Kathy Lewis
Kris Martin-Baker
Julie McKenzie
Robert O'Leary
SWOT
Five Forces
What's the Problem?
What to Do
Team 5
Cathay Pacific Airways Ltd.
1946
2006
Parts
380,000 unique parts valued at $350 million

30% "slow moving," 40% dead stock

Crucial and time-sensitive

Classified by criticality and function

Hold in inventory, borrow, or buy (same-day shipping)

Limited suppliers, single-source suppliers

Certified repair shops
How can Cathay minimize cost without sacrificing availability and reliability?
Imlement RFID system

Split off engineering commercial division



Financially sound

Strong brand

High levels of inventory necessary

Lots of "dead" stock

Very high cost of grounded aircraft

Ultramain system overly complex

Inefficiency in problem classification
AeroExchange

Parts loan pool

Parts Manufacturer Approval programs

Potential collaboration with other airlines

Extensive regulation

Few suppliers with a lot of power
Strengths
Weaknesses
Opportunities
Threats
Barriers to Entry: High
Threat of Substitutes: Low
Supplier Power: High
Buyer Power: Low
Degree of Rivalry: Low
Parts are complex,high accuracy needed

High startup costs

Lots of regulation

Patents, proprietary knowledge
Few large suppliers

Regulations and traceability requirements
Few suppliers

Company required to purchase from only approved suppliers

Competition among suppliers is low
Cost of grounded flights

Required product quality

Parts are not standardized
Little competition

Branding not an issue (OEMs)
Potential Solutions
Outsource spare parts

Split off engineering commercial division

Change parts classification methodology

Implement RFID system

Streamline existing process

Align with suppliers for JIT delivery
Aviation Spare Parts Supply Chain Management Optimization

at Cathay Pacific Airways Limited
Questions/Comments
Why This Solution
Only one entity to deal with for parts

Mitigates risk for Cathay

Specialized company can better optimize

Frees up capital

Cathay can concentrate on improving service
Founded 1946

"Airline of the Year"

Strong financial position
Current Processes
Engineering division handles all parts issues

Ultramain - multiple steps

AeroExchange - information network, inter-airline communication

No centralized supplier 

Supplier's market
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