Redesign of the Control Model of the Catering Distribution Network of KLM

Abstract

The commercial aviation industry is a very competitive market. KLM is struggling with the difficult economic climate due to ever climbing fuel prices and the results of the global- and euro financial crises. Yet KLM wishes to become the best service oriented airline in the world, as a way to stay competitive in the current and future market. As part of the overall inflight service, the passengers on each KLM-flight are offered catering services during the flight. The sort and amount of services depend on the flight length, the time of day of the flight, the destination and the booked class. For European flights (EUR), the entire catering load for both the outbound- and homebound flight can be loaded at KLM’s main hub, Amsterdam Airport Schiphol. However, for the much longer intercontinental flights (ICA) this is not possible. This means that the catering load for the homebound flight must be prepared and loaded at the outstation (a destination where catering activities occur). KLM has a contract with a caterer at the outstation, which encompasses the responsibilities concerning loading of the homebound flights, responsibilities concerning the local inventory management and responsibilities concerning the preparation of business class meals. Because KLM wishes to serve the same products on each flight, there is a need to distribute catering products to the 58 outstations. N.B. In this context the same product means that for instance the same sort of soda can is used for a specific soda, not that the entire catering product is the same on each flight. Cabin Inflight Management is the department that is responsible for the catering activities of KLM. The product portfolio for the three different product groups (1) World Business Class (WBC), (2) the intercontinental economy class (ICA-M) and (3) European (EUR) is developed and maintained by the sub department Product Management. The operational management of the product portfolio is the responsibility of the sub department Network Supply Management (NSM). Therefore, NSM is responsible for the actual ordering and distribution of the catering articles. KLM has chosen to have a central warehouse at Schiphol Noord and distribute the catering articles to the outstations from the central warehouse. The distribution of articles to the outstations is done either by sea freight, airfreight or by pantry outfits. The most important performance indicators are defined as the reliability of the inventory, the quality and the costs. However, there is neither absolute and objective knowledge about the performance concerning these indicators nor knowledge about the possibilities to influence these important process parameters in a controlled manner. Given the difficulties KLM faces, it is important to realize cost savings by improving the efficiency of the company, while maintaining or even improving the satisfaction rate of customers. Therefore, the need for objective information about the performance of the distribution network and the ways to influence the performance is evident...