Table of Contents

Introduction ................................................................................................................................................. 2
Company Profile ....................................................................................................................................... 2
Objectives ................................................................................................................................................. 2
Challenges ................................................................................................................................................. 2
Task 1 ........................................................................................................................................................... 3
Task 2 ........................................................................................................................................................... 4
Task 3 ........................................................................................................................................................... 6
SWOT Analysis........................................................................................................................................... 6
Porters Five Forces Model ........................................................................................................................ 8
Task 4 ......................................................................................................................................................... 11
Executive Summary ................................................................................................................................ 11
Recommendations: .................................................................................................................................. 11
Limitations .............................................................................................................................................. 11
Task 5 ......................................................................................................................................................... 12
Reflections and Learning ........................................................................................................................ 12
Problems and Solutions........................................................................................................................... 12
Introduction

Company Profile

South west airlines were founded in 1971 with four planes servicing over three cities. At present
it operates 500 aircrafts over 68 destinations worldwide. It has the best customer service record
among the major airlines.

Objectives

Providing excellent customer services, getting passengers from one place to other with
minimal or no delay.
Clear and unobstructed view of the components in companys supply chain.

Challenges

To have better Inventory management solution.

Budget optimizer to overhaul supply chain management
Use of historic data of parts usage to generate forecast of future requirements of the parts.
Task 1

Supply Chain Management helps to integrate the supply and management of products within and
across the companies. It includes planning, management, sourcing, procurement and logistics
management. It also helps to coordinate with the partners, suppliers, service providers and the
customers.
SCM have five stages:

(Bisk, n.d.)
Plan- Proper planning is required along with the primary goal of the organization which will
help to fulfill the needs of the customers.

Develop-Developing strong relationship with suppliers

Make once the product is manufactured, it need to be tested and launch into the market.

Deliver-Involves transportation of products through various channels.

Return-customer complaints, replacement of the defective items.

SCM have tremendous value to a company for the smooth planning and execution of operations
in order to achieve long-term profits and competitive edge over the others.

(benefits-of-supply-chain-management, n.d.)

The key benefits that South West Airline has with the implementation of SCM software (i2-
Demand Planner, i2-Service Parts Planner, and i2 -Service Budget Optimizer) are:

a) Improved Supply Chain Networks: I2 SCM software provides South west airline with
complete visibility over the entire supply chain processes. It allows the staff to monitor
the activities of suppliers, storage facilities and the distribution centers at multiple
locations. This enables the company to effectively track and manage the processes, from
ordering, acquisition of parts, and shipping of parts from the suppliers.
 b) Minimum Delay: Lack of proper supply chain Software leads to delay, that results in
poor relationship and loss in business. Delay in shipment of parts, holds the repair or
servicing department that may increase in grounding time of the aircraft that in turn puts
negative impact on companys ability to satisfy the customer needs. With I2 SCM all the
activities can be coordinated and executed from start to end with higher level of accuracy
related to delivery of parts on time to the warehouse.
c) Enhanced Collaboration: SCM software helps to bridge the gap among different
warehouse at different locations. All warehouses share vital information related to
inventory levels, future demands, and order status in real time.
d) Inventory Buffer: South West Airline is required to manage inventories in a way that it
can provide the required parts when needed. SCM includes inventory buffer thats helps
to maintain stock levels on basis of historical trends. (DeBenedetti, n.d.)
e) Reduced Costs: SCM helps in removing overhead expenses by improving the inventory
management, Effective demand planning, improving the relationship between vendors
and distributors, avoiding excess storage of parts.

Task 2

Managing risk is key factor for business and SCM systems that helps to identify the critical risks
in the organization and the vendors or the suppliers. SCM systems assist organization in
organizing risks and finding the potential internal and external failures. Without SCM
organization is exposed to legal risks.

Key strategies that a business can adopt to mitigate the risks of failure are:
(Buthusiem, 2014)

i.) Sound Methodology: South West Airline needs to clearly define the types of risks to be
managed. Appropriate and meaningful risk identification can be achieved through effective
partnership between the suppliers and the buyers. Effective partnership will help to find the
risks clearly and measure the impact of the risks.
 Figure 1 Business Methodology

ii.) Deploy Bottom up process: South West Airlines currently employs high level process, in
which risks identification and mitigation plans are decided at senior levels. Risk Assessment
and Mitigation plans should be developed at the operational level, from bottom to top
management in the organization. Policy Reviews, interviews with stakeholders will help to
manage the risks at appropriate levels within the organization

iii.) Prioritizing the risks: Once the risks are being identified there should be proper
methodology to prioritize the risk (assigning critical levels) such that the risks with higher
critical values are processed first. In depth knowledge of the business process is required to
ascertain the severity of impact and occurrence.
iv.) Meaningful Mitigation Strategies: Mitigation plans should be developed and individuals
should be addressed about the risks. Accountability of actions and end conclusions should be
noted for future references.

Task 3

Business Modelling Techniques helps to improve organisational efficiency and quality. It helps
to improve business performance by optimizing the activities.
Business Modelling Techniques SWOT analysis and Porters Five Force Model will be used to
evaluate business strategy of South West Airline.

SWOT Analysis
S-Strengths- Organization strengths are its core-competencies and the resources
W-Weaknesses-Areas of substandard business performance in comparison to others in industry.
O-Opportunities-Potential for new business market
T-Threats- potential for business and market losses
SWOT helps to identify and evaluate the impact of strategic opportunity on an organization and
the usage of Information systems by the organization.
 Strengths Weakness
Company Company
Purchasing power Not Utlizing purchasing power
Inventory Turnover Late payments
Payements Fragmented orders
Vendor management Policies Poor Vendor Policies Internal
Vendor
Vendor
factors
Credit Policies
Quality Late delivery
Delivery Lack of services
Response time Lack of amnufacturing capacity
Support Quality issues
Pricing

Supply Chain
SWOT Analysis

Opportunities Threats
Company Company External
Increased warehouse space Cash flow issues
factors
I2 SCM software Business decline
Storage and handling Late payments
Expansion Inventory damage
Vendor Vendor
New strategies Future price rise
Exapnsion for vendor change in credit policies
Improved service Material allocation
Shortage of raw material

Neg
Posi
ativ
tive
e

Strength

South West Airlines is in the business since 1971 and thereby possess a strong brand name in the
market. With the passage of time it has upgraded its business strategies in order to provide full
customer satisfaction. The company possesses huge purchasing power, payment capabilities and
properly stated vendor policies to deal with. Implementation of I2 SCM software had led the
company to have quality parts on time and maximum support from the vendors. Companys long
term and trained staff has led to provide better services to the customers. It has huge inventory
turnover due to its large scale presence in the Aviation sector. Vendor Management policies
helps them to provide the parts on time making minimal or no delay in the repair of aircraft and
thereby by increasing customers faith in the company.

Weakness

South West airline was operating in non-automated way. Despite of having larger turnover
company was not able to utilize it purchasing power to buy parts from different vendors. Lack of
automated system lead to late payments to the vendors , poor stocks reports lead to multiple or
fragmented orders to the vendors that in turn lead to late delivery , poor services and quality
issues from the vendor side. Implementation of I2 helped to maintain the stock efficiently and
prepare bulk orders in advance from the historical data of usage of parts from the software. The
major problem of ordering parts, storage and reporting has been overcome with the use of I2
software.

Opportunities

South West Airline with the usage of I2 software will help to provide better customer services
and also help them to take a leading edge from their rival competitors. Company can look
forward for increased warehouse space and expansion. The I2 System will ease the tasks of the
employees by proper handling and storage of parts, timely data of stocks will help them to
prepare well in advance.

Threats

Cash flow issues and unstructured inventory may help the upcoming companies to take over the
South West Airlines. Without I2 software its difficult to keep up with the market demands
.Moreover the government policies related to tax, price rise , credit policies , Material import can
hamper the business growth. In order to provide better customer quality Company need to
upgrade with latest technologies to keep the workflow of the company robust and efficient.

Porters Five Forces Model: It is a framework to analyze the level of competition within the
organization and the development of effective business strategy. (cathy, 2014)
Figure 2 Porter Five Forces Model
Buyer Power

In order to maintain the customer quality the implementation of IS/IT or the I2 package is
crucial. The storage of details, capability to order larger volume of parts, and also keeping the
price controlled will help South West Airline to lead over the competitors. The processing,
retrieval and storage of information will become easier and efficient. I2 will help in efficient
handling of the inventory and reduced aircraft grounding and thereby providing quality services
to the customers, growth of companys business and attracting new customers.

Supplier Power

South West Airline exports parts from various suppliers throughout the world. Therefore it
necessary to maintain a good relationship with suppliers in order to receive quality products on
time. South West airline need to continuously monitor the market price and change suppliers
based upon the quality and cost price of products provided by the respective supplier.

Threats of Substitutes

The threats from substitutes for South West Airlines are quite relevant because of cheaper and
better quality services from the other airlines. In order to handle this company have to come up
with cheaper services to the customers such thats the customers inclination towards substitute
options is less.I2 will help the company to track the inventory as per the demands and thus
providing better services in term of airlines.

Threat of new entry

South West Airlines are still expanding, therefore many new competitors can arise .Many new
companies with effective IT system can offer the clients with wide variety to choose from. It is
necessary to keep track of the new entrants, their policies and the offerings. With the proper
utilization of the resources will help the airlines to lower the prices and thereby preventing the
new entrants to expand. Proper flow of the spare parts will minimize the grounding of aircrafts
for larger time period. More the time of grounding more is the impact on the business and
thereby giving the new entrants a chance to exceed.
Competitive Rivalry

South West Airlines have large no of competitors providing services at better price with having
robust and efficient Information system to support the work flow. The new entrants have better
information systems as they adopted in early stages, so the chances of errors and miss-matches
are supposed to be lesser. Different barriers in terms of spare parts availability, storage should be
tracked in order to have upper edge over the rivals.

Task 4

Executive Summary

The report provides us the current status of the business model of the South West Airline. The
analysis and evaluation carried out will help South West Airline to manage their supply and
inventory efficiently and achieve maximum profit from their business.
The analysis includes financial prospects, strengths, weakness and the risk associated with the
business. The results of the analysis shows that the use of i2Demand Planner, i2 Service Parts
Planner, and i2 Service Budget Optimizer have enabled to fine tune the business operations and
thereby facilitating the expansion of the organization.
The Swot Analysis and Porter Five force model has helped to know the weaknesses and the
threats that the organizations have or may face in future.

Recommendations:
Providing funds and resources for investment in SCM Software systems.
SWOT analysis at regular intervals to identify the weakness.
Centralized system to manage the branches and also the availability of parts at different
stores.
Training to staff for better use of the software system.

Limitations
The report lacks detailed parts quantity, revenues generated etc.

Historical data of usage of parts and then comparing it with current stock in order to know the
future requirement.
Task 5

Reflections and Learning

It has helped me make sense of events; techniques used to carry out the analysis provided me an
opportunity to understand different business strategies, threats, risks involved in the business.
SCM can be called as network of logistic system along with the other activities of the
organization. It deals with the traditional functionalities of the organization and collaboration
among the vendors and the customers. The product flow, services, and financial are important for
the success of supply chain management.
Business modeling techniques helps to create expressive models including executives, technology
experts. Business modeling plays an important role in describing, analyzing, improving and the
implementation of the various business processes. The study of various business modeling
techniques has helped me learn the relationship between different processes and adoption of
customer oriented approach.
Problems and Solutions: When I started the analysis I jumped to the solution immediately; but
more the time I spent on the scenario it opened up more facts and opportunities. It led me to
spend more time, challenging the scenario from different angles. It helped me to identify various
solutions, prioritizing the solutions and then making the final decision.

All the skills and knowledge gained in this process gives me the ability to arrange the facts and
the statistical data and thereby implementing them in the system