Principle # 2: Concept
Over the last decade shippers, freight forwarders, 3PL’s, IAC’s and air carriers have focused on creating lean organizations and business processes. Internal lead times have been shortened and made more predictable, set up times and work-in-process inventories reduced. But for maximum supply chain efficiency, all supply chain trading partners must design, align, and execute their jointly operated processes so that the entire chain has the desired attributes: response times must be short, predictable and repeatable. Thus lean, secure supply chains must be designed as a system that responds quickly and predictably to fluctuations in demand and available capacity.
To date, most lean initiatives have been pursued within the enterprise. To attain maximum efficiency - with increased security - across the chain of custody, lean philosophies must be extended beyond the boundaries of individual organizations to include all supply chain partners. No combination of software systems and information technology can compensate for a poorly designed physical operating environment and inefficient, sloppy execution.
Principle # 2: Application to the Air Cargo Supply Chain
A recent study of the application of Business Process Reengineering (BPR) on the air cargo handling process identified substantial benefits in overall throughput through lean operations (4). Overall, the combined processes of operations, transportation, delay, inspection and storage were reduced from 120 steps to 18 steps and overall cycle time by 74%, while facility capacities and staffing remained constant. Delays in the process were almost completely eliminated through process improvement; no additional automation was incorporated to achieve these results.
Computer simulation models are powerful tools that can be used to guide lean process development for optimal facility efficiency, throughput and performance. For example, the Air Cargo Screening Facility (CSF) Operations Model (5) provides decision support and “what-if” analysis to answer questions that are encountered in the design and operational phases of an Air Cargo Screening Facility. This model has been used to plan requirements for storage and screening capacity, staffing, outbound logistics and material usage (e.g., tamper-evident tape and seals) and also to estimate facility throughput and in-process inventory levels to help develop accurate estimates of facility set-up and operating costs. For example, changes in the receiving and sorting processes recommended using this model resulted in projected reductions of late shipments by over 90% with the same level of resources.
Another study conducted with a major air carrier at Toronto Pearson Airport used a similar computer simulation technique to analyze air cargo operations at a new state-of-the-art cargo facility, equipped with automated material handling and fully computerized inventory control systems, validating the approach (6). The purpose of the study was to develop new processes to ensure that products and services were properly aligned with customers’ needs. The tool was used successfully to quantitatively evaluate and compare different policies, business practices and procedures within a given set of operational and business constraints. The model can also be used in evaluating scenarios such as the effect of an increase in cargo volumes or changing service level policies.