Modelling business process redesign strategies for improved reverse logistics in an aircraft component supply chain

Abstract

Within aircraft component MRO industry, companies providing availability contracts are challenged by inherently unpredictable demand patterns and complex time crucial operations. Most prevailing academic literature within the MRO industry has focused on availability models or operations management in repair shops in the past. This study focuses on one of the most critical, and often neglected parts of the MRO supply chain. The reverse logistic flow of aircraft components. A research methodology was constructed by integrating the adapted DMADE (Define, Measure, Analyse, Design, Evaluate) structure from Lean Six Sigma and a number of different business process improvement methodologies from the literature in combination with a simulation study. The aim of the study is to identify a methodology with practical design criteria on how to redesign the reverse logistical processes of a component MRO provider, in order to improve the performance from an integral supply chain perspective. For this purpose a case study is performed and the current state of the closed loop supply chain of KLM E&M was measured and analysed. By analysing this current state, design criteria for redesign are determined. A new automated logistic handling area is introduced by separating the physical and administrative handling operations. The proposed redesign is evaluated using discrete event simulation. Through optimisation modelling the optimal balance between inventory, resources and time required to handle the volatile demand pattern to achieve a desired service level, is determined. By optimising the capacity in handling the total time in the supply chain can be shortened. The redesign was evaluated using different levels of proactive repair order creation and skill configurations. Results from the case study showed the relationship between process efficiency, available capacity in terms of manpower, inventory, service level, and handling time. By separating the physical from the administrative flow, reducing handovers and transactions, generating repair orders in advance and shifting from inventory buffers to capacity buffers the reverse logistic flow of component MRO providers can be drastically improved.