local re-
engineering, including GEMS
Abandon „single MRO‟ and „competency centres‟
| 18 November 2010 | Page 2
Project Zeus
Purpose
• Conducted a review of E&M Supply Chain to optimise it‟s performance and to
position it for the future
• Provided an input to the two remaining options under Project Challenge,
i.e. ‘outsourcing all of E& M’ and ‘local re-engineering’
Scope
• Thomsonflys‟ Engineering and Maintenance Supply Chain (E & M SC)
• Reviewed structure, skills, processes, systems and stock levels
Phase I (August 2004 – October 2004)
• Identified key tactical business, process and data improvements
• Proposed strategic improvements, ensuring alignment with
Opportunities offered within the TUI Group
Project Challenge
Project LOLA
„C Check Escalation‟
„A Check Optimisation‟
| 18 November 2010 | Page 3
Project Zeus - Phase I (Q3 2004)
Delivered as agreed in project terms of reference
• Documented Findings
• Tactical Actions Outlined
Improving inventory Accuracy
Optimising inventory levels
• Strategic Improvements Outlined
Organisation Structure & Roles
Skills & Experience
KPIs & Accountability
Process Redesign & Implementation
Deliverable incremental to the project terms of reference
• Cost/Benefit Analysis Model and Template for all Supply Chain initiatives
Feeding into the ‘local re-engineering’ option of Project Challenge
| 18 November 2010 | Page 4
E&M Supply Chain – “The story so far”
Focus of the last 3 years
Consistently reducing the cost base whilst maintaining an
adequate level of service for an expanding business model.
Delivering in excess of £8.5m pa business benefits through: -
Reduced Headcount by 40% over a period of 18 months, to end 2003,
reducing the cost base by over £350k pa
Rationalised inventory holding achieving in excess of £6m benefits
Increased revenue contribution by winning profitable business, in excess
of £1m pa
Delivered bottom line benefits in excess of £1m pa through improved
contract coverage and improved sourcing strategy
Strategically outsourced non-core services delivering in excess of £250k
pa
| 18 November 2010 | Page 5
E&M Supply Chain – “The way forward”
A supply chain function that operates pro-actively, effectively
and efficiently in delivering „bottom line‟ business benefits
and an excellent service to BAL, TUI and it‟s customers.
This will include: -
• The design and implementation of an organisational model that
Is composed primarily of „knowledge workers‟
Ensures clarity of roles and responsibility
Enables full accountability
• Enables the outsourcing of all „low skills-based‟ areas
• Embedding a culture that encourages teamwork, initiative and a
„can-do‟ attitude
• Processes that are simple, auditable, measurable and
streamlined
| 18 November 2010 | Page 6
Key findings addressed
Inventory data is consistently inaccurate
Inventory levels are in excess of business need
Insufficient contracts and framework agreements in place
No consolidated/comprehensive view of procurement and
invoice settlement activity
No active supplier management
Unable to assess profitability of services sold to
customers - poor data quality and quantity
People – skills less than needed, performance less than
acceptable
| 18 November 2010 | Page 7
Inventory data that was consistently
inaccurate
Scale of the inaccuracy is hidden by the
• Reporting format
• Process halting when the report is delivered?
Perpetual stock checks are used solely to correct
financial records
• NO root cause analysis
• NO corrective actions
Cause of inaccuracies extend beyond the span of
control of the Supply Chain team
• NO clear mechanism to ensure compliance to record-
keeping from the Engineering community
| 18 November 2010 | Page 8
Inventory levels that were in excess of
business need
Accountability and ownership unclear
Inaccuracies are corrected manually rather than
systemically
Processes and actions for materials forecasting &
planning and the setting of replenishment levels are ad-
hoc rather than methodical
No clear and agreed process/procedure to address old
„removed‟ parts, „resulting in an accumulation of
redundant/obsolete inventory
No clear and agreed process/procedure to dispose of
redundant/obsolete stock
| 18 November 2010 | Page 9
Insufficient contracts and framework
agreements being in place
Low contract coverage for procured services
No contract or framework agreement coverage for airline
approved parts
The process for requesting contracts award is ad-hoc and
initiated on an „as requested‟ basis – no contracting
strategy or formalised, methodical process
Resources and skills are not in place to pro-actively
manage negotiation, tender activity and contracts, resulting
in business exposure from „unqualified‟ staff entering into
negotiation and supplier selection
Key contract information not readily available for repair
activity
| 18 November 2010 | Page 10
Absence of consolidated/comprehensive
view of procurement and invoice settlement
activity
Procurement carried out using
• IES (Integrated Engineering System) for Airline Approved Parts
• Oracle iProcurement – for commercial parts and general
purchasing
• Services – non-PO invoices processed via Oracle
No single view of purchasing commitments related to
Engineer & Maintenance activities
Disjointed processes and systems, resulting in data
inaccuracies and significant issues in reconciliation
IES has been designed primarily from an „engineering‟
perspective and does not lend itself to enabling pro-active
analysis, planning and management of procurement
activity
| 18 November 2010 | Page 11
No active supplier management
Supplier performance
• No monitoring or reporting
• No evaluation meetings
• No formalised feedback mechanisms
• No formalised mechanisms for sharing plans and projections
No strategic sourcing strategies
No commodity strategies
No visible market data analysis
| 18 November 2010 | Page 12
Inability to assess profitability of
services sold to customers - poor data
quality and quantity
Unreliable recording of man-hours
Misunderstanding/misinterpretation of available man-hour
data
All required data not available
Disjointed processes and systems between engineering,
contracts and sales
Capacity planning information not readily available
Resulting in
• Difficulties in charging correct amounts to customer
• Difficulties in assessing potential profitability
• Difficulties in assessing actual profitability
| 18 November 2010 | Page 13
People – skills less than needed,
performance less than acceptable
Organisation structure and boundaries are not conducive to team
work
Process are broken and disjointed across the organisation
Skills level is not sufficient for an effective supply chain
management group
Resources mix inappropriate
On-going headcount reductions and business uncertainty for
Thomsonfly as a whole has dampened motivation and developed
a culture where „job security‟ is sometimes managed by
protecting job content knowledge
Morale and motivation too low for the productivity and
performance required going forward
Environment not conducive to exhibiting initiative or gaining
recognition for any significant contribution
„Silo mentality‟ - very little „periphery‟ vision
| 18 November 2010 | Page 14
Implemented a Tactical Action
Improving Inventory Accuracy
Luton Main Stores (highest occurrence of inaccuracies)
• „Root Cause Analysis‟ to be initiated immediately
• Corrective actions, including any process changes, to be applied
to all relevant stock locations
3rd-Party Agencies
• Root Cause Analysis‟ to be initiated immediately
• Corrective actions, including any process changes, to be
implemented
Perpetual Stock Check (PSC) Process
• Immediate redesign of reports to accurately reflect scale of
discrepancies
• Redesign process
To capture, where possible, „cause and effect‟ information
To complete only when corrective and preventative action has
| 18 November 2010 | Pagebeen implemented for each cause
15
Organisation Structure & Roles
Supply Chain
Manager
Commodity Contracts Management Services Management
Management Group Leader Group Leader
Group Leader Contracts Specialists Services Specialists Revenue Specialists
Commodity Specialists
Engine & APU
Landing gears,
pneumatics & hydraulics
Navigation Controls
KPI
Flight & Environmental
Control
s
Interiors
Structures & Tooling
Consumables
(Discrete)
Consumables
(Volume Based)
KPI
Non-Approved s
| 18 November 2010 | Page 16
Role & Responsibility KPIs & Accountability
Commodity Specialists
• Materials Planning • Minimise stock excess
• Commodity strategies – stock levels vs.
• Stock level Skills & Experience usage
• Stock accuracy • Aviation Engineering & • Minimise stock
• Procurement Maintenance supply- shortages (AOG &
• Supplier Performance base knowledge Loans data)
Management • Procurement and/or • Minimisation of Loans-
• Supply-base analysis Materials planning In
• Contracting requirements experience • Revenue from Loans-
• Contract management • Degree/Diploma plus 5 Out & Sales
• Teamwork with years • Savings – Cost
o Contracts Specialists • Commercially astute optimisation
o Outsource Specialists • Strong inter-personal • Supplier Scorecards
o Revenue Specialists • Strong communication (quality of supplier
• Liaison with engineering (written & verbal) performance)
community for materials needs • Highly analytical • Internal Customer
for all maintenance and repair • Team player Satisfaction
activity • Performance against
• Management of loans contracts
• Repair and warranty
management
• Management reporting
| 18 November 2010 | Page 17
Commodity Specialists
Closed-loop Performance Improvement
Role & Responsibility
• Materials Planning
• Commodity strategies
• Stock level
• Stock accuracy
• Procurement
• Supplier Performance Management
Capability • Supply-base analysis
Performance
Required • Contracting requirements in Role
• Contract management
• Teamwork with
o Contracts Specialists
o Outsource Specialists
o Revenue Specialists
• Liaison with engineering community for materials needs for all
maintenance and repair activity
• Management of loans
• Repair and warranty management
• Management reporting
KPIs & Accountability
Skills & Experience • Minimise stock excess – stock levels vs. usage
• Minimise stock shortages (AOG & Loans data)
• Aviation Engineering & Maintenance supply-base •
knowledge
Development Minimisation of Loans-In
• Revenue from Loans-Out & Sales
• Procurement and/or Materials planning experience Plan • Savings – Cost optimisation
• Degree/Diploma plus 5 years • Supplier Scorecards (quality of supplier
• Commercially astute performance)
• Strong inter-personal • Internal Customer Satisfaction
• Strong communication (written & verbal) • Performance against contracts
• Highly analytical
• Team player
| 18 November 2010 | Page 18
KPIs &
Accountability
Commodity Management Group Leader •
Role & Responsibility Employee
• Leadership and co- Satisfaction
ordination of Commodity Skills & Experience • 360 degree
Specialist team • Aviation Engineering & feedback
• Liaison with all areas of BAL Maintenance supply- • Aggregated team
and TUI pertinent to base knowledge KPIs
commodity planning and • Degree plus 10 years
delivery • Procurement and/or
• Management reporting materials planning
• Performance management • Sound leadership
• Strong inter-personal
• Strong communication
(written & verbal)
• Commercially astute
• Highly analytical
• Team player
| 18 November 2010 | Page 19
Commodity Management Group Leader
Closed-loop Performance Improvement
Role & Responsibility
• Leadership and co-ordination of
Commodity Specialist team
• Liaison with all areas of BAL and TUI
pertinent to commodity planning and
delivery Performance
• Management reporting in Role
Capability • Performance management
Required
Skills & Experience
• Aviation Engineering & KPIs & Accountability
Maintenance supply-base Development
• Employee Satisfaction
knowledge Plan • 360 degree feedback
• Degree plus 10 years
• Aggregated team KPIs
• Procurement and/or materials
planning
• Sound leadership Leadership
• Strong inter-personal Performance
• Strong communication (written &
Commodity
verbal)
Specialists’
• Commercially astute
Team
• Highly analytical
• Team player
| 18 November 2010 | Page 20
Outsourced Services
Stores
• Goods receiving
• Returns Management
• Warehousing and Stores Movement
Inventory Pooling
Logistics
• UK & Overseas Planning & Handling
Sales Agents
• Surplus Stock
Repair Agents
• Engines & APUs
• Components
Maintenance (C-Checks, A-Checks, Line,
Unscheduled)
• Overflow
• Strategic/Planned
| 18 November 2010 | Page 21
Strategic Process Redesign &
Implementation
Inventory Level Management
Key Inventory Definitions
Included: - Redundant No longer valid for Fleet
Obsolete No longer valid for any
• A comprehensive „disposal‟ timetable airline
Excess: Too much valid stock
• For Redundant/Obsolete Stock
Quarterly review and disposal process – capturing input for the KPIs of
relevant Commodity Specialists
Event-based review and disposal process for stock replaced through
normal course of business and/or exceptional events (e.g REFRESH
programmes)
• For Excess Stock
Quarterly review and disposal process for potentially excess stock –
capturing input for the KPIs of relevant Commodity Specialists
Maintenance plan-based review and tuning of replenishment levels (by
Commodity Specialists for each of their commodities)
Key inputs for both processes (i.e. Quarterly reviews and „plan-based‟
reviews)
Stock Usage vs. Stock Turns
Forecasted Usage
Current and projected market value and purchase price
• Business impact reporting of stock shortages (AOG/Loan Costs)
| 18 November 2010 | Page 22
capturing input for the KPIs of relevant Commodity Specialists
Implementation
Strategic Sourcing & Contract
Management
Included: -
• The development and ongoing management of
Sourcing Strategies
Contract Strategies
• Full life-cycle management and administration of
Tenders
Contracts
Framework Agreements
• Monitoring and reporting of
The coverage of commodities and services with contracts and
framework agreements
Procurement activity against contracts and framework
agreements
Performance and continued „fit‟ of contracts and framework
agreements
„Off-contract‟ activity
| 18 November 2010 | Page 23
Supplier Management
Included: -
• Supplier Scorecards that enable analysis and decision-making
related to supplier performance in key areas, e.g. -
Price
Quality
Delivery/Lead-time
Responsiveness
• Data collection processes that enable the construction of the
Supplier Scorecards based on consistent and, wherever
possible, objective data
• Supplier performance review process, including: -
Internal review
Supplier feedback
Supplier ranking
• Supply base optimisation
| 18 November 2010 | Page 24
Market Development and Customer
Satisfaction
Included: -
• Business and market development strategies and plans
• Sales performance management
• Key decision-making data to win profitable business
• Customer satisfaction surveys and associated processes and
timetable
• Market/Customer review process, including: -
Internal review
Feedback from Customers
• Customer ranking
• Customer base optimisation for maximum profitability
| 18 November 2010 | Page 25
People Management
Included: -
• Date collection, monitoring and reporting processes for all KPIs
• Employee satisfaction surveys and associated processes and
timetable
• 360 degree feedback process
• On-going skills review and gap analysis
• Group and individual development plans and timetables
• Skip-level meetings (i.e. relatively informal meeting between a
manager and staff two levels away in the organisation’s structure,
‘skipping a level’)
• High-visibility employee recognition programmes
| 18 November 2010 | Page 26
Transition Route Map
with Optional Outsourcing of Stores
Group Leader Specialists
Finalise & embed
organisation
8-10 weeks • Review performance
6-8 weeks
assignments 8-10 weeks
assignments of all staff in new
Set-up & • Target roles for • Target specialists roles
mobilisation existing Group roles for existing staff • Recruitment shortlist
6 month probationary period for each
• HR support and Leaders identified identified identified if any role
participation • Recruitment shortlist • Recruitment shortlist needs to b revisited
initiated identified identified • Assessment centres
• Group leader • Specialists completed and new
• New organisation Assessment centres Assessment centres staff assigned
Staff feedback cycles completed and group completed and staff • Skills gap analysis
• Role
completed profiles leaders assigned assigned
and and associated
associated • Skills gap analysis • Skills gap analysis development plans in
role
target skills‟ and associated and associated place for any new
matrix in development plans in development plans in appointments
place place place • Probationary
• Recruitment • Probationary • Probationary performance targets
campaign performance targets performance targets in place for new
initiated in place in place appointment
• Assessment • Redundancy • Routine performance
centres processes completed target established for
designed remaining staff
and • Redundancy
scheduled processes
Design of new business process and procedures completed, if
completed Ongoing
appropriate
Performance
Probationary Performance monitoring and monitoring and
review review
Optional Outsourcing of
Rationalisation of STORES STORES
| 18 November 2010 | Page 27
Project Challenges
Support increased number of outsourced maintenance Checks
Management of complex component support arrangements across
mixed fleet i.e. Thomsonfly, Nordic, Third Party, etc
Maintaining business continuity whilst transitioning the Supply Chain
through it‟s organisational restructure
Facing the challenge of up-skilling and changes to the “Fabric” of the
business:
• For employees this means either
• Repair (develop, train, grow)
• Remove (re-deploy elsewhere or leave)
• Replace (external recruitment)
• For peers this means exposure
Embedding a culture that encourages teamwork, initiative and a „can-
do‟ attitude with processes that are simple, auditable, measurable
| 18 November 2010 | Page 28
and streamlined
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