As I was flying home on a Southwest Airlines flight following a long weekend in the San Francisco Bay Area, I found myself preoccupied with analyzing all of the little things that go into making Southwest a great company that stands apart from the rest of the U.S. airline industry. Although I live less than five minutes from Chicago O’Hare International Airport, I tend to go out of my way to fly Southwest from Chicago Midway despite the 45-minute drive to the south side of Chicago. Much of this stems from the fact that Southwest is consistently cheaper than the “major” domestic carriers, but for the most part I fly SWA because I know that I can expect a consistent and high quality traveling experience. From the call center operators to the gate agents to the flight attendants, when I engage with Southwest Airlines I know that I will receive high quality service just about every time; I haven’t been able to say the same about other airlines in…well…forever.
There are several reasons for Southwest’s success, from great corporate and functional management, to loyal and high quality employees, to continuous innovation, to operational effectiveness. It was the latter that created a very interesting connection to effective Information Technology / Information Systems management in my mind; specifically, the way Southwest has standardized on the Boeing 737 creates a strong analogy to IT/IS consolidation and complexity management.
To provide context for this brief case study, it is important to bear in mind that Southwest Airlines is not simply a niche player that is afforded the luxury of agility because of its relative size to the ”major” U.S. airlines; to the contrary, Southwest operates 3,200 flights each day and carries more passengers each year than any other domestic airline. In fact, Southwest is the second largest airline in the world in terms of the number of passengers it carries on an annual basis. Most importantly to its shareholders, however, is the fact that Southwest has been profitable for 34 consecutive years…this is not serendipity or blind luck at work – this is the result of visionary leadership and highly effective management.
Back to the Boeing 737. As of November of this year, the Southwest fleet consisted of over 500 Boeing 737 planes – the most of any carrier in the world. More important than the sheer volume of planes is that the 737 is the only type of plane that Southwest flies. Granted the fleet currently consists of 737-300, 737-500, and 737-700 models, but the fact remains that Southwest uses the same type of aircraft for every one of its 3,200 daily flights. While the quantitative measurement of such streamlining is beyond the scope of this blog entry, one has to imagine the magnitude of such operational efficiency on the bottom line. The significance of this level of standardization is evident when broken down and viewed from a functional and business process standpoint:
- Complexity management – Southwest has one type of aircraft, in three different flavors. With production on the 737-300 and 737-500 ending, the already simple equation becomes even less complex. Airport gates, baggage trucks, catering equipment, and other supporting equipment are configured to support the Boeing 737, which creates efficiencies throughout the infrastructure.
- Standardized parts inventory – Every one of Southwest’s maintenance facilities is stocked with Boeing 737 parts. Having only one type of aircraft to service reduces inventory requirements and increases velocity substantially; equally important, the probability of having parts available for unscheduled maintenance increases significantly because even if a specific airport does not have a part in stock, chances are high that the part is available at an adjacent airport where a subsequent Southwest flight can deliver the part within hours.
- Standardized knowledge management – Every Southwest pilot knows how to fly the Boeing 737; every Southwest mechanic knows how to service the Boeing 737; every Southwest flight attendant knows the Boeing 737 inside and out. Imagine how simple it is to create training curricula when there’s only one type of aircraft for each function to learn; imagine the depth of Boeing 737 knowledge that exists within the Southwest organization. Sound like a strategic advantage?
- Economies of scale – Everything from leather seats, Canyon Blue paint, and toilet seats get cheaper and easier to come by when they are purchased in bulk and in standard configurations.
- Strategic sourcing relationships – Do you think Boeing and Southwest have a strong, collaborative relationship after 500+ deliveries of the 737 aircraft? Not to mention, one has to assume that Southwest has to leverage the relationship for significant pricing concessions from its primary vendor.
- Lifecycle planning – While the useful life of an airplane is significantly greater than that of most Information Technology infrastructure components, the concept of predictable, non-disruptive lifecycle management afforded by disciplined standardization is directly applicable to the IT world.
- Organizational design – Life tends to be a little easier when the workforce is aligned around unambiguous core operating principles and the overhead of managing specialized functional organizations is consolidated thanks to a single, standardized platform that the entire business emanates from.
- Process effectiveness – By standardizing on the Boeing 737, Southwest Airlines necessarily streamlines its value chain and eliminates non-value-adding activities associated with managing business complexity. This allows Southwest to focus on operational excellence, continuous innovation, and providing the highest levels of customer service. The best example of operational process innovation is Southwest’s open seating concept – since every 737-700 seats 137 passengers, the cycle time of the boarding process can be quantitatively measured and continuously optimized to create system-wide efficiencies, and as I discovered on my way to San Francisco this past weekend, the process has once again been updated to make the boarding process faster than it had been previously.