Southwest Case Study

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The Importance of Parts Inventory Management and the Business Processes Affected
Southwest Airlines is the single largest low-fare airline today, carrying more passengers to their destinations than any other airline in the world. One thing that has made Southwest Airlines so big is its commitment to customer service, an area of focus that positively affects an organization’s bottom line. While almost every major U.S. airline has declared bankruptcy within the last 10 years, Southwest Airlines has consistently generated a profit for over 40 years (Schlanger, 2012).
According to Laudon and Laudon, “the basis of competition has switched from who sells the most products and services to who owns the customer, and that customer relationships represent a firm’s most valuable asset” (2011). In order for Southwest to sustain their stronghold over other airlines, they looked for additional ways to improve their already impeccable customer service. This meant revamping its parts inventory management to manage and control its supply chain and inventory at an optimal level. In order to achieve this goal, they had to sharpen some of their business processes such as their supply chain planning systems, and the factors there of, which included demand planning and supply chain execution.
The problem was that as the airline grew, they found that their legacy information systems were not able to keep pace with the growing amount of data and information the firm generated. By using outdated repair procedures, airlines undermine their efficiency processes, which is a problem caused by ineffective information (Lampe et al., 2004). One of the biggest issues in regards to Southwest’s legacy systems was that it lacked information visibility.
Factors Involved in Southwest’s Inventory Management Problems
Southwest Airlines found that they had $325 million in service parts inventory,…...

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