Bombardier takes a new look at after-market product support
Aware that its aircraft owners and operators have been growing increasingly dissatisfied with product support and service in recent years, Canadian business jet manufacturer Bombardier has launched a major initiative it says will remedy the problem. The solution, including restructuring, expansion and training, began about 18 months ago, said Dave Orcutt, v-p of customer support for business aircraft.
“We had slipped,” said Orcutt, the leader of a freshly organized customer services troika that includes Troy Jonas as v-p and general manager of service centers and Desmond Bell as v-p of parts logistics.
Orcutt attributed the slow erosion in customer service to a number of factors, among them an unusually high number of new aircraft types introduced into Bombardier’s business jet fleet– 15 new types in the past 15 years– and the increased tempo of flight operations in the past few years. Bombardier, he noted, now has the second largest fleet of business jets in service worldwide– some 3,200 aircraft.
The large fleet, the dramatic growth of fractional and charter operations in recent years and new regulations requiring such equipment upgrades as TCAS and RVSM combined to put an extraordinary strain on the capacity of the company’s service network.
The renewed focus on customer service began as an independent initiative at the same time Bombardier was undergoing a major overall restructuring of its business jet assets. In a recent presentation at Bombardier’s show- case service center in Windsor Locks, Conn., Orcutt, Jonas and Bell outlined the specifics of the customer service initiative.
A key element of the initiative is a customer action center at the company’s Montreal headquarters. The center is a central clearing-house designed to “develop and apply solutions to meet immediate customer issues [and] plan initiatives to meet mid- and long-term customer needs.” Meetings are weekly, said Orcutt, “not just to determine where we should be but also how to get there.”
“Getting there” is part of Bombardier’s extensive plan and places an emphasis on people. According to Orcutt, it starts with hiring people who have not only the “hard” technical skills but also the “soft” skills necessary to deal with customers and fellow employees. It is a philosophy similar to that of Southwest Airlines, whose flamboyant former CEO, Herb Kelleher, emphasized, “Hire for attitude, train for skill.”
There is initial technical as well as human resources training for new employees. For experienced technicians already working at Bombardier, there is recurrent and cross-training, and the company plans to launch a series of human-factors training that will add the necessary soft skills. And, said Orcutt, Bombardier has doubled the training budget for this year.
Increasing Service Network Capacity
The recent addition of 113 service technicians has raised the total to more than 1,000 in the Bombardier service network, and there are plans to hire another 92 in the coming months, “not all of them at the entry level.” He added that approximately 80 percent of those currently in the system hold an airframe and powerplant (A&P) certificate.
The need for more skilled people is compelled by the company’s plans to expand facility structures and overall capacity.
In the U.S., Bombardier has added three company-owned aircraft facilities to the existing service center network–Clarksburg, W. Va., for heavy and line maintenance, and Addison, Texas, and Teterboro, N.J., for line maintenance. Clarksburg and Addison had previously been available only to aircraft from Bombardier’s Flexjet fractional ownership fleet.
Jonas said that as a result of these additions, based on manhours, the total service network capacity increased by 17 percent in the second half of last year and is expected to rise another 10 to 15 percent this year. The addition of Clarksburg, Teterboro and Addison brings the total number of Bombardier-owned and -operated service centers to eight. The others are at Dallas, Fort Lauderdale, Tucson and Wichita, as well as at the company’s lead service center at Hartford, Conn.
The Bombardier-owned and operated service center network is also adding a Bombardier service center in Dubai, the United Arab Emirates. The Dubai center will include a parts depot and will be operated with partners ExecuJet of Zurich and Alpha 55 of Dubai.
In the U.S., a Bombardier center is expected to open on the West Coast “in the near future,” taking some of the pressure off the Tucson facility.
To expand the network of independent authorized service facilities outside the U.S., Bombardier has one planned in South America and another in the Commonwealth of Independent States (CIS, formerly the Soviet Union member states), probably Russia. According to Orcutt, several Global Expresses are being operated in Moscow, and a mix of nine Global Expresses and Global 5000s is active in the CIS region. Bombardier also has plans to extend its Skyjet private charter program into the CIS. “We’ve been tracking the growth in transient activity in the CIS for some time and it’s encouraging,” said Orcutt.
The company has already expanded its authorized service facility network in the U.S. There are nine authorized service center locations under five major names– Corporate Jets, Duncan Aviation, Garrett Aviation, Midcoast Aviation and Stevens Aviation. The most recent signup came last year with the addition of Duncan’s Battle Creek, Mich. facility.
To increase capacity, Bombardier has extended the field service action center in-office hours in Montreal and Wichita to 6:30 a.m. to 9 p.m., Weekend in-office coverage is now 7 a.m. to 7 p.m. Service representatives are on call 24/7 on the AOG outside-office hotline. Noting that the field service rep is usually the first point of contact in an AOG situation, Orcutt said that Bombardier has also added to those ranks.
Part and Parcel of Keeping the Customer Satisfied
“No customer is ever happy with parts pricing,” said Bell. With that in mind, Bombardier has launched an assault aimed at bringing prices down and at the same time making the parts more readily available.
Bell said the company is going to hold parts prices at last year’s level through this year. At the same time, an ongoing review of the 100 most frequently demanded parts is aimed at establishing a market benchmark for price reductions, and an independent third party (Carlisle & Co.) is conducting an analysis of parts pricing and revenue management.
As a result of these and other efforts, in the past year Bombardier has reduced prices on some 6,000 Learjet parts. The price of the vertical speed indicator for the Learjet 45, said Bell, has been reduced by 83 percent, and the Learjet audio control panel has been reduced by 19 percent. Bell also said billing errors have been reduced by 70 percent.
“We’re already hearing good things, and things are going to get better,” he said. A survey of “the people who actually order the parts, typical maintenance people,” has shown “a measurable improvement from April to December 2004.” Overall satisfaction, he claimed, went from 83 percent in April to 87 percent in December, and overall performance from 72 percent to 77 percent.
Bell admitted, however, that lower prices aren’t worth much if you can’t get the part to the customer when it’s needed. With that in mind, Bell is managing significant restructuring supported by a company decision “to invest time and money into a major change.”
The Canadian manufacturer is also building two new parts “super warehouses” in Chicago and Frankfurt, Germany. The Chicago warehouse, totaling 238,000 sq ft, is 10 minutes from the terminal at O’Hare International Airport. It will be managed by Caterpillar Logistics with more than 200 people, approximately 50 of whom will be Bombardier employees. “It’s more a relationship than a subcontract arrangement,” said Bell. Bombardier said the warehouse will open for business by the end of next month.
The warehouse in Germany is adjacent to Frankfurt Main International Airport and will cover 50,000 sq ft. It is expected to go into operation in the third quarter of this year. Bombardier has made a $10 million commitment to stocking the facility and has already begun staging parts at the London depot.
The super warehouses are in addition to and in support of the existing parts depot in Montreal and start-up depots in Dubai, Singapore and Sydney due to open this summer. The company is considering a fourth new parts depot for South America and is currently reviewing location proposals. The idea, according to Bell, is to have a warehouse or depot within a single, nonstop flight of almost any city in the world.
The opening of the warehouses in Chicago and Frankfurt means the closure of parts depots in Detroit, Wichita, London and Paris.
Management of the Chicago super warehouse by Caterpillar Logistics is a part of Bombardier’s new customer service initiative aimed at outsourcing work to the specialist subcontractors throughout the service network. “Ten years ago, we built the entire aircraft, and as time went by we realized that risk-sharing partners with expertise in special areas made more sense,” said Orcutt. Now, he said, the company is doing the same thing in the area of after-market support. “So we can focus on what we do best–building airplanes– and outsource for what others do best.”
The effort at lowering parts costs has also involved renegotiation of vendor contracts. As for vendors that choose not to renegotiate, Bell said Bombardier is willing to match the cost of any vendor part being sold independently.
To make the purchase of parts from Bombardier more attractive, the company has eliminated a restocking fee for returned parts if a Bombardier tech was involved in the order, whether through an authorized service facility or a field service representative.
Bombardier has also instituted a list of parts that its authorized service facilities will be required to maintain. To make the new rule go down a bit more easily, it is offering a new discount structure.
Orcutt said the net change in the inventory mix over the past year has exceeded $67 million. “We’ve increased inventory, improved forecasting of customer demand, increased the number of high-moving parts, and improved distribution…in the interest of having the right part at the right place at the right time.”
Parts availability, also known as fill rate, is at an all-time high, according to Bell, up from 81 percent to 95 percent.
Parts availability and delivery is a key to reducing AOG time. Bell said the industry has always given 24 hours as the standard for spare parts shipping, but he notes that 14 to 16 hours is more or less the standard. Bell said Bombardier’s spare parts shipments are in the 12-hour range and have been for the past several months. And with the opening of the super warehouses in Chicago and Frankfurt, Bell said, Bombardier expects to cut that by another two hours.
Reducing AOG Time
Bombardier has aimed a number of ongoing efforts at getting airplanes that have been grounded for mechanical problems back in the air. It started in March with the AOG Code 1 program. A red, amber or green code alerts the entire service organization to an AOG situation.
The result, said Bell, is improved delivery performance. He said the order-to-shipment (processing) time for a part for an AOG is now down from six hours to less than two hours. And he added that even with a volume of some 6,000 weekly parts shipments, same-day shipments are now 99.9 percent on time.
The idea is to get the right part to the customer on time. In this effort, Bombardier uses Washington, D.C.-based international air consolidation and forwarding freight specialist Expeditors. The system includes single tracking and tracing capability for customers through the Expeditors Web site. As a backup, Bombardier will draw from the resources of such Bombardier- owned services as AirNet private charter, Flexjet fractional operation or Skyjet charter, whether for the transport of parts, or to provide a replacement aircraft for an AOG.
Orcutt noted the story of a Global Express owner whose aircraft, en route to St. Kitts in the Caribbean, was recently AOG in Zurich for lack of a part. “The part was ordered, but so was a replacement aircraft. The part didn’t arrive, but the replacement airplane did, and so did the executive, on time.”
In terms of service, Jonas said Bombardier’s efforts are already bearing fruit. The number of aircraft accepted per week at service facilities rose from an average of 164.5 in February last year to 201.5 in August last year, and the number of aircraft turned away has dropped from an average of 3.5 a week to 2.25 a week. “We’re averaging 98-percent aircraft acceptance at the service facilities,” he added.
To ensure the success of its new customer service initiative, Bombardier is relying on more than surveys. There are multiple measuring sticks, said Orcutt, that include key performance indicators, qualitative feedback in which the data reflects reality and customer testimonials.”
In terms of customer service, said Orcutt, “For nine of the past 15 years, we were the best.” And he concluded, “It may take several years to get back, but the focus is there, and the support is there, from the top down.”