CUSAS 10.11

This cycle was conducted in the period 12'*^ - 16*^ September 2011.

During the diagnosis stage the interim Technical Dispatch Reliability figures of the sum mer schedule period were considered.

The sum mer schedule period ended on 29. October 2011 and the winter schedule period started on 30. October 2011. It was therefore necessary to allocate the spare parts stock for the W inter Schedule 2011/12 period during the summer schedule period. However, as the Technical Dispatch Reliability was monitored on a weekly basis and the improvement of the Technical Dispatch Reliability compared to 2010 was obvious. Based on this positive developm ent it was decided to repeat the summer schedule period exercise for the following winter schedule period. Action was planned accordingly.

The schedule for the Summer Schedule 2011 period remained unchanged for the W inter Schedule 2011/12 period, except for local departure and arrival tim es

adjusted at several airports to daylight saving time. Therefore Appendix D equals Appendix E except for the period of validity.

The following action was taken. Even with the flight schedule unchanged, the researcher increased the spare parts stock by adding additional parts. Due to temperatures far below zero degrees in Russia and some airports within the Asian region, she expected higher failure rates for certain components, e.g.

hydraulic parts that needed to open and close the cargo door of the aircraft.

Hydraulic parts and systems are very sensitive to temperature variations of the hydraulic oil (Li et al 2011). The aircraft operating into Russia would be parked on the apron for some hours before departing again. With a temperature

difference of up to 40- Celsius between homebase airport XHB and airport RU1, the hydraulic parts were subject to failure due to the oil inside becoming pasty.

Over the summer period, the Purchasing and Logistics Manager realised some repair and exchange agreements and succeeded to sign consignment contracts for various high cost items, such as avionic computers. As a result, the stock value in XYZ Cargo’s books decreased even though the researcher added additional spare parts. The value of the spare parts stock set up for the Winter Schedule 2011/12 period was 3% below budget.

Another difference in the winter schedule period compared to the summer schedule period was the number of spare parts and their allocation to the relevant stock locations for this period. For this period, the researcher’s default settings were adjusted by the Director Maintenance and the Purchasing and Logistics Manager applying their intuition. The researcher had asked them again to do so and for the winter schedule period they agreed. As a result the preset quantities remained unchanged, however, the allocation changed. Now 83% of the spare parts were stocked at homebase airport XHB and the remaining 17% were distributed to the stock locations.

For the Winter Schedule 2011/12 period the same confidentiality clause applies as for the Summer Schedule 2011 period, therefore the actually compiled stock cannot be published here.

The evaluation of the winter schedule period Technical Dispatch Reliability as shown in Exhibit 4.8 shows another improvement.

Exhibit 4.8: XYZ Cargo: Technical Dispatch Reliability W inter Schedule 2011/12

XYZ Cargo: Technical Dispatch Reliability W l l

...♦ 99,00%

98,9 98,90% - ♦ ~ a a , 9 0 ^

98,70% W 98,70%

9%,G0%

98,50%

Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mrz 12

—♦ — Actual —■ — Benchmark

Source: present author

The average Technical Dispatch Reliability was 98.88% which is 0.03 percentage points above the benchm ark of 98.85%. The Technical Dispatch Reliability improved by 0.33 percentage points compared to the Summer Schedule 2011 period.

Further analysis for the summer schedule and winter schedule periods showed that the number of technical incidents causing delays had not decreased but only the number of delays caused my missing spare parts. These findings support the view that the operational factor approach was successful in reducing the number of delays caused by missing spare parts resulting in an increased Technical Dispatch Reliability. On the other hand, these findings support the critique of the researcher that the root cause of the low Technical Dispatch Reliability was not the missing spare parts management but more likely a wrong maintenance programme.

Findings from the literature show that intuition can improve decisions.

Gigerenzer and Gaissm aier (2001) provide findings from their research on forecasting accuracy in the retail business. They were able to show that retail managers’ forecasts were 3%-8% more accurate than the ones derived with a statistical model.

In this research the Technical Dispatch Reliability improved for the Winter Schedule Period 2011/12 compared to the Summer Schedule 2011 period. The difference regarding spare parts allocation was the modification of the

researcher’s primary allocation by the Director Maintenance and the Purchasing and Logistics Manager. As discussed before the number of technical incidents had not decreased over time, but the Technical Dispatch Reliability increased.

The difference between the summer schedule and the winter schedule period was 0.33 percentage points. With all other factors being the same the

improvement of 0.33 percentage points can be credited to the successful application of intuition.

This finding is based on the following. The aircraft did not behave different, i.e.

the number of technical incidents did not decrease, only the number of delays caused by missing spare parts decreased. The researcher did not change the process of spare parts allocation between the summer and winter schedule periods. It is highly unlikely that the researcher herself developed critical experience and knowledge within the short period of 6 months with only two active intervals in February and September. Matzler et al (2007) state, that intuition is based on years of experience and learning. Therefore, the

researcher’s experience gained during the Action Research cycle 3 in February 2011 is considered not having influenced her decisions taken in the Action Research cycle 4 in September 2011.

4.8 Final Review

The final on-site visit of the researcher took place 07'^ - l f ^ May 2012.

The setup for the final review was similar to the one applied for the initial situation described in Chapter 4.3.

On 08^^ May the researcher met with the Director Maintenance and the Purchasing and Logistics Manager to discuss their views on the project. The researcher had not prepared any specific questions but relied on creative

interviewing again. In an open discussion Director Maintenance and Purchasing and Logistics Manager shared their views with the researcher.

Both the Director Maintenance and the Purchasing and Logistics Manager expressed their satisfaction about the achieved results. The Director

Maintenance highlighted that he now viewed the position of XYZ Cargo on the market to be competitive due to the very good performance. Beside this he pointed out that the inventory cost reduction was a huge relief for him and all stakeholders.

“Great work. I am really satisfied with the results. ” (Director Maintenance, 08. May 2012)

“It was a great experience for us as a team. I specifically liked the workshop during which we deveicped the cperaticnai factors. ” (Purchasing and Logistics Manager, 08. May 2012).

The Purchasing and Logistics Manager reported that she and her team had used the same approach for the summer schedule 2012 spare parts stock set up. So far, the Technical Dispatch Reliability statistics had proven this decision to be the right one.

‘Yes, we listen to our intuition now. It’s nothing a newcomer can easily apply, but my staff will gain the necessary experience. ’’ (Purchasing and Logistics Manager, 08. May 2012).

“Looking back I don’t know why I refused to rely on my intuition in the first place. I know that it works. ... / guess I ju st want to be the process as rational as possible. ’’ (Director Maintenance, 08. May 2012)

The statement from the Purchasing and Logistics Manager that intuition requires experience is supported in the literature. In their research on intuitive decision making Burke and Miller (1999) showed that most of their participants viewed experience-based decision making as intuitive decision making. Matzler et al (2007) also discuss the important role of experience knowledge to reach good intuitive decisions.

The Director Maintenance feeling obliged to apply a “rational decision making process is also documented in the literature. Sadler-Smith and Shefy (2004) highlight that rational analysis is the standard approach in many business decision processes. However, such rational analysis requires unbounded rationality, i.e. people have all relevant information, unlimited time, unfailing memory and large computational power (Marewski et al 2010). Unbounded rationality is a common assumption in economic models (Marewski et al 2010).

This concept has been challenged by e.g. Simon (1955,1979,1987) as well as Gigerenzer (2008) and Gigerenzer and Gaissmaier (2011). The Director Maintenance seems to believe that only rational processes lead to the desired outcome. Gigerenzer (2008) considers this belief a common misconception about heuristics, i.e. that more information and computation is always better.

Evidence from research suggests that applying heuristics, i.e. consciously ignoring part of the information, can lead to better results in decision making (Gigerenzer 1991, 2008, Marewski et al 2010, Gigerenzer and Gaissmaier 2011).

However, both the Director Maintenance and the Purchasing and Logistics Manager clearly stated that they viewed the manual spare parts stock set up to be impossible with a larger fleet and more routings to be considered. For them a Decision Support System would be a suitable means to apply to an increased flight schedule and a growing fleet.

“You know, having something sophisticated would be great. Software that would capture a default mode which we could adapt. ” (Purchasing and Logistics Manager, 08. May 2012)

On 11*^ May, the researcher presented the project to the heads of the departments who had not been involved in the project, i.e. Finance, Flight Operations, Maintenance, Legal. However, the Director Maintenance wanted to use this opportunity to market this successful project internally. This

presentation was created by the researcher for internal company use only and can therefore not be included in this study.

An overview of the field work is shown in Exhibit 4.9. This illustration focuses on the activities undertaken and the input required for realisation.

Exhibit 4.9: Field W ork Overview Determination and Set Up for Spare Parts

Stock for winter schedule period (4.8)

Final Review (4 11) Determination and Set Up for Spare Parts

Stock for summer schedule period (4.7)