Improving inventory management

BA improves inventory management to save over £40 million.

Large British Airways plane inside a warehouse with scaffolding and workers around it.

The Problem

The current business environment at British Airways, one of the world’s longest established airlines, is one of growth and development in all areas of long, medium and short haul travel. Considering its short haul operation alone at Heathrow, British Airways is responsible for 2,600 flights per week, to 42 UK destinations, using a fleet of 85 aircraft.

Every one of those 85 aircraft has to undergo pre-flight checks and regular mechanical overhaul often involving parts replacement. Inventory management for the spare parts needed to maintain an air fleet for long, medium and short haul use can be problematical from the perspective that some components have short life time cycles and rapid turnover from inventory. Whilst other components may be needed less often and remain in stock for considerable periods of time.

Identifying a need to optimise engineering inventory management, British Airways enlisted the help of OR experts to find the most efficient means of optimising overall inventory without compromising safety factors and maintenance turn around.

The OR Solution

Optimisation was achieved by focusing on costs and best practices within the airline. British Airways held an inventory of several thousand components of varying criticality. These components were stored in various destinations (with about 10% being housed overseas), decisions had to be made about issues concerning component repair, replacement or scrapping - the OR process here was one that 'focused on implementation'.

The OR approach led to the construction a modelling system that included the process and technologies for provisioning, deprovisioning, managing, and synchronising inventory while complying with governing policies. The modelling system provided a unified view which aided the implementation of provisioning and deprovisioning across multiple stores. Additionally a user manual was created for the new model along with guidelines to how implementation of best practices would streamline procedures and provide significant cost benefits.

The Value

The project achieved impact in cycle alignment to the extent that £40 million was saved on storage costs alone.